compilation GUIDE2014

BPM6 Compilation Guide

BPM6 Compilation Guide
Companion Document to the sixth edition of
the Balance of Payments and International
Investment Position Manual

BPM6 Compilation Guide
Statistics Department 2014

IMF

I n t e r n a t i o n a l

M o n e t a r y

F u n dThis page intentionally left blank© 2014 International Monetary Fund
Cataloging-in-Publication Data
Joint Bank-Fund Library
Balance of payments and international investment position compilation guide. – Washington,
D.C. : International Monetary Fund, 2014.
p. ; cm.
“Companion document to the sixth edition of the Balance of Payments and International
Investment Position Manual . . . published by the International Monetary Fund (IMF) in2009”—Preface.
Includes index.
ISBN: 978-1-48431-275-9
1. Balance of payments – Statistics – Handbooks, manuals, etc. 2. Investments –Statistics – Handbooks, manuals, etc. I. Title: Balance of payments and international investment position manual. II. International Monetary Fund.
HG3882.B35 2014
ISBN 978-1-48431-275-9 (paper)
978-1-48437-271-5 (PDF)
978-1-47551-347-9 (ePub)
978-1-47554-796-2 (Mobi)
Disclaimer: The views expressed in this book are those of the authors and should not bereported as or attributed to the International Monetary Fund, its Executive Board, or thegovernments of any of its member countries.

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Contents

Prefacexi

Acknowledgments

xiii

Abbreviations

xv

Chapters
1.

2.

3.

4.

Introduction

1

Purpose of the Guide
Scope of the Guide
Organization of the Guide
Conceptual Framework
Data Sources Used to Compile International Accounts Statistics
Compiling and Disseminating International Accounts Statistics

1
1
2
2
5
5

How to Conduct a Survey

6

Introduction
Timetable
Responsibility for Producing Official Statistics
Creating or Updating a Survey Frame
Draft Survey Questionnaires
Initial Discussions with Key Respondents
Low Coverage or Low Response Rates
Editing/Validating Collected Data

6
6
6
8
13
13
15
16

Speciﬁc Surveys for Balance of Payments
and International Investment Position

20

Introduction
Collections on Goods and Services Statistics
Collections on Primary and Secondary Income Statistics
Collections on External Assets and Liabilities
Collections on International Activity Associated with Securities
Collections of Data on Financial Derivatives
Collections from Persons and Households

20
20
36
39
43
52
52

International Transactions Reporting System

59

ITRS Reporters
Comprehensiveness of ITRS
Data Items Collected

59
60
60

iv

5.

6.

7.

8.

9.

10.

11.

Contents

Reporting Threshold
Classification of Transactions
Scope of a Simple ITRS

61
61
63

International Merchandise Trade Statistics

73

Introduction
International Guidelines on IMTS

73
73

Data from Ofﬁcial and Administrative Sources

82

Overview
Data on the General Government and the Central Bank

82
83

Selected IMF and Other International Organizations’
Data Collection Initiatives

92

Introduction
IMF’s Bilateral Data Collections
Bilateral Data from Other International Organizations
Other Datasets

92
93
97
99

Crosscutting Issues in Compiling Balance of Payments
and International Investment Position Statistics

101

Introduction
Design of the Statistical Process
Estimation
Metadata
Possible Issues Faced by the Compiler
Analysis of Net Errors and Omissions
Recording Transactions in Balance of Payments

101
101
103
106
106
124
125

The International Investment Position

129

Introduction
Data Sources
Deriving Quarterly Positions from Quarterly Transactions
Other Changes in Financial Assets and Liabilities Account

129
129
140
144

The Financial Account149

Introduction
Direct Investment
Portfolio Investment
Financial Derivatives (Other than Reserves) and Employee Stock Options
Other Investment

149
149
155
160
164

Goods

175

Introduction
IMTS as a Primary Source for Compilation of Goods
ITRS as a Primary Source for Compilation of Goods
Enterprise Surveys as Primary Sources for Compilation of Goods
Estimation in the Absence of Data
Other Estimations Required

175
175
181
181
182
183

Contents

12.

13.

14.

15.

16.

17.

v

Treatment of Transfer Pricing
Merchanting
Nonmonetary Gold

184
184
186

Services

187

Introduction
Manufacturing Services on Physical Inputs Owned by Others
Transport
TravelOther Services
E-commerce

187
187
191
199
203
217

Primary Income

219

Introduction
Compensation of Employees
Investment Income
Other Primary Income

219
219
223
235

Secondary Income

237

Data Sources and Methods
Personal Transfers
Other Current Transfers

237
239
240

The Capital Account250

Introduction
Acquisitions and Disposals of Nonproduced, Nonfinancial Assets
Capital Transfers

250
250
252

Exceptional Financing Transactions

257

Introduction
Identifying Exceptional Financing Transactions
Recording Exceptional Financing Transactions
Timing of Recording and Valuation of Exceptional Financing Transactions
Data Sources and Collection of Data on Exceptional Financing

257
257
258
263
264

Serviceability and Accessibility of External Sector Statistics

265

Serviceability
Accessibility

265
267

Appendices
1
2
3
4
5
6
7
8

Conversion Matrix from the BPM5 to the BPM6
Insurance Transactions and Positions, and Pension Schemes
Financial Intermediation Services Indirectly Measured
Foreign Direct Investment
Compiling Balance of Payments and IIP by Partner Economy
Linkages with Other Macroeconomic Datasets
Balance of Payments Coding System
Model Survey Forms

269
331
365
372
398
405
445
456

vi

Contents

Tables
3.1
3.2
3.3
3.4
4.1
4.2
5.1
6.1
7.1
8.1
8.2
8.3
8.4
8.5
8.6
8.7
8.8
8.9
8.10
8.11
9.1
9.2
9.3
9.4
9.5
9.6
10.1
10.2
10.3
11.1
11.2
11.3
11.4
11.5
11.6
12.1
12.2
12.3
12.4
13.1

Classification of Services
Sources of Data Associated with International Securities
Recording of Household Transactions in Balance of Payments
Number and Surveys of Travelers
Summary of International Transactions Reporting System (ITRS) Transactions
from Previous Examples
Reconciliation of Opening and Closing Positions with Transactions
Reconciliation between the IMTS 2010 and BPM6Standard Components for the General Government and the Central Bank onExternal Financial Assets and Liabilities, Excluding Reserve Assets
Assets/Liabilities Presentation Compared to Directional Principle Presentation
Impact of Using Alternative Conversion Methods
Determining the Residency of Mobile Equipment Operators
Sample Accounting Statement for Transactions Relating to Mobile Equipment
Balance of Payments Treatment of Sample Transactions Shown in Table 8.3
Treatment of Transactions Involving Mobile Equipment—Resident Operator
Is a Branch of Parent Enterprise in Economy B
Treatment of Transactions Involving Mobile Equipment—Operator Is
Resident of Economy B
Treatment of Construction Activity in Economy A
Types of Household Sector Transactions Recorded in the Balance of Payments
Calculation of Financial Account Balance
Changes in Sign Convention from the BPM5 to the BPM6
Example of Sign Convention in the BPM6 versus the BPM5
Summary Lines from Standardized Report Form (SRF) for Other Depository Corporations
Summary Lines from Standardized Report Form (SRF) for Central Bank
Summary Lines from Government Finance Statistics (GFS) for General Government
Unconsolidated Balance Sheet
Possible Data Sources for Compiling an IIP Statement
Examples of Other Changes in the Volume of Financial Assets and Liabilities
Recording Increases in SDR Holdings and Allocations, and Associated Interest Accruals
Data Required on Reserve Assets
Treatment of Securities Lending, Gold Loans, and Gold Swaps where
the Resident Owns the Securities or GoldUse of International Merchandise Trade Statistics (IMTS) for Compilation of Goods:
Adjustment for CoverageUse of International Merchandise Trade Statistics (IMTS) for Compilation of Goods:
Adjustment for Classification
Use of International Merchandise Trade Statistics (IMTS) for Compilation of Goods:
Adjustment for Valuation
Use of International Merchandise Trade Statistics (IMTS) for Compilation of Goods:
Adjustment for Timing
Use of International Transactions Reporting System (ITRS) for Compilation of Goods
Adjustments to Balance of Payments in Cases of Transfer Pricing
Methods for Estimating Transport
Methods for Estimating Freight and Insurance on Imports
Estimating the Travel Component
Compilation of Items in Other Services
Compilation of Investment Income and Other Primary Income Items

32
48
53
55
65
67
74
86
95
107
109
110
110
111
114
118
121
126
126
127
131
133
134
136
140
146
168
170
171
177
179
179
180
181
185
194
196
200
205
225

Contents

14.1
14.2
15.1
15.2
16.1
16.2
16.3
A2.1
A2.2
A2.3
A2.4
A3.1
A3.2
A4.1
A4.2
A4.3
A4.4
A5.1
A5.2
A5.3
A5.4
A5.5
A5.6
A6.1
A6.2
A6.3
A6.4
A6.5
A6.6
A6.7
A6.8
A6.9
A7.1
A7.2
A7.3
A7.4
A7.5
A7.6
A7.7
A7.8
A8.1

Compilation of Secondary Income Items
Borderline Cases for Account-to-Account Transfers
Treatment of Alternative Time-Share Arrangements
Treatment of Debt Assumption
Examples of Recording of Exceptional Financing Transactions
Timing of Recording and Valuation of Exceptional Financing Transactions
Additional Information on Exceptional Financing Transactions
International Investment Position Entries
Data Collection and Compilation of the Insurance Transactions for the Current AccountData Collection and Compilation of the Insurance Transactions
for the Financial AccountData Collection and Compilation of the Insurance Positions for the IIP
Exports of Financial Intermediation Services Indirectly Measured (FISIM) in
the Context of International Classification Standards
Imports of Financial Intermediation Services Indirectly Measured (FISIM) in
the Context of International Classification Standards
Treatment of Borrowing on Behalf of the Government of Another Economy
Treatment of Direct Investment under the Assets/Liabilities Presentation and
Directional Principle
Assets/Liabilities Presentation Compiled from Foreign Direct Investment Survey
Calculation of Reinvested Earnings along a Direct Investment Ownership Chain
Treatment of Transactions and Other Changes in Securities under the Transactor Principle
Balance of Payments Transactions of Economy A with Partner Economy
Comparison of Merchandise Trade and Trade in Goods for Merchanting
Use of Origin/Consumption and Consignment/Destination to Record Goods Trade
Income Accounts of Enterprises in Economies A, B, and C
Partner Economy Direct Investment Income Statistics for Economies A, B, and C
Conversion of the Sector Breakdown: System of National Accounts (SNA)–
Balance of Payments
A Comparative Overview of SNA−International Accounts
Reconciliation of Other Depository Corporations’ Balance Sheet Items with
International Investment Position (IIP) Components
Reconciliation of Sectoral Balance Sheet Items for the Central Bank with
International Investment Position (IIP) Components
Statement of Operations
Taxes in Government Finance Statistics (GFS) and Balance of Payments
Other Revenue Categories in Government Finance Statistics (GFS) and
Balance of Payments
Expense in Government Finance Statistics (GFS) and Balance of Payments
Financial Assets and Liabilities in Government Finance Statistics (GFS) and
Balance of Payments
Example of the Balance of Payments Codes
List of Values of “Aggregate” Component of the Code
List of Altered Balance of Payments Codes
List of Generic Codes for the Balance of Payments Data Structure Definitions (DSD)
Dimensions for the Balance of Payments Data Structure Definitions (DSD)
Attributes for the Balance of Payments Data Structure Definitions (DSD)
Description of Attributes for the Balance of Payments Data Structure Definitions (DSD)
Statistical Data and Metadata Exchange (SDMX) Coded Example for
Selected Balance of Payments Series
Summary of the Model Survey Forms

vii

237
240
251
254
258
263
264
357
361
362
364
366
367
375
381
382
385
399
399
400
401
403
404
406
410
423
424
429
431
433
437
442
446
446
447
448
449
449
453
454
456

viii

Contents

Figures
4.1
5.1
13.1
13.2
A4.1
A4.2
A6.1

Processing System in an International Transactions Reporting System (ITRS)
Import and Export Flows
Dates Associated with Dividends
Difference Between Rent and Rentals
A Case of Round-Tripping with Many Companies in Routing Economies
Linkages Between UCP’s Residence and Treatment of Fellow Enterprises
Government Finance Statistics Framework

70
77
232
236
376
380
428

Draft Timetable for Conducting an Enterprise Survey
Conducting a Private Capital Flows Survey in Anglophone Africa
Production Sharing Arrangements and Direct Investment
Deriving Transactions Using Data on Positions and Other Price Changes
General Methods for Estimating Fair Value of Portfolio Investment Debt
The Use of the Centralized Securities Database in the European System ofCentral Banks in Compiling Balance of Payments and IIP Statistics
Recording a Forward Contract in the International Accounts
The Data Quality Assessment Framework
BPM6 Entries in the Balance of Payments Related to Nonlife Insurance Transactions
Insurance Sales Agents and Brokers
BPM6 Entries in the Balance of Payments Related to Life Insurance Transactions
Implementation of the BPM6: Insurance, Pension Schemes, andStandardized Guarantee Schemes in the Case of Austria
Balance of Payments Entries Related to Financial Intermediation Services
Indirectly Measured (FISIM)
Compiling Data on Special Purpose Entities in Mauritius

7
18
150
153
156

Boxes
2.1
2.2
10.1
10.2
10.3
10.4
10.5
17.1
A2.1
A2.2
A2.3
A2.4
A3.1
A4.1

159
163
268
336
338
344
345
370
386

Examples
9.1
12.1
13.1
13.2
14.1
14.2
14.3
14.4
14.5
15.1
A2.1
A2.2
A2.3
A2.4
A2.5
A2.6
A2.7
A2.8

Estimation of quarterly position data
Recording of Construction Activity in Balance of Payments
Recording of Compensation of Employees in Balance of Payments
Calculation of Dividends
Taxes on income and wealthTechnical assistance personnel employed by donors
Technical assistance personnel employed by recipient government
Grants and donations sent to local NPISHs in the recipient economy
Long-term technical assistance missions financed by the donor government(from the perspective of the donor economy)
Investment Grants
Illustration of insurance company profit and loss accountExcerpt from an insurance company balance sheet
Excerpt from the sectoral balance sheet for the financial corporations
subsector (liability side)
Estimation of insurance services provided to nonresidents
Deriving transactions related to nonlife insurance
Estimation of insurance services in indirect insurance
Excerpt from an insurance company profit and loss accounts
Excerpt of notes to a company’s financial statement on plan asset allocation

142
208
220
233
241
245
247
248
248
256
334
335
339
340
340
342
344
350

Contents

A2.9 Excerpt of notes to a company’s financial statement, projected benefit obligation
A2.10 Excerpt of notes to a company’s financial statement, cost of pension planA2.11a Calculation of data for a defined benefit scheme
A2.11b Transactions for a defined benefit scheme
A2.11c Transactions for a defined benefit scheme
A2.11d Recording of transactions for a defined benefit scheme in the balance of
payments statistics (economy of pension funds)
A2.12a Transactions for a defined contribution scheme
A2.12b Transactions for a defined contribution scheme (based on assumptions andcalculations presented in Example A2.12a)A2.12c Recording of transactions for a defined contribution scheme in the balance of
payments statistics (economy of pension funds)

ix

351
351
352
353
354
355
358
358
359

This page intentionally left blankPreface

The 2014 Balance of Payments and International Investment Position Compilation Guide (the Guide) is a companion
document to the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) which
was published by the International Monetary Fund (IMF) in 2009. The primary purpose of the Guide is to provide practical advice on source data and methodologies for compiling statistics on the balance of payments and the international
investment position that are consistent with BPM6.
Globalization, increasing elaboration of balance sheet issues, and financial innovation are three major themes thatemerged during the BPM6 revision. The Guide identifies data sources and adjustments to source data that would beappropriate for compiling data on a BPM6 basis.
The Guide provides guidance that is applicable for different economies—from the smallest and least developed to themost advanced and complex. National compilers should develop and adapt the data sources and compilation methods
in ways that are appropriate to their national circumstances, by considering the practical and legal constraints in theirown economies.
An economy’s data compilation methods should evolve over time as the economy changes. Therefore, the Guide
does not present a prescriptive or definitive approach to compiling statistics on the balance of payments and theinternational investment position (IIP). Instead, the Guide identifies the relative strengths and weaknesses of alternate
approaches, and identifies the adjustments that may be required to source data to derive estimates of flows and stocks
that are consistent with the recommendations in BPM6.
The BPM6 strengthens the theoretical foundations and linkages with other macroeconomic statistics, and the Guide
includes elaboration on these linkages. The Guide also provides practical advice on using the data from the othermacroeconomic accounts in compiling the international accounts.

This page intentionally left blankAcknowledgments

The Guide was produced under the direction of two Directors of the Statistics Department (Adelheid Burgi-Schmelz[2008–2012] and Louis Marc Ducharme [2013–]). Robert Heath was the responsible Deputy Director.
In the Balance of Payments Division, the coordinator was Ms. Tamara Razin (Senior Economist), who also draftedsome of the chapters and edited the contributions of others. The work was undertaken under the close supervision andguidance of Mr. Ralph Kozlow (Chief). Many other staff in the division also contributed to the project, including Eduardo Valdivia-Velarde (Deputy Chief), Mr. Paul Austin, Mr. Jose Carlos Moreno-Ramirez, Ms. Silvia Matei, Ms. Rita
Mesias (all Senior Economists), Ms. Emma Angulo and Ms. Cornelia Hammer (both Economists), Ms. Colleen Cardillo and Mr. John Joisce (retired, formerly Senior Economists), Ms. Loida Cruz (former Senior Economist, currently
with the Bank of Philippines), and Ms. Bianca Ully (former special appointee, currently with the Öesterreichische
Nationalbank).
Staff from other divisions of the Statistics Department also contributed to the text: Data Dissemination and Review
Division (Mr. Andrew Kitili, Deputy Chief and Mr. Mark van Wersch, Senior Economist), Financial Institutions Division (Mr. Artak Harutyunyan, Deputy Chief), Government Finance Division (Ms. Sagé de Clerck, Senior Economist),
Real Sector Division (Mr. Kim Zieschang, Chief, Mr. Robert Dippelsman, Deputy Chief, and Mr. Thomas Alexander,
Senior Economist), Statistical Information Division (Mr. René Piché, Deputy Chief, and Mr. James Chan, Information
Management Assistant).
The Guide benefited from the written contributions and comments of external experts and institutions, in particular:
Mr. Paul Mahoney (Branch Head, Australian Bureau of Statistics, who prepared preliminary drafts of six chapters orappendices); Ms. Anne Harrison, Editor of the 2008 System of National Accounts; the Task Force on Statistics of International Trade in Services; the European Central Bank; the World Trade Organization; the Organization of Economic
Co-operation and Development; and the Bank for International Settlements. Case studies were provided by the teamof the External Sector Statistics Module within the IMF–United Kingdom Department for International Development
project on enhanced data dissemination initiatives1; the European Central Bank; the Öesterreichische Nationalbank;and the Bank of Mauritius.
Mr. Stuart Brown (retired, formerly with the UK Office of National Statistics) reviewed draft chapters and appendicesfor their consistency with the BPM6. Also, the Statistics Department acknowledges with gratitude the comments on
the draft Guide from compilers throughout the world during the several public comment opportunities. The Guide wasprepared under the general guidance of the IMF Committee on Balance of Payments Statistics.
Mr. Roderico de Nitti and Ms. Esther George (Statistics Department) provided administrative support in preparing
the manuscript. Ms. Cathy Gagnet, Communications Officer in the Communications Department, edited the final
document and coordinated print production.
Louis Marc Ducharme
Director
Statistics Department
International Monetary Fund1

The team consists of Mr. Simon Quin (Module Manager), Mr. Kenneth Egesa, and Mr. Howard Murad.

This page intentionally left blankAbbreviations

ABO
AP
BD4
BEC
BIS
BLA
BML
BOM
BPM5
BPM6
c.i.f.
CB
CBS
CDIS
COPC
CPC
CPIS
CR
CSDB
DAC
DC
DCS
DFID
DI
DIENT
DOTS
DQAF
DR
DSD
DTC
e.g.
EBOPS
ECB
EDDI
EDS
EDSG
ESCB
ESO
EU
f.o.b.

accrued benefit obligation
approval of foreign investment
OECD Benchmark Definition of Foreign Direct Investment, fourth edition
Broad Economic Category
Bank for International Settlements
Bilateral Loan Agreements
broad-money liability
Bank of Mauritius
Balance of Payments Manual, fifth edition
Balance of Payments and International Investment Position Manual, sixth edition
cost, insurance, and freight
central bankcentral bank survey
Coordinated Direct Investment Survey
Current Operating Performance Concept
Central Product Classification
Coordinated Portfolio Investment Survey
creditCentralized Securities Database
Development Assistance Committee
domestic credit
depository corporations survey
United Kingdom Department for International Development
direct investment
direct investment enterprise
Direction of Trade Statistics
Data Quality Assessment Framework
debit
data structure definitions
deposit-taking corporations
exempli gratia (for example)
Extended Balance of Payments Services (Classification)
European Central Bank
Enhanced Data Dissemination Initiative
external debt statistics
External Debt Statistics: Guide for Compilers and Users
European System of Central Banks
employee stock option
European Union
free on board

xvi

Abbreviations

FDI
FDIR
FDR
FIN
FISIM
FMA
FP
FPSO
FS
FSC
GAB
GATT
GBC
GDDS
GDP
GFS
GFSM
GNI
HS
i.a.
IAS
IASB
IBS
IFS
IIP
IIP Guide
IMF
IMTS
IMTS 2010
IO
IRFCL
IRTS 2008
ISIN
ISO
ITRS
JEDH
MC
MFS
MFSM-CGMMF
MSITS 2010
MTO
n.i.e.
NAB
NAV
NCB
NFA
NGO
NPA
NPISH

foreign direct investment
Framework for Direct Investment Relationships
full direct reporter
IMF Finance Department
financial intermediation services indirectly measured
Financial Market Authority
financial press
floating production, storage, and off-load (vessels)
financial statements of enterprises
Financial Services Commission
General Arrangements to Borrow
General Agreement on Tariffs and Tradeglobal business corporation
General Data Dissemination Systemgross domestic productgovernment finance statistics
Government Finance Statistics Manualgross national income
Harmonized Commodity Description and Coding Systeminter alia (among other things)
International Accounting Standard
International Accounting Standards Board
international banking statistics
International Financial Statistics
international investment position
Quarterly International Investment Position Statistics: Data Sources and Compilation Techniques
International Monetary Fundinternational merchandise trade statistics
International Merchandise Trade Statistics: Concepts and Definitions
international organization
International Reserves and Foreign Currency Liquidity: Guidance for Data Template
International Recommendations for Tourism Statistics 2008
International Securities Identification Number
International Organization for Standardizationinternational transactions reporting system
Joint External Debt Hub
management company
monetary and financial statistics
Monetary and Financial Statistics Manual and Compilation Guide (2013)
money market fund
Manual on Statistics of International Trade in Services
money transfer operator
not included elsewhere
New Arrangements to Borrownet asset value
national central bank
net foreign assets
nongovernmental organization
Note Purchase Agreement
nonprofit institution serving households

Abbreviations

ODA
ODC
ODCS
OECD
OeNB
OFBV
OFC
OFCS
OIN
PBO
PCFS
PDR
PSA
QEDS
RL
RPF
SBS
SDDS
SDMX
SDR
SDRF
SITC
SMEs
SNA
SPE
SRF
SUR
TIC
U.S.
UCP
WTO
2008 SNA

Official Development Assistanceother depository corporations
other depository corporations survey
Organization for Economic Cooperation and DevelopmentÖesterreichische Nationalbank
own fund at book value
other financial corporations
other financial corporations survey
other items net
projected benefit obligation
private capital flows survey
partial direct reporterproduction sharing arrangement
Quarterly External Debt Statistics
register of external loans
reserve position in the IMF
security-by-security
Special Data Dissemination Standard
Statistical Data and Metadata Exchange
special drawing right
Supplementary Data Report Forms
Standard International Trade Classification
small and medium-sized enterprises
system of national accounts
special purpose entity
standardized report form
surveyTreasury International Capital
United States
ultimate controlling parent
World Trade Organization
System of National Accounts 2008

xvii

This page intentionally left blank1

Introduction

Purpose of the Guide
1.1 The Balance of Payments and International
Investment Position Compilation Guide (Guide) is acompanion document to the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) published by the International
Monetary Fund (IMF) in 2009. The Guide updates the
Balance of Payments Compilation Guide released in
1995. The BPM6 addresses important developmentsthat have occurred in the international economy since
the BPM5, including those that have emerged fromglobalization, increased elaboration of balance sheet
issues, and changing patterns of financial intermediation. The purpose of the Guide is to show how theconceptual framework described in the BPM6 may be
implemented in practice. Key elements of the framework are described in paragraphs 11–24 of this chapter. The Guide is not intended to be a “stand-alone”
manual; users of the Guide should be familiar with
the BPM6.
1.2 The important relationship between the BPM6
and the System of National Accounts 2008 (2008 SNA)
is explained in detail in the BPM6 and outlined inAppendix 6 of this Guide. The international accounts
include the balance of payments, the international
investment position (IIP), and the other changes infinancial assets and liabilities accounts. The balanceof payments statement is equivalent to the rest of theworld accounts of the SNA,1 and the IIP statement may
be considered a component of the sectoral balance sheet
accounts of the SNA. Therefore, in describing how theinternational accounts statements may be compiled, theGuide also illustrates how the rest of the world accountof the SNA may be compiled.
1

The SNA rest of the world accounts are presented from the pointof view of the nonresident units, whereas the balance of payments
presents the same transactions from the point of view of resident
units.

1.3 The Guide was prepared to assist balance of payments and IIP compilers in understanding the various
compilation methods employed throughout the world
for the preparation of the international accounts. The
Guide should be useful to national accounts compilers that prepare the rest of the world account by using
the balance of payments statement or balance of payments data sources.
1.4 The Guide can be of interest to users of balance of payments and IIP statistics who wish to understand the nature and quality of data sources andmethods underlying the international accounts andrelated national accounts tables. For instances whennational concepts, sources, and methods are set out
in published documents by national compilers, they
can be compared with best practices provided in thisGuide.
1.5 The preparation of the Guide included extensive consultation with international accounts
compilers and other interested parties worldwide,
including the IMF Committee on Balance of Payments Statistics.

Scope of the Guide
1.6 Preparation of the Guide included consideration of the main tasks that balance of payments and
IIP compilers normally perform. While such tasks
vary from economy to economy, the following list
represents a fairly typical set:
• Extraction of data from collections (e.g., international merchandise trade statistics, migration
statistics, and other official sources) over which
the compiler may have some influence but not
full control• Extraction of data from collections (such as reporting systems for foreign exchange and otherinternational transactions and surveys of businesses) managed, either solely or jointly with

2

Balance of Payments and International Investment Position Compilation Guide

other statistical compilers, by the balance of payments compiler• Compilation of the international accounts, including balance of payments, supplementary balance of payments series, and the IIP statement• International accounts data management, publication, dissemination, and communication withusers
• Evaluation and development of data sources andcompilation methods as necessary• Assessment of data quality
1.7 The Guide covers all the tasks or functions in
the preceding list. For example, the Guide includes
descriptions of data sources used by the balance of
payments and IIP compiler. For sources that the compiler typically manages, a discussion of the design andmanagement of data collection is also included.
1.8 Articulating balance of payments and IIP compilation methodology is difficult because economies
have developed procedures independently, and eachnational methodology may be considered unique.
Some patterns emerge, but different national experiences have created different approaches as to the mostappropriate methodology. Consequently, it is not possible to present a single methodology suitable in allcases. Instead, the Guide outlines various options that
may be available. In addition, for economies that havewell-developed compilation systems, the Guide contains criteria against which these compilation systems
may be compared and evaluated. For economies that
may need to improve parts of their compilation systems, the Guide presents information on approaches
used elsewhere. For economies that do not have welldeveloped systems, the Guide contains advice forcompiling balance of payments and IIP items and aset of model collection forms that can be used as astarting point to develop a data collection system.

Organization of the Guide
1.9 The Guide has 17 chapters and eight appendices. Chapters 2 through 9 describe sources that canbe used to compile balance of payments and IIP statistics. Chapters 10 through 16 deal with the compilation of specific components of balance of payments,
IIP, and related statistics, including the recording of
exceptional financing transactions in the balance of

payments. Chapter 17 discusses two aspects of data
quality assessment—namely, accessibility and serviceability of these statistics.
1.10 The Guide includes eight appendices discussing complex methodological and compilation issues,
as well as other issues that go across several accounts.
A conversion matrix that matches the standard components of the BPM5 with the standard componentsof the BPM6 is presented in Appendix 1. The next
three appendices discuss issues related to the compilation of estimates of insurance, pension and standardized guarantees schemes (Appendix 2), financial
intermediation services indirectly measured—FISIM(Appendix 3), and foreign direct investment (Appendix 4). Methods for the compilation of balanceof payments on a regional basis (by partner economy
or group of economies) are examined in Appendix 5.
Appendix 6 presents the linkages of the international
accounts to the national accounts, monetary and financial statistics, and government finance statistics,
including a presentation in parallel of the recordingof flows and positions in the SNA and the BPM6. Appendix 7 introduces the balance of payments coding
system, and finally, a set of 23 model survey forms ispresented in Appendix 8.
1.11 An element of repetition is present in the
Guide. Some specific balance of payments and IIP
components are described in different parts (e.g.,
direct investment is covered in Chapter 3, SpecificSurveys for Balance of Payments and International
Investment Position; Chapter 9, The International Investment Position; Chapter 10, The Financial Account;and Appendix 4, Foreign Direct Investment). The description of such specific components is done in thecontext of the respective chapter/appendix and ensures an adequate coverage of the subject.

Conceptual Framework
1.12 A brief outline of the conceptual framework
underlying the international accounts must precede
discussion of data sources and methods used to compile the balance of payments and IIP statements. The
following outline provides a summary of the BPM6.
For a more complete presentation, please consult the
BPM6. In instances where the reader might consider
that the conceptual advice in this Guide could be interpreted as deviating from the BPM6, the BPM6 isIntroduction

to be used as the prime source of conceptual advice.
The concepts of the international accounts are harmonized with the SNA, so they can be compared or aggregated with other macroeconomic statistics.
1.13 The international accounts for an economy
summarize the economic relationships between residents of that economy and nonresidents and provide
an integrated framework for the analysis of an economy’s international economic relationships. They comprise the following statistical statements:• The IIP—A statement that shows at a point intime (1) the value of financial assets of residents
of an economy that are claims on nonresidents
or are gold bullion held as reserve assets, and(2) the liabilities of residents of an economy tononresidents• The balance of payments—A statement that summarizes economic transactions between residents
and nonresidents during a specific time period• The other changes in financial assets and liabilities account—A statement that shows otherflows, such as valuation changes, that reconciles
the balance of payments and IIP for a specific period, by showing changes due to economic events
other than transactions between residents andnonresidents
1.14 An economy consists of all the institutional
units that are resident in a particular economic territory. The most commonly used concept of economic
territory is the area under the effective economic control of a single government. For the purposes of global
statistics and reporting to the IMF, it is important tohave data on all areas under control of a particulargovernment, including special zones, even if for someof the government’s own purposes, those zones are
excluded or shown separately. Economic entities who
have closer associations with other economies are
nonresidents.2

Flows and Positions
1.15 Flows refer to economic actions and effects ofevents within an accounting period, and positions referto a level of assets or liabilities at a point in time. International flows are recorded in the accounts as trans-

2

The concept of residency is fully discussed in Chapter 4 of
the BPM6.

3

actions (balance of payments) and other flows (otherchanges in financial assets and liabilities account).
Positions of external financial assets and liabilities arerecorded in the IIP. Flows and positions are integrated
so that all changes in positions between two points intime are fully explained by the recorded flows. Positions and flows of financial assets and liabilities aregrouped according to the functional and instrumentclassifications of financial assets and liabilities. Nonfinancial transactions are generally grouped according
to their nature and characteristics. Flows and positions
are discussed in detail in the BPM6, Chapter 3.
1.16 A transaction is an interaction between two
institutional units that occurs by mutual agreement
or through the operation of the law and involves an
exchange of value or a transfer. The definition is extended to cover actions within an institutional unitthat are analytically useful to treat and separately
identify as transactions, often because the unit is operating in two different economies, such as where onepart operates as a nonresident branch. The definitionis also extended to cover unrequited transfers, by
the identification of transfers as the corresponding
flow to the economic value supplied. Transactions
recorded in the international accounts are between
two institutional units, one a resident of the compiling economy and the other a nonresident, and which
represent a change of economic ownership between
the units.
1.17 Other flows are changes in the volume, value,or classification of an asset or liability that do not result from a transaction between a resident and a nonresident. Other flows cover two broad types: (1) otherchanges in the volume of assets and liabilities, whichreflect entrances of new assets into balance sheets andexits of existing assets and liabilities from balance
sheets that are not caused by interactions by mutual
agreement between institutional units (i.e., transactions); and (2) revaluations (holding gains and losses)
on an asset or liability arising from exchange ratechanges or from other changes in prices.
1.18 Positions refer to the level of financial assets
or liabilities at a point in time and are recorded in the
IIP. Positions at two points of time are connected withflows during the intervening period because changes
in positions are caused by transactions and otherflows.

4

Balance of Payments and International Investment Position Compilation Guide

Accounting System
1.19 The international accounts for an economy
are to be compiled on a vertical double-entry bookkeeping basis from the perspective of the residents ofthat economy, set out in two columns.3 Because eachtransaction is either an exchange or a transfer, it requires two entries of equal value. Vertical double-entry
bookkeeping ensures that the total of all credit and thatof all debit entries for all transactions are equal. In theinternational accounts, the net IIP provides a measureof net financial claims with nonresidents plus gold bullion held as monetary gold.
1.20 In the current and capital accounts, a credit
denotes entries from exports of goods and services,primary income receivable, transfers receivable, anddisposals of nonproduced nonfinancial assets. A debit
is used to record entries for imports of goods and services, primary income payable, transfers payable, andacquisitions of nonproduced nonfinancial assets. In
the case of transactions in financial assets and liabilities, the use of the terms “net acquisition of financial
assets” and “net incurrence of liabilities” highlights theimpact of the financial account on the IIP. Financial
account items are recorded on a net basis separately
for each financial asset and liability (i.e., they reflectchanges due to all credit and debit entries during an
accounting period). A positive change indicates anincrease in assets or liabilities, and a negative change
indicates a decrease in assets or liabilities.
1.21 The BPM6 recommends the use of the accrualbasis for determining the time of recording of flows.
The accrual basis provides the most comprehensive
information because all flows are recorded (including nonmonetary transactions, imputed transactions
and other flows). The change of economic ownershipis central in determining the time of recording on an
accrual basis. A change in ownership from an economic point of view means that all risks, rewards, andrights and responsibilities of ownership in practice aretransferred.

positions data expressed in one currency to the currency (unit of account) in which the balance of
payments accounts are compiled.4 The BPM6 recommends that flows be converted at the rate prevailingwhen the flows take place and positions at the rate
prevailing on the balance sheet date. The midpoint
between the buying and selling rates should be usedat the time of transactions and at the close of businesson the reference date for positions.
1.23 Although the balance of payments accounts arein principle balanced, imbalances result from imperfections in source data and compilation. This imbalance—
known as net errors and omissions—is a usual featureof balance of payments data and should be identified
separately in published data.

Classiﬁcations Used in the International
Accounts Statistics
1.24 The different accounts within the balance of
payments are distinguished according to the natureof the economic resources provided and received.
The current account shows transactions of goods,
services, primary income, and secondary income between residents and nonresidents; the capital accountshows credit and debit entries for nonproduced nonfinancial assets and capital transfers between residents
and nonresidents; and the financial account shows
net acquisition and disposal of financial assets and liabilities. The sum of the balances on the current andcapital accounts represents the net lending (surplus)
or net borrowing (deficit) by the economy with therest of the world. This is conceptually equal to the netbalance of the financial account. The financial accountplus the other changes account explain the change in
the IIP between the beginning- and end-of-periods.
1.25 Financial assets are residents’ financial claims
on nonresidents and gold bullion, and financial liabilities are nonresidents’ financial claims on residents. The
major classifications of financial assets and liabilities
in the financial account and in the IIP are as follows:• Functional type of investment (direct investment,
portfolio investment, financial derivatives (otherthan reserves) and employee stock options, otherinvestment, and reserve assets)

1.22 An important issue for the balance of payments compiler is the conversion of transactions and3
The accounting system underlying the international accounts, inaddition to the vertical double-entry bookkeeping, derives fromtwo other bookkeeping principles (a horizontal double-entry
bookkeeping and quadruple-entry bookkeeping). These accounting principles are explained fully in Chapter 3 of the BPM6.

4

For some economies, the unit of account is the national currency,
and for others another currency (e.g., U.S. dollars) may be used.

Introduction• Instrument of investment (equity and investment funds shares, debt instruments, and otherfinancial assets and liabilities)• Sector of the domestic transactor (central bank,general government, deposit-taking corporations,
except the central bank, and other sectors—othersectors are further broken down between otherfinancial corporations, nonfinancial corporations, households, and nonprofit institutions
serving households).

Data Sources Used to Compile
International Accounts Statistics
1.26 Chapters 2 through 9 present and analyze themain data sources that may be used to compile balance of payments and IIP statements, ranging fromenterprise surveys to the use of individual counterpart
economy data available in international databases.
Special features of these sources are noted. Enterprisesurveys are treated in Chapters 2 (how to conduct asurvey) and Chapter 3 (specific surveys for balance of
payments and international investment position). The
use of an international transactions reporting systemand of the international merchandise trade statistics is discussed in Chapter 4 and Chapter 5, respectively. Other official and administrative data
sources (for the general government and central
bank sectors and data gathered by government institutions as a by-product of carrying out their various
functions) are discussed in Chapter 6. Data provided
by the IMF and other international organizations

5and international databases with individual counterpart economy data (such as the international banking statistics, coordinated direct investment survey,
and coordinated portfolio investment survey) are
discussed in Chapter 7. Institutional arrangements,
estimation techniques, and other issues that may affect the compilation of international accounts are
discussed in Chapter 8. Data sources for developing an IIP statement, including deriving quarterly
position data from quarterly transactions data, arediscussed in Chapter 9.

Compiling and Disseminating
International Accounts Statistics
1.27 Chapter 10 covers topics relevant to preparation of the financial account, including estimation
techniques when relevant data are either untimely or
unavailable. Chapters 11 through 15 focus on individual balance of payments categories: goods (Chapter 11),services (Chapter 12), primary income (Chapter 13),secondary income (Chapter 14), the capital account(Chapter 15), and exceptional financing (Chapter 16).
1.28 Chapter 17 focuses on two important aspectsof the data quality assessment. Serviceability relates
to the dissemination of data with an appropriate periodicity and timeliness, and consistent internallyand with other macroeconomic datasets. Accessibility relates to the dissemination of data and metadata
clearly, on an easily available and impartial basis, andwith suitable support service for users.

2

How to Conduct a Survey

Introduction
2.1 This chapter provides some general information and rules on what needs to be done to conduct
enterprise surveys. However, these procedures canalso be applied to other business or household surveys if conducted for balance of payments purposes.
Many economies continue to use a bank internationaltransactions reporting system (ITRS); however, some
economies are moving to survey-based collection
systems. Individual economies decide on the generalapproach to adopt, but it is considered that a surveybased system is better able to collect the data for thebalance of payments and IIP as transactions become
increasingly complex, while in some more “basic” circumstances the ITRS is still effectively used.
2.2 Enterprise surveys can be used to capture data
for most elements of the balance of payments and
IIP. They all have common operational aspects. This
chapter begins with a description of the steps that are
involved in conducting an enterprise survey. The general principles set out in this chapter are applicablein all cases, even though the collection process may
range from data collection by telephone from a few
large companies to highly organized, large-scale, mailbased or Web-based surveys. A survey may also be designed to capture a specific type of data or to obtaindata that supplement other sources, such as an ITRS.
2.3 Surveys should be based on clearly defined objectives, sound collection methodology, and a wellestablished legal basis. Properly designed collection
forms, full coverage of the population, well-defined
data structures and classifications, and effective data
validation and aggregation procedures are also required for enterprise surveys.

Timetable
2.4 Compiling agencies that have never conducteda survey will have a different timetable from thoseagencies that conduct them regularly. Box 2.1 sets out

a broad framework for a timetable, covering most of
the aspects compilers will need to take into accountwhen developing a survey. Each of the steps is elaborated further in this chapter. The timetable can beadapted to national circumstances, but in general thesteps apply to most surveys. Agencies with more practice and experience, or topics that are not as complicated as others, may not need as long a lead time prior
to conducting the survey, and also may not need asmuch lead time for editing, processing, and disseminating responses to the survey.

Responsibility for Producing
Ofﬁcial Statistics
2.5 In many economies, a statistics act or formal
legal arrangements exist under which the central
bank or statistical agency has the authority to collectinformation or conduct a survey. In some economies,
there may be no such legal authority. In those circumstances, proceeding with a collection on a voluntarybasis may be appropriate, depending on the generalrelationship between the collecting agency and thecompanies being surveyed, but it is preferable to havelegal authority as soon as possible. Good legal authority needs to state that reporting of statistical information is mandatory, especially for large companies.
2.6 In some economies, responsibility for collecting data for balance of payments purposes may be split
between two or more agencies. For example, central
banks may have responsibility for obtaining data fromfinancial institutions, while the national statisticalagency may have responsibility for the nonfinancial
entities. In other economies, an investment approval
agency or a financial supervisor may be a very important source of information about cross border transactions. Whereas involving all the relevant agencies inthe survey design will improve the relevance, as wellas the overall coverage and accuracy, of the data eventually collected, it is important that the legal authority
for the collection of these data allows all appropriate

How to Conduct a Survey

Box 2.1 Draft Timetable for Conducting an Enterprise Survey

Determine under whose authority survey will be conducted.
Definition of the population and creation of a survey frame: details to be stored on
information database. Begin development of information database of potential respondents.
Identify sources to establish survey frame.

Determine coverage of survey: sample or census.
Determine quantity and type of data to be collected and discuss with a sample of potential
respondents.
Draft survey forms and discuss with a sample of respondents.

Undertake initial discussions with key respondents.

Finalize survey forms.
Conduct trial run with a small selection of respondents.
All other respondents should be reminded of the survey.
If feasible, inform respondents of the upcoming
survey.
Begin seminars to educate respondents of survey
needs and requirements.
Mail questionnaires.
Survey data due from respondents.
Follow up with those that have notreported. Enter responses on
information database. Process resultsfor dissemination.
Review results for
quality.
Release results/use
results for inclusion inbalance of payments/IIP.
–12

–9

–6

Prior to reference date–3

Reference 1
date

2

3

4

5

6

After reference date(months)7

8Balance of Payments and International Investment Position Compilation Guideagencies to access the information. The survey questionnaire should make clear which agencies haveaccess to the reported data. More information on institutional arrangements for compiling external sector
statistics is presented in Chapter 8 of the Guide.

Creating or Updating a Survey Frame
2.7 The survey frame comprises the set of units
subject to the survey and the details about those units
that can facilitate conducting of the survey. The survey
frame can be used to list units as well as to facilitate
some of the steps involved in conducting the survey,
notably through storing and tracking information on
the units being surveyed.

Developing a Register
2.8 The sources of information on potential survey respondents are varied, and the work required incompiling a register to conduct a survey for the balance of payments purposes will depend on the extent
to which a register already exists. A register is a setof records containing information on economic units
that are included, or have the potential to be included,
in balance of payments surveys.
2.9 If there is no existing register or if it is only rudimentary, these are some of the sources that could be
used to build a register:• Existing registers of companies maintained by
the statistical agency or other government agencies for other purposes that might serve to provide useful information on those companies withinternational transactions or positions• Government administrative sources; depending
on legislation and administrative arrangementsor the authority of the collection agency, thesemight include taxation records, files, or lists (including value added tax files and Customs files)• Information held by foreign investment approval
agencies or marketing boards• Information held by regulatory authorities (suchas those responsible for supervision of financial
institutions)• Statutory company reports and company registration details• Records held in foreign exchange control or international transactions reporting systems• Media reports (e.g., business magazines, newspapers, or trade journals)• Publicly available databases and reports suchas the stock exchange register, commercial equity registry information services, international
credit rating agencies’ publications, market research reports or services by accounting or brokerage firms• Industry and trade associations; these associations can make available lists of members, oftenwith indications of their financial size
• Telephone directory.
2.10 All of these sources have limitations andshould be used together. Moreover, the extent of theircoverage may be larger, smaller, or different from thosefor statistical purposes. However, most of them will
help build a register, such as by providing informationon the size of company activity. For example, a list ofimporters from international trade statistics may classify importers by size of importing activity in a specifictime period.
2.11 The development of the balance of payments
register may be regarded as a two-part activity. In thefirst phase, companies with potential balance of payments transactions are identified as being engaged
in cross border activities via sources previously described. The register then becomes the source list forcompanies to be included in balance of payments surveys. These companies are then compared with units
already listed on the register. The compiler shouldmake every effort to identify all units with potentiallysignificant balance of payments transactions.
2.12 In the second phase, more information is obtained on companies that were identified from initialsources and are not yet in the register. It is unlikelythat all companies identified will be entered in thebalance of payments register because some units will
not be engaged in activities of interest. An exploratory survey may be used to discover what, if any,balance of payments activities the companies are involved in and the size of those activities. Model form
1 in Appendix 8 is an example of a form that could
be used for an exploratory survey. In such surveys,
the form should be kept simple so that collection
and processing costs are minimized. Implementationof the exploratory survey may reveal problems withsource data; for example, a number of duplicates mayHow to Conduct a Survey

be found, or it may be difficult, in practice, to identify
all units listed by a source.
2.13 Companies determined from the exploratory
survey not to be engaged in balance of payments activity should be recorded on a list of residual companies and monitored. These companies should beapproached in future exploratory surveys approximately once every five years.
2.14 A threshold can be established for including
companies in the exploratory survey—particularly
if source lists are large. However, the compiler may
wish to add units of particular significance directly tothe register, rather than including them in the exploratory survey, so that these units participate in balanceof payments collections as soon as possible. Units
below the threshold may be recorded on supplementary lists.
2.15 If units in the balance of payments register are
stored at the company group level, the register should
include some information on company group structures. This information is important if a company
is identified as potentially suitable for inclusion in
the balance of payments register. In these cases, thecompiler must know whether the company is part ofa group that has already been identified. A company
register for an international transactions reporting
system could also record information on a group basis
even though the collection (survey) may use the company as the statistical unit.
2.16 Once the balance of payments register isestablished, it should be updated and extended asnecessary. The compiler should keep abreast of developments taking place in the economy—for example,
by reading the financial news. He or she should also
be alert to any major changes among sources used for
initial identification of companies with potential balance of payments transactions. Some companies willneed to be dropped from the register as they do nothave the type of transactions/positions being measured, while others will need to be added.
2.17 The register should include unit name, address, contact officer, telephone and facsimile numbers, and area and size of balance of payments activity.
While the balance of payments register is a logical database, it need not be physically separated from otherstatistical registers. For example, some national statis-

9

tical offices maintain a single register for all surveys,
including balance of payments collections. Modelform 2 in Appendix 8 is an example of a form that
could be used to collect data to build up a register.
2.18 Periodic references to the foregoing sources
are necessary to keep the register current. Some companies may be surveyed for a variety of topics, whileothers may be surveyed for only one. Some will becovered in an ongoing survey; some only in a benchmark survey or in censuses conducted infrequently.
As a consequence, the register of companies will needto cover many of the elements of the system.
2.19 Register’s sources should be reviewed progressively, and lists of units newly identified from thesesources should be checked against the existing register. Unless more immediate action is required, information on newly identified units could be obtained byincluding them in the next exploratory survey.

Building the Survey Population
2.20 After the development of the register, thecompiler needs to produce a list of potential respondents. A decision needs to be made as early in the exercise as possible as to whether to undertake a census
or compile data from as large a sample survey as possible. In determining the reporting population, various approaches are possible. In practice, compilers inmany economies use a combination of two or three
approaches when collecting data from companies:• Census—Includes all members of the population• Partial coverage collection survey—Includes allcompanies above a certain threshold measured
in terms of their dimensions (e.g., nominal capital) or other variables (e.g., significant cross border activity)• Random sample survey—Includes companies
that are preferably selected according to rigorous
sampling procedures, with the results “grossed”
up for the whole population• Stratified random sample—Groups population
components according to the size of selected activity so that companies within different strata
have different probabilities of selection; usually,
this is a combination of the partial coverage andrandom sample options but is more sophisticatedand might produce a high level of coverage whileremaining relatively cost-effective.

10

Balance of Payments and International Investment Position Compilation Guide

2.21 A census is useful to provide the benchmark
for estimating the universe in subsequent surveys
when samples may be used. However, for most activities, it is not necessary that the compiling economy
conducts a census covering all companies as it would
be too much burden and many economies are notequipped for it. Maintaining an up-to-date information database of all additions (and deletions) of companies in the register is an essential part of keeping theestimates as accurate as possible.
2.22 For economies that have not undertaken an
enterprise survey before, it will be highly beneficial
to initially focus on the largest firms in their economies that are involved in the activity being measured,with less attention given to smaller firms. Consideration should be given to more sophisticated methods of compiling data, only after experience has been
gained in conducting the survey, such as by conducting a sample survey with estimation for nonsample
firms. Undertaking a sample survey without a goodunderstanding of the relative size and importanceof the companies being surveyed may produce datathat cannot be reliably grossed up to a universe total(more details on grossing up techniques are presented
ahead).
2.23 Grossing up the data without a census is moredifficult than conducting a survey, which requires
prior knowledge of the approximate size of the universe. The size of the universe involves two major
dimensions: the number of entities in the universe,
and the individual weight of each enterprise’s transactions/positions. As economic statistics are primarily
concerned with values, in any survey, the focus of asurvey should be on those companies with the highest weights. In this regard, it may be appropriate to
conduct a census of those companies that constitute,for example, 90 percent of the total activity/position
being targeted and to conduct a sample survey or use
models to estimate the remaining 10 percent of data.
However, it is also important to stress that there are
increasing demands for data on small and mediumsized companies (SMEs), so that, if a sample survey
is employed for those companies with the smallest
contribution to the total, it may be useful to bear thisinformation in mind when the sample is designed, sothat the detail on the SMEs is sufficiently robust foranalysis, especially at the industry level.

2.24 The exploratory survey can be used to collectbroad information on the size of balance of payments
transactions of individual transactors in the population frame. This information could be used directly toestimate the impact of units not surveyed in the partial
coverage collection, or it could be used indirectly in thecreation of a framework for a sample survey. Because
sample surveys are relatively inexpensive, they can be
conducted at frequent intervals—for example, annually or quarterly—and can provide high-quality factors
for expanding results from partial coverage surveys.
Another advantage with sample surveys is that the impact of nonresponse may be reduced. The disadvantage
with sample surveys is the presence of sampling error.
2.25 Nonetheless, nonresponse is likely to be aconcern with either a census or a sample survey. An
appropriate approach to dealing with it should be decided before the data are collected (see paragraphs
2.56–2.62), and applied in a flexible way as the survey
develops.
2.26 Large transactors must be approached eachtime a partial coverage collection is conducted. It istherefore important that the list of large transactors
be kept up-to-date. Use of partial coverage collections
can provide cost savings without much loss of quality.
If the partial coverage approach is used for balanceof payments surveys, the compiler should develop
methods to measure, at frequent intervals, the contribution to balance of payments activity of all members of the population. These measurements could bemade by using an exploratory survey, a sample surveyof smaller units, or a benchmark census.
2.27 Efficient sampling procedures seek to keep
both the number of units selected and the sampling
error to a minimum. These objectives are usuallyachieved by stratifying the population. Two factors
predominate in the determination of sampling error.
One is sample size; the larger the sample, the smaller
the sampling error. The other is the variability of theactivity being measured; the wider the dispersion of
the activity, the greater the sampling error. Population
size is not an important factor unless the populationis very small or the sample size approaches the sizeof the population. Stratification involves grouping theunits into similar size bands and selecting an independent sample in each band. Variability of units ineach band is less than the variability of the population

How to Conduct a Survey

11of units as a whole. Typically all units in the largest
size stratum are enumerated. By using stratification
techniques, the compiler essentially increases sample
size for units likely to have large absolute variability insize of activity.

Information Content of the Survey Frame
2.31 Depending on the topic, the survey frame
should be developed well in advance of the reference
date (for more complicated topics, a lead time of 12 oreven 18 months may be appropriate).

2.28 In addition to supplementing partial coverage
surveys, sample surveys can also be used as the primary survey method. For example, the compiler canuse sample surveys as the principal source of information on international trade in selected services. However, compilers in many economies choose not to usea sample survey approach to supplement partial coverage surveys. Instead, they use benchmark censuses
to establish the contribution of smaller units. These
censuses are usually costly and undertaken infrequently. Therefore, revisions to results may be made at
greater intervals. However, benchmark censuses typically provide more detailed information than otherapproaches and also establish whether some companies, which should now be included in the completely
enumerated partial coverage survey, have changed
size during intercensus periods.

2.32 The survey frame should include relevant
information on each respondent and may serve as a
tracking system for contacts with respondents. Relevant information to maintain on the respondent includes the following:

2.29 The compiler must be careful to select thecorrect population. To do so, the appropriate target
group, probably the larger companies, should be engaged through consultation meetings. These discussions should make these companies aware of the
purpose of the survey and help the statistical agency
design the survey so that it is most efficient in obtaining the desired information. Even where the statisticalagency has the legal right to collect the data, this does
not guarantee the cooperation of the target group—and cooperation is essential for good results.
2.30 In approaching the target group, the compiler
needs to know not only the concepts that are to bemeasured but also the nature of the business activities that are being surveyed. He or she also needs tobe aware of such things as the terminology used in
the business activity, the nature of the operations, record keeping, and accounting practices of the target
businesses in order to be able to communicate withthe target group and to gain their respect and cooperation. Businesses are not all structured in the samemanner. The information sought may be recorded indifferent ways in different organizations—especiallyfor large, complex companies—so some flexibility in
how the data are captured is helpful.

• Respondent name• Respondent ID code/registry or business number• Respondent address• Respondent contact person/authorized person tosign form• Designation of contact person/authorized person• Phone number of contact person/authorized person• Facsimile number and e-mail address of contact
person/authorized person• Activity code of respondent (i.e., business sectorof respondent)• Financial/fiscal year of respondent’s enterprise(i.e., accounting period).

Survey Log
2.33 A well-integrated data collection provides
comprehensive response logs containing information
about the respondent and to track response status.
Response log details• Date letters/questionnaires are sent (could be automatically entered by computer)• Date due• Response status (responded, liquidated, no response, respondent owned by another enterprise,
which will respond)• Date first response received• Date of first and subsequent follow-up and nature of discussion and outcome• Edit date and date of follow-up, if appropriate.

Computerizing the Survey Frame
2.34 Computerizing the survey frame may savethe compiler time and effort and reduce the scope

12

Balance of Payments and International Investment Position Compilation Guidefor error in dealing with survey respondents. Careful maintenance of the database is also required—for
example, updating address changes, company namechanges, and so forth. The types of issues and tasks
that national compilers need to consider include thefollowing:• Taking account of the information flows to andfrom the database (the use of charts and diagrams may be useful in the planning phase)• Taking account of the specifications required toquery the frame and to generate reports• Designing a coding structure that embodies
important defining characteristics of each respondent; this allows the sorting and analysis of
respondents and the tracking of nonresponse• Ensuring that supporting hardware/software
is sufficient for the task—for instance, that the
memory and processing capabilities are such that
response and retrieval times are acceptable• Allowing time for a thorough tryout of the system before “live” use• Backing up copies of data and software on a regular basis and storing them both on-site and at aremote location so that the files can be restored
in the event of a system breakdown• Ensuring appropriate systems security and accessauthorization• Producing thorough documentation on the system• Providing for a suitable filing system for associated papers, not least the completed survey forms.

Use of the Survey Frame
2.35 Once the survey is under way, the benefits ofan efficient computerized survey frame become apparent. The benefits accrue both at the initial stageof distributing the survey forms and at the follow-up
stage and beyond. Some of these benefits are presented
ahead to provide the compiler with an idea of the capabilities of a computerized information database.
2.36 At the initial stage, the compiler need to prepare and dispatch (either electronically or via the mailservice) the survey forms and companion transmittal
letters. The compiler can generate the mailing labelsfrom the computerized information database. At thesame time, a record can be made noting which survey

respondents will be sent a questionnaire (e.g., mailstatus to “yes”). The compiler can also perform a quality check to ensure that the right respondent is receiving the right survey form(s).
2.37 This is particularly important if the mailingincludes more than one type of survey form. If thestatistical agency has never previously conducted
such a survey, it may be useful to include with thesurvey form a postcard (or use some similar technique) that respondents use to acknowledge receipt of the questionnaire and identify the person
to contact. In this way, the compiler can quickly
identify problems and initiate follow-up action. The
national compiler should note, in the response log,
those companies that have returned the postcard.
The compiler should record the return of the completed survey form in the response log, along withthe date of receipt, and any changes required to theinformation database (for instance, name, address,etc.). The compiler could run a report to verify thatthe correct entries have been made. Thereafter, he or
she could distribute survey forms to the appropriate
person for data capture and editing.
2.38 For a number of reasons, respondents may wish
to contact the compiler using the contact information
printed on the questionnaires. The compiler should
keep a record of significant phone calls and/or correspondence (such as requests for extension of the survey
due date) either in a manual file or as a note against theappropriate record in the response log file, along witha notation on how the matter was resolved. If a survey
respondent requires more time to complete the survey
form, the compiler should note this information so that
reminders are not sent. In such a case, the response log
status is changed to indicate “in contact,” and followup procedures are suspended for a specified period. If
nothing is received from the respondent by the agreed
date, the system should indicate this and prompt thecompiler to recontact the respondent. When new copies of the survey forms are requested, a remail is initiated, and additional forms are sent to the respondent
with the follow-up procedures kept in place. The compiler must update the information database if updated
information is provided and run a check to confirm
that correct details have been stored.
2.39 At the planning stage, it is important to consider which fields will be automatically completed byHow to Conduct a Survey

the computerized system. For example, would the“date mailed” field be updated directly by the mailingprogram? Provide sufficient space for addresses andso forth; it may be appropriate to subdivide fields forsome items (e.g., distinguishing the postal code fromthe remainder of the address). Care needs to be taken
when assigning default values to fields. As a safeguard
against inputting errors, an accessible, online, separate file should be maintained that lists inputs that are
currently acceptable for a specified field, so that unacceptable inputs will be rejected—for instance, entering an “alpha” value in a field where only numericvalues are appropriate. It is also useful to have a comment area for the compiler’s use.
2.40 When the closing date for the return of completed survey forms has passed, the compiler canidentify the overdue survey respondents from theresponse log, based on the response status of “outstanding” and the mailing date, and prepare labels forenvelopes and follow-up documents.
2.41 A number of reports can be produced on aregular basis to assess the status of the survey:• Transaction reports—Lists of changes to records
sorted by name, ID code, date, and so forth.
• Response log reports—Summary counts of survey
forms mailed, received, and percentage outstanding; response log listing all survey respondents,
survey status sorted by name, ID code, and soforth.

Draft Survey Questionnaires
2.42 The model survey forms provided in Appendix 8 could serve as a starting point for the questionnaires to be used to collect the data and could be
modified for local circumstances.
2.43 The basis for much of the information to becollected—especially for financial data—should beavailable from the business accounts (such as its income and expenditure statement, the statement ofchanges in financial position, and the balance sheet),and the information collected should consider the accounting standards that respondents routinely follow
in preparing and maintaining their records. However,as some of the information needed for the international accounts is not necessarily standard for drawing up the accounts, respondents may not have ready13

access to the data, or the data may require combining (or even disaggregating) data in the underlying
management information system. Contact with respondents is, therefore, essential to ensure that there
is sufficient lead time for them to put in place the systems needed to extract the data.
2.44 Balance of payments and IIP concepts anddefinitions need to be considered when designingsurveys, and need to be carefully compared to theconcepts and definitions used in surveys. For instance, identifying residents and nonresidents may
be difficult. The compiler may need to advise surveyors on suitable questionnaire design (e.g., to ensurethat the relevant components of remittances can be
estimated).
2.45 The questionnaire should indicate under what
authority the information is being collected, that the
information is for statistical purposes, and that no
confidential information will be divulged without theconsent of the individual respondent to which this information pertains and only aggregated data will be
published. Commercial and personal data are available only to compilers of balance of payments andrelated statistics. The questionnaire and the transmittal letter should also indicate the reason that the
information is being collected. As well, the questionnaire should provide advice on how the information
is to be provided, setting out the measurement date,the currency of valuation, and the valuation principles, as well as some additional information (such as
the contact person’s details, and the industry of thecompany).

Initial Discussions
with Key Respondents
2.46 The following is an approximate timetable for
conducting a survey for the first time. Once a survey
is being conducted on a regular basis, some of thesesteps may not be necessary or the lead time may notneed to be so long.

About 12 Months before the Reference
Date of the Survey
2.47 Having identified many of the major companies to survey, the compiler needs to complete thedevelopment of an appropriate survey form, whichshould be field-tested with the key respondents to14Balance of Payments and International Investment Position Compilation Guide(1) inform them that the survey will be undertaken in
the coming year or so, and (2) to give the respondents
an opportunity to provide comments on the survey
form and to ask questions.
2.48 Having face-to-face discussions with key respondents is a very efficient way of eliminating potential reporting problems, thereby limiting the extent
of the need for follow-up and raising the quality ofthe data. As was mentioned earlier, in surveys for thecompilation of economic statistics, accounting records are central. It is often the case that accountantsand economic statisticians use the same terminology,
yet the meanings may not be the same. Equally, economic statisticians may use terms (such as “financial
intermediation services indirectly measured,” “tradecredits,” or “foreign direct investment”) that may not
be understood in accounting terminology. Such matters can be clarified and the draft reporting instructions improved.
2.49 The survey form needs to identify the agency
responsible for conducting the survey and underwhich authority the data are being collected, including sanctions for nonreporting, as relevant.

About Six Months before the Reference
Date of the Survey
Trial run, if feasible

2.50 Conducting a small-scale trial run witha sample of respondents no later than about six
months before the reference date (even earlier may
be useful) may provide many benefits, resources
permitting. It may highlight where respondents
have problems interpreting the questionnaire, andit may also serve to test the compiler’s processing
system. Highlighting and addressing problems at
this stage will reduce problems at a later, and morecrucial, stage.

About Three Months before the Reference
Date of the Survey

Training seminars, if feasible

2.52 In addition to having one-on-one or small
group meetings with some key respondents, resources
permitting, it may be useful for the compiler to arrange larger seminars for respondents. These seminars could review the survey form and identify any
areas where respondents may not be familiar (suchas the concept of residence or center of predominanteconomic interest). The point should be made that the
information provided is confidential and only aggregated data will be published. The seminars also help
public relations, and allow the compiler to advise respondents of the reasons for the survey. The seminars
should serve as another opportunity to fine-tune thequestionnaire.

About One Month before the Reference
Date of the Survey
Recontact respondents to remind themof the survey

2.53 It may help the response rate (at least, initially)
if respondents are contacted (by mail or e-mail) to remind them of the survey’s reference date and whendata are due to be reported.

During the First Month after the Reference
Date of the Survey
Mail out survey, along with acknowledgment
cards, if feasible

2.54 As part of the questionnaire that is sent to the
respondents, resources permitting, it may be helpful
to include acknowledgment cards, which respondents
should return to the compiler, to indicate that the survey has been received. Respondents should be asked
to return these cards immediately upon their receipt.
For responses that have been received, this should beentered on the information database. For those requiring follow-up, this should also be noted on theinformation database.

Advance notiﬁcation to identiﬁed
respondents, if feasible

Between One and Three Months after
the Reference Date of the Survey

2.51 About three months before the reference date,resources permitting, the compiler could send a notification to all identified respondents to advise themthat the survey will be conducted, including the reference date and a summary of the information that will
be requested.

Reporting date by respondents

2.55 It is recommended that data for an initial
survey be requested within one to three months
after the reference date, depending on the complexity of the survey and how readily respondents
can access the information from the management

How to Conduct a Survey

information systems. If it is later than this, respondents may forget to complete and return the questionnaire. After the lapse of this time, for those
respondents that have not reported, the compiler
should follow up more or less immediately after thedue date. Responses that have been received should
be recorded on the information database and madeready for processing. The information databaseshould also note cases where follow-up is needed,either due to nonresponse or due to an inquiry or
response that requires an action by the compiler.

Low Coverage or Low Response Rates
2.56 Hopefully a substantial share of the requested
data will be received within the time allotted for thecollection of the data, although there are likely to besome responses that remain outstanding, particularly
if the questionnaires were not delivered and collectedby enumerators. In order to obtain data that approximate the universe, there are various ways to estimate
for low response or low coverage rates.
2.57 For economies that have conducted surveys
previously and prepared universe estimates of positions, the previous estimates can be used as a starting
point. For example, if a survey requested data from100 companies, and by the cut-off date, returns havebeen obtained from only 70 companies, the compiler
has to estimate the data for the missing 30 companies
on the basis of the most recently reported data forthese companies. These estimations can be calculated
as follows: the changes reported by the remaining 70
companies that filed surveys are considered in relation
to the volume percentage of the companies, reported
vis-à-vis not reported, from the previous period. This
technique can be refined by analyzing the changes bysector. If there has been a history of making estimatesthat have subsequently been revised, and if there isa consistent upward or downward bias in the initial
estimates, the compiler should take this bias into account when calculating the estimates.
2.58 If the survey is not a census, the results should
be grossed up to produce a universe estimate, perhaps using an earlier benchmark survey or census as
the basis for the grossing up factors. When the next
census or benchmark survey is conducted, it may befound that the weights for the unsurveyed portionof the universe have changed. In that case, the data

15

for the periods between the census/benchmark surveys should be revised to reflect this. The change inweights of the unsurveyed companies between thetwo censuses/benchmark surveys should be introduced gradually over the period for which the data
are being revised, rather than introduce the change inweights all at once. Further details regarding grossing
up and estimating data appear in Chapter 8.
2.59 Other adjustments may include: taking account of exchange rate and price movements (especially for surveys of financial assets and liabilities);changes in financial markets that might affect interest
and other income flows; for goods and services, adjusting the nominal values to volume measures (e.g.,through price deflators) to see whether the nominal values are consistent with the volume measures;noting developments in various types of markets (suchas commodities and financial) to ensure that any
changes are adequately picked up in the underlying
data or to adjust the collection vehicle’s questions
accordingly; where there have been changes in legal
or institutional arrangements (such as changes in exchange control or opening of segments of the local
market to nonresident activity—either through direct
sales or through permission to make investments)that may result in changes in the nature of cross border transactions and positions.
2.60 Such approaches may provide reasonably good
estimates for positions data. The methods used to derive universe estimates, when responses have been lessthan 100 percent, should be described in metadata.
2.61 However, where response rates are low for asurvey that has not been previously conducted, alternative approaches may be required. For example, if
the survey requested data from 100 companies, andby the cut-off date, returns have been obtained fromonly 30 companies, in the absence of any other information about the relative importance of those that did
not respond compared with those that did, one very
crude technique may be to multiply the reported databy 100/30 to derive an estimate for the total. Althoughsuch a crude technique should be a last resort, it might
be reasonable for a sector if all companies in it tend tobe similar. If there is some indication of the size of thenonrespondents to the survey (such as based on othersurveys filed by the same companies, relative employment sizes, value added, or asset size) that could be16

Balance of Payments and International Investment Position Compilation Guide

used to gain some measure of the relative importanceof those that have not reported compared with thosethat have, then this information should be applied,even if it is only an overall indication of size. In addition, telephone contact should be made to obtain useful input from the companies that are considered to beamong the largest nonrespondents to the survey, because it is extremely important to find some method of
estimating the data for these companies as accurately as
possible. Published information such as financial statements on the Internet may be useful to impute data forlarge nonrespondent companies. If resources permit it
can be useful to inform a large nonrespondent what
imputed data for that enterprise will be included, indistinguishably, in the aggregate statistics. The enterprise might be inclined to provide better data.
2.62 Another option where positions data arebeing surveyed and there has been a low response rate
might be, in the absence of any other information, to
use the comparative weights for accumulated transactions reported by those that reported transactions forbalance of payments purposes versus those that havenot and to apply the weight for estimating missing
position data.

Editing/Validating Collected Data
2.63 If, despite all the preparations, survey respondents submit poor-quality data, much good work will
nonetheless have been accomplished, because thegroundwork will have been laid for follow-on, more
successful effort.
2.64 The compiler conducting a survey for the firsttime needs to be especially vigilant in checking data
supplied. The more experience the respondent has
in completing the survey form, up to a point, the lesslikely significant errors will be made.
2.65 The compiler can conduct editing/validation
control checks on a number of levels. The compiler
can include checks in the survey form, cross-checksurvey data against other reported data, and devise
analytical checks.
2.66 This section provides some guidance on a
range of possible checks. Nonetheless, it should beborne in mind that the more the survey form fits thedomestic circumstances, and the more that survey
respondents are consulted about what is required ofthem, then, inter alia, the greater the probability ofreceiving good-quality data. Perhaps just as important, the more groundwork that is laid, the greater
the likelihood of cooperation, if the national compiler
needs to question the respondent about reported data.

Data Editing/Validation throughthe Questionnaire Form
2.67 The sooner errors are spotted and corrected,
the better. For this reason, it is recommended that thecompiler consider devising a survey form that explicitly
includes quality control checks and/or requires extra
information, which can be used as a consistency check.
However, if extra information is required, it should
be kept to the minimum necessary, and the compiler
should be clear as to the purpose of the collection.
2.68 Among the tools that can help raise data
quality are various computer systems that can allow
for internal edits, including commercial spreadsheets; relational database management systems; andtime series database management systems. Simple
computer-checking procedures can be written toprocess reported data. Edit checks could include
some of the following:• Are the results consistent with what might be expected? (This question poses some difficulties forsurveys conducted for the first time, but the compiler may be able to use other data sources suchas those used for input to the national accounts
as an indication of what might be expected fromany given respondent.)• If total assets and liabilities (including shareholders’ funds) are to be reported, are they equal?
• Are reported transactions consistent with thereported positions data after taking account ofsuch nontransaction changes as price and exchange rate changes, write-offs, reclassifications?
To use this particular quality control check, positions data are required for points in time.
• Where income is reported, do the rates of returnon assets/liabilities make sense in light of rates
of return available for other companies in theeconomy?
• More generally, the compiler could require an official of the reporting company to certify that the
information provided is complete and accurate;
this could help ensure data quality and promote
timely reporting. Similarly, requesting the nameHow to Conduct a Surveyof a contact person helps ensure that follow-up
enquiries are efficiently directed.

Data Editing/Validation throughAnalytical Checks
2.69 The degree to which analytical checks can be
developed depends on the availability of comparable
data. If data are available, the following checks can bedevised:• If position data and flow data are independently
assembled, then an attempt could be made to reconcile these data. To do so requires considerationof effects caused by different prices, exchange
rates, reporting thresholds, and other factors likewrite-offs. Checks can be applied at the individual respondent and aggregate data levels.
• For surveys where financial position data arebeing collected for the first time, but transactions data are available, position data could becompared to transaction data. If sizeable transactions data appear opposite an economy forwhich reported positions are small, it should be
investigated.

Advantages of a Survey as a Data Source
2.70 The main advantage of using surveys as adata source may be that surveyors have more directcontrol over the information collected, because it is
not a by-product of administrative or financial systems. In economies where questions can be added toregular surveys, further useful information—also for
analytical reasons—can be obtained whenever thesurvey is administered. Therefore a survey meets therequirements for compiling the balance of payments
and IIP.
2.71 Surveys can also provide insights about forwhat purpose the transaction is used, which can be
useful information for the compiler when evaluating
the coverage of data obtained from other sources. It
also may provide information to help estimate bilateral flows, which is very useful as transactions become
increasingly complex.
2.72 Enterprise surveys of financial components
can be conducted specifying opening and closing
positions reconciled with transactions, providing inprinciple more consistent data and permitting soundconsistency checks.

17

2.73 The reporters have greater knowledge of
their transactions and are able to convey more accurate information regarding foreign counterparts andlevel of detail. Therefore enterprise surveys cause lessmisclassification.
2.74 Enterprise surveys are usually conducted by
mail, e-mail, web applications provided by the compiler, or personal interview; therefore the reporting burden and the costs for the reporter usually aremoderate.
2.75 Information on other economic activity additional to balance of payments activities can be easilycollected through surveys for analytical purposes andfor quality control.

Disadvantages of a Survey
as a Data Source
2.76 There is the possibility of sampling error,
particularly where the target population under study
is relatively rare and the number of respondents inthe sample small. The target population may not be
uniformly distributed among the whole population.
Special sampling techniques may be needed to identify them and include them in statistically representative samples.
2.77 Samples may not represent the desired target
population. The behavior of the sample could differ
from the whole population, and the resulting estimates obtained in this way will contain a bias.
2.78 There is the possibility of nonsampling error.
For example, the most significant error in informationon personal transfers is that it may be underreported,because these data are often considered sensitive by
respondents.
2.79 Conducting a survey may be costly. The costs
for the compiler of using surveys vary greatly between
economies, in line with the cost of enumeration andthe cost of obtaining technical advice. Obtaining estimates with greater precision usually requires larger
samples, which increases costs or decreases freshness. The costs of designing surveys vary according
to the sampling method used. Adding questions toan existing survey may be a cheaper method of obtaining survey data, but resulting usable sample sizes
may be small unless consecutive samples are pooled
because some cases are likely to be relatively rare.

18

Balance of Payments and International Investment Position Compilation Guide

Box 2.2 Conducting a Private Capital Flows Survey in Anglophone Africa
United Kingdom Department for International Development—DFID
Background
This case study gives a brief overview of the IMF/DFID Enhanced Data Dissemination Initiative (EDDI) for Anglophone
Africa to introduce annual private capital ﬂows surveys (PCFS) in a number of African economies. The PCFS provides direct
reporting of private sector, cross border ﬁnancial ﬂows and positions that can be used to compile the balance of payments
ﬁnancial account and related IIP account. In some cases, the survey was expanded to include current and capital accounttransactions and to collect data to meet other local stakeholder needs. However, the central focus of the PCFS was on thebalance of payments ﬁnancial account and the IIP largely because data sources in this area were poor and because of aheightened interest in the IIP.
Identiﬁcation of the Survey Population
The survey’s frame was mainly constructed by including all listed companies and consulting with the main industry
associations, large enterprise groups, and relevant government and public sector bodies (such as regulatory agencies, investment agencies, and export processing zones). The survey frames were mostly limited to private companies, althoughsome participating economies included selectively public corporations.
Approach Applied in Conducting the Survey
After the identiﬁcation of the survey population, an exploratory survey module was added by some economies to existing large frame enterprise surveys or censuses conducted for other statistical purposes. It helped expanding the frame
to a size that would support a census of companies that met a threshold of foreign liabilities and assets. The result
showed that all companies that met a threshold of foreign assets and liabilities were included in the PCFS. The compilers
decided to conduct annual surveys with periodic larger frames and surveys with smaller frames for intermediate years
not yet explored. The establishment of close working relationships by balance of payments and IIP compilers with industry associations, the local stock exchange for listed companies, and key major companies prompted the increased use of
e-mail communication and resulted in initiatives to establish the electronic reporting by some companies, although thisis at an early stage of development.
For most of the economies participating in the EDDI project, a census of companies that met a threshold of crossborder ﬁnancial ﬂows and positions was established. For others, further steps were required to ﬁnalize the survey
frame through the use of exploratory surveys as well as more detailed checks of the ITRS data for large ﬁnancial account transactions.
Data Review Process
Most economies built internal review checks into the questionnaire. Control mechanisms were used to check the reported data against previous survey responses, companies’ ﬁnancial statements, and/or annual reports to shareholders.
The latest company ﬁnancial statement and/or annual report to shareholders was requested from reporters together
with the completed questionnaire.
During the project the internal review checks built into the questionnaire were adjusted. Investigations showed thatthe process of data review was best completed if the database was designed to facilitate the data review process. Someeconomies in the project successfully established databases based on relevant data management software that provides
tools for scrolling through an entire enterprise survey to review responses on a company-by-company basis, looking forgaps and outliers that escaped the attention of those completing the data entry screens.
Grossing Up for Nonresponse
Survey response was running at over 70 percent for most economies, although some major companies were reluctant
to respond. Response had generally improved with successive surveys. Presurvey sensitization meetings helped in thisregard, as well as the publication of reports on the outcome of the surveys. Techniques for grossing up for nonresponse
had evolved in the course of the project.
Because most cross border ﬁnancing is accounted for by the major companies, estimates for nonresponding companies
were normally made on a company-by-company basis for the larger companies using available data, such as company
ﬁnancial statements, the application of carry forward techniques to completed questionnaires for the company in earlier
surveys, and the use of ITRS data for large ﬁnancing transactions. For smaller companies, grossing up techniques were applied when an earlier large-frame PCFS was conducted that allowed estimates for nonresponse to be made on the basis ofHow to Conduct a Survey

Box 2.2 Conducting a Private Capital Flows Survey in Anglophone Africa (concluded)
the earlier survey. Some economies applied different grossing up techniques for large and small companies. For example,
it is likely that for small locally owned companies portfolio investment is small and borrowing from abroad is likely to comprise trade credit received. This information was taken into account when deciding how to gross up the resulting data.
The need for grossing up also arose when successive enterprise surveys had different survey frames, or when there
were differential survey responses. Earlier experience with enterprise surveys in the region had been to conduct eachsurvey on a stand-alone basis with its own database. This was true especially where spreadsheet software was used toaggregate the reported data.
Databases were developed using appropriate data management software where it was possible to bring the resultsof successive enterprise surveys into a single database. These databases made it possible to track the data reported by asingle enterprise across all years that had been reported, which may be particularly important where there were mergers and acquisitions.
Other examples of grossing up (or down) techniques that were used concern the use of alternative data sources forbalance of payments and IIP compilation (such as ITRS or administrative data sources for investment approvals) thatcover earlier/later periods. In the case of trade credit, if a relationship is found between survey data and customs or
ITRS to obtain data for imports and exports of goods, some economies worked plans to apply grossing up techniques toestimate trade credit for periods not covered by enterprise surveys.
Incorporation of Survey Results in Balance of Payments and IIP Statistics
On data dissemination issues, the EDDI project follows the IMF’s Data Quality Assessment Framework (DQAF) for balance of payments statistics. Since the project is expected to result in substantial revision of balance of payments to ensure their consistency with directly reported IIP statistics, all participating economies were expected to follow the DQAF
guidelines on revision policy. These required that the revised data were announced by a press release that explained thereasons for the revisions being made to previously published statistics together with documentation of the details of therevisions that have resulted, and plans for the future. Publication of the resulting balance of payments and IIP data wasassessed against the DQAF standards for methodological soundness (in conformity with the BPM6, accuracy and reliability, serviceability (periodicity, timeliness, and consistency), and accessibility.
Encountered Difﬁculties• For some economies, tax records proved to be of limited use for the identiﬁcation of the survey population as
they did not provide a useful tool for identifying companies with signiﬁcant foreign liabilities and assets.
• In most cases where no foreign funding was involved, budgetary considerations limited the size of the survey
frame. In those cases, it was expected that the results could be recast using appropriate grossing up techniques. A larger-frame survey should be conducted at a later stage.
• Experience in the region in using mail, e-mail, or telephone for contacting companies or sending out company
questionnaires was disappointing. For the most part, the use of e-mail and other electronic media had proveneffective only once a working relationship with a counterpart in the company had been established, and eventhen was best suited for collecting data from the larger companies. In practice, for most economies in theregion, the preferred way of delivering company questionnaires and collecting completed questionnaires was
through the use of enumerators, particularly when the enumerator presented questionnaires to the company
physically and returned after two weeks to collect completed questionnaires.
Lessons Learned• Assuring that all large companies were captured in the survey frame was often
difﬁcult. In some cases, ITRS data for large cross border ﬁnancial transactions that were classiﬁed by type of instrument and by the name of the account holder had proven useful as a check on whether all large companies,
especially those engaged in major investment projects, were included.
• Presurvey sensitization meetings were very important to increase the response rate.
• For some economies the best way to collect data for the ﬁrst time was by sending enumerators to the companies instead of mail, e-mail, or telephone surveys.
• Well-deﬁned databases encompassing the enterprise survey data were important in increasing the quality ofbalance of payments and IIP statistics.

19

3

Speciﬁc Surveys for Balanceof Payments and International
Investment Position

Introduction
3.1 In Chapter 2, the essential elements in conducting a survey of businesses were discussed. Suchsurveys, whatever the topic, have many elements incommon. This chapter discusses surveys of businesses for several specific topics in both the balanceof payments and international investment position(IIP). While there are many elements in common, thespecific purpose of the survey and the complexity of
aspects of the balance of payments and IIP requireconsideration of particular design features.

Collections on Goods
and Services Statistics
Goods
3.2 International merchandise trade statistics(IMTS) based on administrative records are the primary data source used by compilers in most economies for the compilation of the goods item in thebalance of payments. However, in some economies
compilers use an international transactions reporting system (ITRS), and in a few economies surveys ofbusinesses are used to collect extensive data for goods.
3.3 As described in more detail in Chapter 11, there
are a number of challenges in using the IMTS alone forthe compilation of the goods component. In particular,
adjustments may need to be made for coverage, classification, valuation, and timing differences between IMTS
and trade in goods on a balance of payments basis. Targeted surveys of businesses can be used to support theadjustments from merchandise trade to trade in goods.
3.4 Similarly, if an ITRS is being used as the primary source for the compilation of trade in goods,
then targeted surveys of businesses can be used tocorrect major cases in which the change of owner-ship and the time of recording of payments do notcoincide.
3.5 In addition to the ability to serve as a primarysource for trade in goods, or informing adjustments tomerchandise trade or ITRS-based trade data, surveys
of businesses can be extended to collect information
on goods trade-related components of the balance of
payments. These components include the two service
components associated with the physical movementof goods (manufacturing services on physical inputs
owned by others, and maintenance and repair services n.i.e. [not included elsewhere]) and the financial
account component on trade credit.
3.6 Model form 4 in Appendix 8 can be used for acomprehensive survey of businesses to compile tradein goods. If used to make adjustments to merchandise
trade or ITRS statistics, the form can be tailored toaddress specific issues. Also, the compiler may need
to approach only selected importers and exporters
who trade in specific commodities or have large values or volumes of trade in order to achieve material
improvements to the balance of payments accounts.
Consignment trade

3.7 Goods shipped on consignment are an example
where the timing of a good crossing the customs border does not coincide with the change of ownership—ownership change will occur later than the time thegoods cross the border, and it is only when the goods
are sold that they should be included in the balance of
payments. It would be useful, to ensure consistency ofrecording, to obtain data on opening and closing positions of goods located abroad that were held, prior
to sale, by residents (the same applies to goods heldin the resident economy by nonresidents). In eachcase, values of goods should be deducted from theSpeciﬁc Surveys for Balance of Payments and International Investment Position

merchandise trade statistics in the period in which
they cross the border, with the value of the sale added
to the merchandise trade statistics in the period inwhich the sale occurs. Such adjustments would typically be made only when amounts involved are significant. However, the BPM6 recommends that if it
is impractical to make the adjustments as describedearlier, the goods for consignment can be recorded inbalance of payments by the time of recording in IMTS(BPM6, paragraph 10.29).
Merchanting

3.8 Merchanting transactions—that is, the purchase of goods by a resident from a nonresident combined with the subsequent resale of the same goods toanother nonresident without the goods being present
in the compiling economy—are recorded in the balance of payments as transactions in goods, classified
as merchanting. If there is a change in the physicalform of the goods during the period they are ownedby the merchant as a result of manufacturing services,then the transaction should be classified as generalmerchandise (not as merchanting). Examples of thetreatment of goods under merchanting and manufacturing services on physical inputs owned by others arepresented in Box 10.1 of the BPM6.
3.9 By the very nature of merchanting, the goods
involved do not cross the customs boundary of theeconomy of residence of the merchant. Therefore, thedata need to be collected directly from the companies
involved in merchanting. It may be possible to identify such organizations through the maintenance of abusiness register that may be maintained by the collecting body or central statistical office (if different).
Model form 5 requests data required for recording
merchanting transactions in the balance of payments.
Data should be collected on a gross basis, by commodity, and by partner economy, wherever possible.

Services
3.10 While international merchandise trade statistics are used primarily in the compilation of trade ingoods in the balance of payments, some information
may be available to assist in the compilation of trade
in services. In particular, if total values of freight andinsurance costs are available through the merchandise trade system, they can be used to estimate thepurchase of freight and insurance services, which is21

described further ahead. Similarly, information in themerchandise trade system may allow for the identification of companies who are undertaking manufacturing services on physical inputs owned by others, or
supplying maintenance and repair services. However,
it is likely that there will be only limited informationin the merchandise trade system to support the compilation of trade in services.
3.11 An ITRS can be used for the compilation of
trade in services statistics and is likely to have a goodcoverage across the full range of services. However, aswith trade in goods, there may be challenges with differences between the time of delivery of the service
and the time of payment, as well as from the “bundling” of the payment for services with payments forgoods or financial instruments. Depending on thesystem, an ITRS may also suffer from undercoverage(payments for some services (e.g., telecommunication) are made on a settlement (net) basis) and present
difficulties for classifying to the detailed service type(particularly if classifying by the extended balance of
payments services classification recommended in the
Manual on Statistics of International Trade in Services,
2010 (MSITS 2010)).
3.12 Surveys of businesses can provide the coverage across the full range of services. Model form 6 inAppendix 8 provides guidance on a comprehensive
survey of services. As with surveys of businesses for
trade in goods, the survey can also be used to collectinformation on trade credit. Capital account transactions reflecting the acquisition and disposal of
nonproduced nonfinancial assets can be difficult toseparate from charges for the use of intellectual property (services). As a consequence, the capital accounttransactions might also be collected in a comprehensive survey on trade in services.
3.13 Business surveys on services have proven successful in a number of economies. However, some
general observations are in order. Surveys of businesses are designed to collect both credit (receipts)
and debit (payments) items. On the receipts side, theparticular service provided is likely to relate closely
to the industry activity of the company approached;for example, the legal industry is most likely to provide legal services. This is less true on the import side,although there are likely to be greater associations ofcertain services with particular industries. Companies

22

Balance of Payments and International Investment Position Compilation Guide

engaged in international trade in services may bethose undertaking other international business activities. Therefore, it is possible to identify a large partof the population involved in import of international
trade in services by approaching companies involvedin a direct investment relationship, companies thathave large external assets and liabilities, and companies that have large transactions in goods.
3.14 The nature of individual services and thespecialized providers associated with those services
means that tailored forms may be appropriate. These
instances are discussed in more detail ahead.

3.17 In order to collect information on the valueof the manufacturing services, it may be preferable
to conduct a survey of businesses. The number ofcompanies that undertake processing or send goods
abroad for processing may be relatively few andcould be identified from the customs documentation.
Therefore, companies may be able to be surveyed
about processing activities in a separate survey. Modelform 7 in Appendix 8 contains a sample questionnaire
on manufacturing services on physical inputs owned
by others.
Maintenance and repair services n.i.e.

Manufacturing services on physical inputs
owned by others

3.15 It is often possible to obtain information on
manufacturing services on physical inputs owned byothers from merchandise trade statistics. Merchandise
trade statistics may provide the values of the goods
that arrive in the economy where the processing is
conducted (values of goods sent from the economy
where the goods are owned) and, after processing,the values of goods that are returned to the economy
where the goods are owned (values of goods received
back by that economy). These transactions may be
identified separately in the customs documents, but
inconsistent valuation principles may be applied between goods entering and leaving the economy. Even
where the valuation principle is the same, the difference between the import price and the export price
may not accurately reflect the manufacturing services that have been provided—for example, mostof the value of the processed goods may derive fromresearch and development undertaken by the ownerrather than the processing, or there may be holding
gains or losses on the goods while they are in the processing economy.
3.16 Nevertheless, it is important to identify themerchandise trade values of goods imported/exported to be processed without ownership changing
hands to ensure that these goods are excluded fromtrade in goods in the balance of payments. In addition, the BPM6 recommends the compilation of supplementary items on the values of goods received andreturned (for manufacturing services provided by thereporting economy) and the values of goods sent andreturned (for manufacturing services acquired by thereporting economy).

3.18 Similar to manufacturing services on physical inputs owned by others, maintenance and repair
services often involve the movement of goods acrossa customs border, although the services can also bedelivered in the economy of the owner of the goods.
3.19 Where the goods are being sent to the economy of the service provider and returned, the companies involved in the provision and purchase of theservice may be identified through customs documentation. In these cases, there may also be other movements of goods across the customs border and thecompanies may be involved in survey of businesseson trade in goods more broadly. Model form 4 (fortrade in goods) in Appendix 8 includes questions on
repair services.
3.20 Alternatively, where the services are provided
in the economy of the owner of the goods, the resident(either the provider of the services or the purchaser)
may be identified from business registers maintained
for balance of payments purposes. The general survey on trade in services (model form 6 in Appendix 8)
would capture information on the value of the services provided.
Transport services

3.21 The international transport industry has many
unique features that require special attention whenbalance of payments transactions are measured. Various modes of transport (including sea, air, rail, road,
space, pipeline, and waterways) may be employed.
A survey of businesses can be used, and may need tobe targeted by the residence of the service provider,
to measure the transactions associated with eachmode. The point-of-valuation convention adopted forSpeciﬁc Surveys for Balance of Payments and International Investment Positiontransactions in goods adds to the complexity of recording transport industry transactions in the balance of
payments. This is explained more fully in paragraphs
12.35–12.36.
3.22 As mentioned in Chapter 12, paragraph 12.27,
to record transport and associated services correctly inthe balance of payments, it is necessary to distinguishbetween owners and operators of mobile equipment,
and the compiler should, when using internationaltransport surveys, have a clear grasp of this distinction. International transport services are provided byoperators, who may not necessarily be the owners, ofthe equipment. Owners can engage in balance of payments transactions (such as operational leasing) thatare related to transportation.
3.23 A number of persons or companies may beapproached for information relevant to the balance of
payments. For services provided by equipment operated by residents, the resident company should be agood source of data. Local branches of nonresident
operators often possess, or have access to, relevant
information on the activities of their head offices.
Agents for nonresident operators may have reliable
information on services provided and expenses incurred by operators when agents are involved in theprovision of services or the payment of expenses.
A resident operator may also act as an agent for a nonresident principal, and the resident transport operator
may be approached to report in this capacity. Additionally, importers may know the value of freight paid,
and government authorities who collect various port
charges may have the relevant data.
Model forms

3.24 Model form 8 in Appendix 8 requests the typeof data that a compiler could collect from a resident
transport operator. In part A of the model form, data
items include selected transport earnings and selected
expenses incurred abroad. Three categories of passenger fares are collected: nonresidents traveling on
international routes of resident carriers (passenger
transport service credits), nonresidents traveling on
domestic routes (travel credits), and residents traveling on international routes. The last item is not a balance of payments item, but collection may be usefulfor compiling passenger fares earned by nonresident
operators (passenger transport service debits) if total

23

fares paid by residents is collected through a household survey. Four freight items are collected: freight
services on imports (which is not a balance of payments item, but as described ahead can be used withtotal freight services paid by residents on imports toderive transport debits as a residual), freight services
on exports (transport credits), freight services to nonresidents on operations in the home economy (freight
credits), and freight services on other foreign routes(transport credits, assuming that all freight services
on foreign routes are provided to nonresidents). Remaining items included in the model form pertaining to earnings cover inward mail (transport credits),
charter of vessels without crew (operational leasing
credits), and other earnings. For the last item, the balance of payments classification should be determinedby the description provided.
3.25 While all of the details that model form 8 requests for expenses are not required as standard balance of payments components, separate identification
should ensure that complete data are reported. Details
sought include expenses on fuel and provisions (goods
debits), charters of vessels without crews (operational
leasing debits), and advertising (miscellaneous business, professional, and technical service debits). Remaining expense items are included in transport. The
more detailed items may also be of analytical interest
to users of balance of payments statistics.
3.26 Part B of the form collects information on expected purchases of large equipment such as aircraft
and ships. Part C obtains data on passenger fare ticket
sales to residents on international routes.
3.27 Model form 9 in Appendix 8 seeks the typeof data that a compiler may collect from resident
companies providing goods and services to nonresident transport operators or acquiring services fromthem. Part A of the form seeks data on fuel and provisions (general merchandise credits), advertising(miscellaneous business, professional, and technicalservice credits), and a number of other items that areincluded in transport credits. The collection of detailed information should ensure complete reportingof items and may be of interest to users of balance of
payments statistics as supplementary information.
Part A collects information on transactions in which
the resident companies provide services and settle
directly with nonresident principals and information

24

Balance of Payments and International Investment Position Compilation Guideon transactions in which resident companies arrange
for services provided by other residents. Data are required on an accrual basis—that is, when the service
was provided, not when it was settled.
3.28 Part B collects data on passenger ticket sales
and passenger fare revenue, which are discussed
further ahead. Part C collects details on various
services—such as inland freight (to help estimate
freight debits) and mail (postal and courier service
debits)—provided by nonresident transport operators to residents.
3.29 In practice, model forms could be modified
so that separate forms are designed for each mode oftransport (in the case of resident operators reportingon form 8) and for each type of company being approached (in the case of form 9).
Passenger fares—travel revenue or ticket sales

3.30 The compiler has two broad options for measuring passenger fares; he or she may collect information on the basis of travel revenue or on the basis ofticket sales. In international transport surveys, dataon both ticket sales and passenger fare revenue could
be collected. This approach is adopted in model forms
8 and 9. Judgments can then be made about adjustments appropriate for deriving a reliable passenger
fare earnings estimate.
3.31 Data on passenger fare commissions paid bynonresident operators are also collected via the model
forms.
International shipping surveys

3.32 As with all surveys, the compiler must first
determine the statistical unit for which data are to becollected. For international shipping activity, this isoften more difficult than for other surveys. It is important that the place of registration not be assumed
to be the residence of the operator. Moreover, as ships
are often leased, it is important to know whether thelease is an operational or finance lease.
3.33 Lloyd’s of London has developed an international Register of Ships1 that lists a reference number,
vessel name, country of registration (or national flag),owner’s name and address, vessel description, type1

The Register of Ships is available through purchase.

(tanker, passenger cruise vessel, bulk carrier, etc.), andcapacity for each vessel. A compiler could use registerdata in surveying operations of individual vessels orin linking individual vessels to owners or other principals. In a shipping register, the name of the lessor(typically a financial institution) is usually recorded
for a vessel operated under a financial lease. It is important to recall that for balance of payments purposes, the operator (the lessee), not the legal owner,
determines the provider of the services. Other names(and addresses) recorded as owners may, in fact, benominees rather than actual owners.
3.34 It should be possible to collect accurate andrelevant data from resident companies in respect ofinternational transport transactions. There may besome complex operational arrangements, but, withclear instructions to the reporting companies involved, high-quality data can be obtained. Sometimes
it may be difficult to identify all resident operators: thecompiler may have to use an exploratory survey or attempt to identify operators from owners listed on ashipping register.
3.35 It may not be possible to obtain informationfrom nonresident principals because a statistical compiling agency is generally not in a position to require
nonresident companies to report. On the other hand,a significant part of the shipping may be handled bya small number of nonresident companies that have
local branches or agents with thorough knowledge
and records of nonresidents’ earnings and expenses;
such is most likely to be true for petroleum transport
and the transport of major export or import commodities. Agents should be defined to include branches ofnonresident companies acting on behalf of their head
office principals, resident shipping operators who act
as agents for nonresident principals, and importers
and exporters who act as agents. Overlap may occur if
more than one collection approach is adopted. For example, a petroleum importer may be both a branch ofa nonresident enterprise and an acting shipping agent
for its nonresident parent. Shipping agents could also
be asked to report details of agent fees earned fromnonresident principals.
3.36 In respect of inland freight charges earned bynonresident operators, only a small number of operators with relatively few clients (who may also act asagents for nonresident principals) may be involved.

Speciﬁc Surveys for Balance of Payments and International Investment Position

Therefore, collection of data may be a straightforward matter. If this activity is more widespread, an
exploratory survey may be needed to identify theprincipals, their agents, or companies using thefreight services.
3.37 In respect of other transport services (such as
passenger services and mail) provided by nonresident
operators, it should not be difficult to identify resident
companies acquiring these services or arranging thesale of such services on behalf of nonresident principals. In many instances, the sales office may be abranch of the nonresident operator.
3.38 Data on services (such as stevedoring and provisioning) supplied to nonresident operators may beobtained by approaching suppliers of these services—
if suppliers can distinguish between services provided
to resident operators and those provided to nonresident operators. Similarly, government authorities
could be approached to obtain details of fees charged.
Alternatively, agents for nonresident operators could
be asked to supply details of all expenses met by themon behalf of their principals.
3.39 It can be difficult to determine whether coverage of shipping operators is complete. In some
economies, all vessels that enter and leave ports canbe identified from lists supplied by port authorities
or other sources. Such lists could be used to ensurethat resident shipping companies and agents for nonresident shipping companies supply data in respectof each vessel entering and leaving a country’s waters. Resident shipping companies and agents could
report on the basis of each voyage, on the basis of aconsolidated period, or on a vessel at a single port.
When reporting is done on a consolidated basis, a listof vessels and ports visited should also be provided toensure that there is no duplication or omission in reporting. It is not unusual for different agents to act for
one vessel in different ports. Account should be takenof such arrangements when collection methodologies
are determined.
3.40 To obtain a list of vessels owned or operated
by residents and operating abroad during an entirereference period, the compiler could approach resident companies directly, consult the Lloyd’s register,or consult trade journals. A combination of suchmethods is likely to give the best results and may
identify resident operators previously unknown to25

the compiler. Lists of ships could also be employed tofacilitate sample surveys (at least for measurement ofnonresident earnings and expenses), and the use ofsuch lists could alleviate some of the reporting burden
on shipping agents. Insufficient resources may makeit difficult or impossible for the compiler to collectinformation on individual vessels. In such cases, thecompiler must provide clear reporting rules for shipping operators and agents to follow to ensure complete coverage and avoid duplication.
3.41 Circumstances arising from flags of convenience should also be noted. Most economies havelegislation on shipping registration. Some economies
frame their legislation (usually by imposing fewer
obligations and costs) to attract shipping company
registrations and thus generate fees for national authorities. The general rules for determining a service
provider’s residence (see BPM6, Chapter 4) apply toshipping transport, with the result that the country ofregistration is not a criterion for determining the residence of the provider.
International airline surveys

3.42 The statistical unit in surveys of the international airline industry is generally the airline operator,
and this fact presents no major problems. However,there may be a number of financing and leasing arrangements of which the compiler should be aware.
3.43 Financing of aircraft is often undertaken
under financial lease arrangements. The treatment offinancial leases is straightforward; therefore the compiler should have no difficulty in imputing a change ofownership to the airline operator when necessary andin measuring the transport activity appropriately. The
treatment of financial leases is discussed in Chapter
10, paragraph 10.80.
3.44 It is common for airlines to lease aircraftwithout crews from one to another for several years
at a time. These charters are usually known as “drycharters,” and the charterer is regarded as the operator. Under such arrangement, the owner of the aircraft
will be renting the plane to the dry charterer, and thisrental agreement should be recorded under “operating rentals” (as a service debit if the owner is a nonresident). The dry charterer will earn transport credits
in the balance of payments to the extent it provides
transport services to nonresidents.

26

Balance of Payments and International Investment Position Compilation Guide

3.45 “Wet charters” are akin to “voyage charters,”
and the plane is hired with a crew. In this case, thecompany responsible for the crew is regarded as theoperator, and charter payments are recorded as payments for transport services.
3.46 There are some complex joint venture arrangements in the international airline industry.
Various treatment options are outlined in Chapter 12,
paragraph 12.34. Compilers in most economies where
surveys are used to collect data on international airline
operations normally approach resident airline carriers
and the resident offices of nonresident airline carriers. Such collections tend to be relatively small andare usually readily managed. Model forms 8 and 9 canreadily be tailored specifically to the airline industry.
3.47 While coverage of normal commercial operations should be easy to maintain, coverage of private
charters and foreign military flights may be less easily measured. If these are missed, balance of payments
service credits (such as airport fees in the compiling
economy) could be understated. Monitoring such activity should be possible in conjunction with civil airline and defense authorities.
Rail transport

3.48 In Chapter 4 of the BPM6, the criteria for determining residence are set out. If these criteria aremet for a rail operator, the company is treated as aresident of the economy. When a rail company operates outside its economy and meets the definition of abranch in the economy of operation,2 a separate institutional unit is recognized and the railway system inthe second economy would be regarded as a resident
direct investment enterprise in the host economy. If
the activity of the rail company does not allow for therecognition of a branch in the economy of operation,
the rail company (in the home economy) is deemed to
be providing transport services in the host economy.
Obtaining these credits in the home economy should
be relatively straightforward as the unit is a residentof that economy. For the travel debits, however, it isless easy: in this situation, the railway company may
have an agent in the host economy that could be approached for the information.

2
The factors used for identifying a branch are presented in the
BPM6, paragraphs 4.26–4.28.

Other modes of transport

3.49 Other modes of transport include roads,
waterways, pipelines, electricity cables, and space.
3.50 When a company providing road transport
services operates in more than one economy, theseparate operations of the company in each economy
should be regarded as resident units of those economies if the criteria for recognizing a branch are generally met. Thus, it follows that it is the principal centerof economic activity that determines the residence of
the unit, not the location of the mobile equipment.
3.51 Unlike rail transport, road transport services
may be provided by many companies and, as in the
shipping industry, there may be many complex ownership and operation arrangements. Collection ofcomplete data may be difficult, in practice, becauseof the large number of companies involved, the complex ownership and operating arrangements, and thenecessity to split, for balance of payments purposes,
inland freight (the carriage of goods within an economy or to the border) and international transport(the carriage of goods outside the exporting border).
In addition, it may be difficult to distinguish services
provided to nonresidents from those provided to residents. Although it may be difficult to obtain complete
coverage of these activities, larger trucking and bus
companies could be approached, and collection of thenecessary data negotiated—these companies may beable to make a reasonably good estimate on the proportion of their business that is provided to nonresidents compared with residents. Such estimates may beeasier for these companies to make for goods transport than for passenger transport. If the breakdown
between passenger services provided to nonresidents
compared residents is too difficult for these companies to make, it may be necessary for the compiler toundertake various on-site surveys of the passengers
themselves. Data on freight rates and cost factors may
be obtained, and these could then be applied to somebenchmark data collected by national statistical authorities on road transport activity.
3.52 Transport by inland waterways should have
many features in common with rail systems; relatively
few operators are involved in most economies. However, in some economies, there are many operators,
and in these economies the compiler could explore
the possibilities for developing collection strategies

Speciﬁc Surveys for Balance of Payments and International Investment Position

similar to those described for international shippingor for road transport.
Postal and courier services

3.53 Under the BPM6, postal and courier services
are also included under transport. The data could becollected through survey of post offices; model form 6
from Appendix 8 could be used for this purpose.
Travel services

3.54 Surveys of businesses can be used to measure expenditure by residents traveling abroad (travel
debits) or travel expenditure by nonresidents in thehost economy (travel credits). Companies engaged
in providing the means to pay for travel can provide
information on both travel credits and debits, while
companies that provide travel services to nonresidents
can provide information on travel credits. Modelform 10 in Appendix 8 requests the type of information that could be collected in a survey of businessesof international travel. It is important to distinguishbetween payments for international passenger services and international travel. The former are in thebalance of payments under passenger services (part oftransportation services), while the latter are included
in travel. Surveys of businesses for travel purposes areoften used to supplement or to provide indicator series where surveys of households may be too expensive to conduct on a frequent basis.
3.55 Businesses that provide the means to pay for
travel include institutions involved in issuance ofcredit, debit, and cash cards, and traveler’s checks, wiretransfers, and the sale or purchase of foreign exchange(usually banks or similar financial institutions); travel
agents; tour wholesalers; and retailers providing prepaid or package tours. Hotels and car rental companies may also be able to provide the information for(some) credits data. Surveys of such companies could
be supplemented by estimates of travel expenditures
paid with other instruments (e.g., cash expenditure).
3.56 Many travel charges are made through credit
and debit cards, or through the use of automatic teller
machines. Data on expenditures by nonresidents inhost economies and by residents who travel abroad
and use credit, debit, or cash cards are typically available from card-issuing companies. These businesses
should be able to distinguish foreign payments and27

receipts from domestic payments and receipts. As relatively few institutions issue credit and debit cards, thiswould be a small collection sample. Part A of model
form 10 contains the type of questions that may be
asked. Data should be collected before fees payable by,or to, nonresident companies are deducted.
3.57 Wire transfers may be used by individuals andtravel organizers to pay for certain travel expenses.
However, wire transfers are also used for other purposes (such as remittances), so it is important that the
purpose of the transfer is clearly identified at the timeof the transaction so that it can be properly classified.
3.58 Caution must, however, be exercised whencredit or debit card information is used without supporting information on the transactions covered.
Payments may relate to nontravel items (such as imports of goods) in the balance of payments, and theresidence of cardholders (as perceived by the issuing company) may differ from balance of payments
definitions. Equally, some travel debits that are paidfor on credit or debit cards may be to a resident organizer or wholesaler, so there may be a need to survey
these companies as well, and ensure there is no undercounting. Moreover, if travel transactions for car
rental or accommodation, for example, are obtained
directly from these businesses, it is important thatsuch transactions be identified separately in data obtained from the credit or debit card companies so thatthese data can be adjusted to avoid double counting.
Moreover, as such data sources are based on the timeof the payment, and not necessarily the time of thetravel, it would be useful to obtain some indicator as
to when the travel took place or will take place. Nevertheless, in the absence of comprehensive surveys of
individuals traveling abroad, data on credit or debitcard expenditures can often serve as the basis for a
useful estimate of part of travel expenditure.
3.59 To measure some prepayments, including package tour payments, it is necessary to identify wholesale
and retail travel businesses. An exploratory survey could
be used to identify companies receiving (or making)payments from (or to) abroad. Companies involved inthis activity on a significant scale could be asked, subsequently, to complete a more detailed questionnaire.
Gross amounts involved should be collected so thattravel expenditure and commissions can be separately
distinguished. The compiler, in establishing a survey of28

Balance of Payments and International Investment Position Compilation Guide

wholesale and retail travel businesses, should pay particular attention to reporting rules so that no overlap or
duplication of reporting occurs. Part C of model form 10
requests the type of information that could be collected.
3.60 With the increased use of credit, debit, andcash cards, traveler’s checks are less important thanthey used to be. Nonetheless, they remain importantfor some individuals traveling abroad. Part B of model
form 10 seeks data that could be collected on the valueof the following:• Traveler’s checks (less refunds to original purchasers) that are issued abroad by nonresident
companies on behalf of your enterprise and usedduring the recording period (travel credits)• Traveler’s checks that are issued by resident companies to residents and presented for collection
by nonresident banks (travel debits)• Traveler’s checks (less refunds) that are issued
to residents by resident companies on behalf ofnonresident banks (travel debits)• Traveler’s checks that are sent for collection tononresident banks—that is, traveler’s checks issued abroad by nonresident institutions and purchased by resident companies from nonresident
individuals traveling in the compiling economy(travel credits).
3.61 Gross data should be collected for all payment
means, and fees and commissions should be collected separately and treated as financial services fortraveler’s checks, wire transfers, credit, debit, and cash
card transactions.
3.62 Businesses that issue traveler’s checks canidentify the name of the bank or other agent—andthe economy—that sold the traveler’s checks (this information is encoded in the number printed on thetraveler’s check) and any refunds on unused checks.
These businesses are also able to identify (or estimate)
the value of traveler’s checks used in each economy.
Companies acting as traveler’s check sales agents for
issuing companies have information on locations at
which traveler’s checks are sold and on details about
refunds. Staff of banks accepting traveler’s checks
know the values of checks sent abroad for collection by the banks. Therefore, for balance of paymentscompilation purposes, it should be possible to identify
flows associated with traveler’s checks.

3.63 As relatively few institutions (mostly banks)
issue and redeem or buy and sell traveler’s checks, data
should be readily available. The compiler, in establishing a survey of traveler’s check transactions, should
pay particular attention to inclusion and exclusion
rules so that all transactions are reported without duplications. The resident transactor undertaking thesettlement with the nonresident party is usually designated as the reporting company in model forms.
3.64 Business surveys may also be used to measure actual travel services provided. Some compilers collect, from hotels and tourist resorts, data on
numbers of nonresident individuals staying at theseestablishments, numbers of nights spent, and expenditures on accommodations and food. If conducting
a regular survey to collect these data is not possible,
it may be possible to obtain the numbers of visitors,
hotel guests, and so forth and use an average from abenchmark survey (conducted annually) to estimate
the subannual transactions. However, in economies
with large seasonal travel flows, or with changes inthe types of travelers in different seasons, an annual
survey may mask important seasonal differences. In
those instances, subannual surveys should be conducted whenever possible, or, if regular subannual
surveys are not possible, it is preferable to conduct abenchmark survey once every three to five years that
captures seasonal variations.
3.65 In economies where nonresident individuals
stay at relatively few such establishments, a survey ofhotels may be a good data source. A survey of businesses can also be used to obtain data from other establishments likely to provide significant services tononresident travelers. Such services may be provided
by restaurants, car rental companies, tour and transport operators, casinos, entertainment centers, andso forth. To obtain a profile of nonresident travel expenditure, the survey could collect the total value ofservices provided or partial information, which could
be combined with information from other sources tomeasure travel credits. Part D of model form 10 contains the types of questions that could be used. The
rules about which businesses should report must be
clearly understood so that no overlap or duplication occurs. In the model form, data are collected on
the basis of the institution that receives the payment
rather than the institution that provides the service.

Speciﬁc Surveys for Balance of Payments and International Investment Position

3.66 Expenditure by resident employees working abroad or nonresident employees working in thecompiling economy should be treated as travel. These
expenditures may best be obtained through surveys
of households (see this chapter, Collections from Persons and Households).
Construction services

3.67 Construction covers the creation, management, renovation, repair or extension of fixed assets in the form of buildings, land improvements ofan engineering nature, and other constructions suchas roads, bridges, and dams. It also includes related
installation and assembly work, site preparation andgeneral construction, and specialized services such as
painting, plumbing, and demolition.
3.68 Model form 11 could be used for collecting
information on construction abroad and construction in the compiling economy. The former covers theconstruction work for nonresidents by residents andthe goods and services acquired from the economy inwhich the construction activity is being undertaken,
from the economy of the construction company, andfrom a third economy. The latter includes construction
work for residents by nonresident construction companies, and goods and services acquired in the compiling
economy by the nonresident construction companies.
3.69 The form also collects data on both short-termand long-term construction projects. However, only
the short-term projects should be included under services, while long-term projects should be treated as
foreign direct investment.
Insurance services

3.70 International insurance transactions include
insurance placed abroad by agents and brokers, otherinsurance placed directly abroad, insurance received
from abroad, reinsurance received from abroad, andreinsurance placed abroad. Also, it may be desirable
to distinguish between insurance on goods, other casualty insurance, and life insurance. See Appendix 2,“Insurance Transactions and Positions,” for a discussion on how to classify a transaction in insurance into
the service, income, transfer, and financial accountcomponents.
3.71 Model form 12 in Appendix 8 requests datathat could be collected from businesses and used for29

compiling insurance services and related balance of
payments items. Part A of the form contains premiumand claim items that may be collected from resident
insurance companies.
3.72 In addition to the claims and premiums information that can be used to estimate the insurance services, model form 12 provides examples of
the information that could be collected to assist thecompilation of claims on technical reserves, incomeon technical reserves (and premium supplements),
current transfers (secondary income), and capitaltransfers.
3.73 A list of insurance companies conducting both
insurance and reinsurance business should be available
from the authority that issues the licenses for insurance businesses to operate. Resident insurance companies should report details of premiums and claims
in respect of business obtained from abroad and inrespect of international reinsurance flows. In addition,these companies may be asked to report separate details of premiums and claims in respect of insurance
written by them on imports (see paragraph 3.79).
3.74 In regard to goods imports, data regarding
premiums on insurance placed directly abroad anddata on associated claims may be collected by approaching importers. However, if such data are notavailable from importers, an alternative is to deductfrom the estimate of total insurance premiums onimports those insurance premiums on goods imports
paid to resident insurance companies and collectedfrom these businesses. In other words, for goods imports, insurance premiums paid to nonresidents canbe derived as a residual. To obtain data on claims received by importers when data from importers are notavailable, data on premiums received and claims paidby resident insurance companies on goods imports
could be used to calculate a claims to premiums ratiothat can be applied to insurance placed with nonresidents. Care needs to be taken to avoid sample bias—that is, where the nature of the goods being insured isrelated to whether the imports are insured with resident insurers or nonresident insurers.
3.75 Data on insurance that covers insured items
other than goods imports and is placed directly
abroad could be obtained from a broad survey ofbusinesses. Branches and subsidiaries of nonresident companies (direct investment enterprises) are30

Balance of Payments and International Investment Position Compilation Guide

more likely to place insurance abroad than are othercompanies—especially when the head office of a multinational enterprise group takes out a global policyor self-insures and recoups premiums from subsidiaries and branches. Similarly, resident companies withforeign operations that do not meet the criteria forrecognition of a branch may insure in the economy
where the activity is taking place.

coverage may be increasing, especially through theuse of the Internet. Therefore, the compiler may needto undertake periodic household surveys (see thischapter, Collections from Persons and Households)
or use bilateral data, if available, from those economies where residents place most of their direct insurance coverage.

3.76 Care should be taken in the case where a multinational company self-insures. In this case, claims of
the insured companies on their insurer (and the related income flows) are treated as direct investment
debt instruments (asset/liability) (and direct investment income flows). Sometimes the direct investor—
that is, the insurer—will reinsure with an unaffiliatedreinsurer.

Freight and insurance services on imports

3.77 Insurance agents and brokers are usually required to register with insurance authorities; therefore, a list of these businesses should be readily
available from official sources. An exploratory form
could be used to identify agents and brokers placing
insurance abroad. These agents and brokers would
then be asked to complete a more detailed questionnaire. Data required on insurance transactions include
details of premiums paid abroad and claims received.
On model form 6, in the section to be completed byagents and brokers, insurance on goods imports is required as a separate category to ensure that it is notdouble counted. Insurance agents and brokers may
satisfactorily report data on premiums paid abroad,but they may not be aware of claims received by residents. Therefore, the compiler may wish to adjust theclaims data accordingly. The adjustment should bemade in consultation with agents and brokers or byusing a claims-to-premiums ratio that domestic insurers think is appropriate. If such an adjustment ismade, the compiler should ensure that allowance ismade for any claims information collected directlyfrom the recipient—allowance should be made to
the extent that such claims relate to premiums paid
through resident agents.
3.78 Households may obtain insurance coveragefor both life and nonlife from insurance companies
abroad. Some may be obtained through agents or
brokers in the resident economy, and the data may
be obtained through a survey of businesses of thesecompanies. However, households may obtain suchcoverage directly from nonresident providers. Such

3.79 Data for freight and insurance on imports
may be required for a number of balance of payments purposes. If imports are recorded on a c.i.f.
basis in merchandise trade statistics, data on freightand insurance are necessary to adjust imports to an
f.o.b. basis. Data also are necessary to estimate freightand insurance premiums paid to nonresident insurers. A common practice is to collect data on resident
carrier earnings from freight services on imports anddata on insurance premiums paid to resident insurance companies on imports; to deduct these amounts
from estimates of total freight services and insurance
on imports; and thereby derive the residual figure for
freight services and insurance premiums attributable
to nonresidents. See Appendix 2 for a further discussion on how to classify a transaction in insurance into
the service, primary income, secondary income, andfinancial account components.
3.80 This process requires information on the total
payments for freight services and insurance on imports. It may be that customs documentation includes
both c.i.f. and f.o.b. valuations on imports, allowing
the calculation of total freight and insurance. Alternatively, an across-the-board survey of importers can beused to obtain the total value of freight and insurance.
Importers may be asked to supply data on imports onan f.o.b. (or c.i.f.) basis and on freight and insurancecomponents separately. These data may be requested
for total imports or, preferably, for imports at eachcommodity level. Part B on import of goods in model
form 4 in Appendix 8 includes questions on the valueof freight services and insurance. A survey of importers could also seek information on how much of thefreight services and insurance was paid to resident
transport and insurance companies.
3.81 The survey of importers does not need to be
conducted every quarter or even every year. Ratios canbe calculated between the value of the goods being imported (either on a c.i.f. or f.o.b. basis) and the charges

Speciﬁc Surveys for Balance of Payments and International Investment Position

for freight services and insurance. These ratios canthen be applied to the value of similar goods in subsequent periods. A benchmark survey of importers
conducted every three to five years may be sufficientif there is a relative degree of stability in the origin andcomposition of the imports. A subsample may be conducted on a more frequent basis in order to determine
whether the ratios have changed significantly fromthose calculated from the benchmark survey.
3.82 If a comprehensive survey is not possible, thecompiler could still approach selected companies toobtain data on freight and insurance for certain commodities, particularly those where charges may be aconsiderable part of the c.i.f. value (e.g., insurance
charges on petroleum). Even though the compiler may
still have to estimate freight and insurance for somecommodities, the scope of estimation is reduced.
Pension services

3.83 International pension services include residents receiving pension services from nonresident
pension fund operators, and services provided bydomestic pension funds. Services are delivered continuously by pension funds (usually associated with
employment), contributions are received, benefits
are paid, and assets are invested and managed. As
the recipient of pension services is always an individual, information will generally be difficult to collect through a survey of businesses for services debits.
“Employment-Related Pension Schemes and Social
Security Schemes” of Appendix 2 contains a discussion of the classification of the various transactions
associated with employment-related pensions andsocial security.
3.84 Model form 13 in Appendix 8 requests datathat could be collected from businesses and used forcompiling pension service credits and related balanceof payments items. Parts A and B of the form containitems for contributions to the fund and pensions paidout of the fund. The model form can also be used tocollect data on secondary income, the technical reserves of the pension fund, and income on the technical reserves.
3.85 A list of pension fund operators should beavailable from the authority responsible for licensing pension funds to operate. Resident pension fundcompanies should report details on contributions to
the fund, reserves held by the fund, and pensions paid

31

out of the fund to nonresidents. Fund operators may
be readily able to identify nonresident members of thefund based on the addresses of the members.
3.86 There are some instances where there may bedomestic sources of information on pension service
debits. In some economies, it is possible for individuals to determine their own pension funding arrangements. In these cases, agents and brokers may offer
services including the placement of funds abroad—these agents do not take the liability onto their own
books, but rather arrange for the funds to be invested
by nonresident pension funds. In model form 6,
Part D requests information from brokers and agentson the placement of monies in nonresident pension
funds. Regardless, the agents and brokers are unlikely
to be aware of the pension benefits being paid out of
the fund, so they are only a partial source of information. Ratios from domestic funds or actuarial assumptions can be used to estimate positions in thefund and pensions paid from the fund based on thepartial information.
3.87 Branches and subsidiaries of nonresident
companies (direct investment enterprises) may require
their employees to participate in specific funds associated with the multinational group. Information may
be available from the branches or subsidiaries on their
payments to the foreign pension funds. While information on pensions paid out of the fund may not beknown by the local enterprise, the estimation of pensions and positions in the fund may be based on local
ratios or actuarial assumptions.
3.88 Most individuals who have claims on nonresident pension funds will deal directly with the fund or
through a nonresident employer (in the case of somepayments into the fund). Information on payments into
the fund, claims on the fund, and pensions received may
be available only from the resident, who, in this case,is an individual. Therefore, the compiler may need toundertake periodic household surveys (see this chapter, Collections from Persons and Households). Alternatively, the compiler may use bilateral data, if available,from those economies where residents are employed.
Financial services

3.89 Financial services include explicit fees associated with loans, deposits, asset management, brokerage fees, and the implicit service charge on loans
and deposits reflected in the difference between the32

Balance of Payments and International Investment Position Compilation Guide

interest charged (earned) on loans (deposits) and areference rate, such as interbank rate. This implicit
service charge is known as financial intermediation
services indirectly measured, or financial intermediation services indirectly measured (FISIM).
3.90 Explicit fees are generally associated with external financial assets or liabilities. Model form 17 inAppendix 8 is an example of a comprehensive surveyof financial claims and liabilities to nonresidents. This
form also requests data on the explicit fees charged between residents and nonresidents on these positions.

3.91 Appendix 3 provides a discussion of the estimation of FISIM.
Other services

3.92 Collection of data on services such as communications, construction, certain financial services, computerand information services, royalties and fees, other businessservices, and other personal services are included underother services. The classification of services according to
the BPM6 appendix is presented in Table 3.1, along withthe more detailed Extended Balance of Payments Services

Table 3.1 Classiﬁcation of Services (continued )Balance of Payments (BPM6)1

Extended Balance of Payments Services Classiﬁcation(EBOPS—MSITS 2010)

1.A.b.1 Manufacturing services on physicalinputs owned by others
1.A.b.1.1 Goods for processing in reporting
economy1.A.b.1.2 Goods for processing abroad

1 Manufacturing services on physical inputs owned by others
1.1 Goods for processing in reporting economy
1.2 Goods for processing abroad

1.A.b.2 Maintenance and repair services n.i.e.

2 Maintenance and repair services n.i.e.

1.A.b.3 Transport
1.A.b.3.1 Sea transport
1.A.b.3.1.1 Passenger
Of which 1.A.b.3.1.1.1 Payable by border,
seasonal, and other short-term workers
1.A.b.3.1.2 Freight
1.A.b.3.1.3 Other
1.A.b.3.2 Air transport
1.A.b.3.2.1 Passenger
Of which 1.A.b.3.2.1.1 Payable by border,
seasonal, and other short-term workers
1.A.b.3.2.2 Freight
1.A.b.3.2.3 Other
1.A.b.3.3 Other modes of transport
1.A.b.3.3.1 Passenger
Of which 1.A.b.3.3.1.1 Payable by border,
seasonal, and other short-term workers
1.A.b.3.3.2 Freight
1.A.b.3.3.3 Other
1.A.b.3.4 Postal and courier services
For all modes of transport:
1.A.b.3.0.1 Passenger
Of which 1.A.b.3.0.1.1 Payable by border,
seasonal, and other short-term workers
1.A.b.3.0.2 Freight
1.A.b.3.0.3 Other

3 Transport
Alternative 1: Mode of transport
3.1 Sea transport
3.1.1 Passenger
Of which 3.1.1.1 Payable by border, seasonal, and other shortterm workers
3.1.2 Freight
3.1.3 Other
3.2 Air transport
3.2.1 Passenger
Of which 3.2.1.1 Payable by border, seasonal, and other shortterm workers
3.2.2 Freight
3.2.3 Other
3.3 Other modes of transport
3.3.1 Passenger
Of which 3.3.1.1 Payable by border, seasonal, and other shortterm workers
3.3.2 Freight
3.3.3 Other
3.4 Postal and courier services
3.5 Space transport
3.6 Rail transport
3.6.1 Passenger
3.6.2 Freight
3.6.3 Other
3.7 Road transport
3.7.1 Passenger
3.7.2 Freight
3.7.3 Other
3.8 Inland waterways transport
3.8.1 Passenger

Speciﬁc Surveys for Balance of Payments and International Investment Position

33

Table 3.1 Classiﬁcation of Services (continued )Balance of Payments (BPM6)1

Extended Balance of Payments Services Classiﬁcation(EBOPS—MSITS 2010)
3.8.2 Freight
3.8.3 Other
3.9 Pipeline transport
3.10 Electricity transmission
3.11 Other supporting and auxiliary transport services
For all modes of transport:
Alternative 2: What is carried
3a.1 Passenger
Of which 3a.1.1 Payable by border, seasonal, and other short-term
workers
3a.2 Freight3a.3 Other
3a.31 Postal and courier services
3a.32 Other

1.A.b.4 Travel
1.A.b.4.1 Business
1.A.b.4.1.1 Acquisition of goods andservices by border, seasonal andother short-term workers
1.A.b.4.1.2 Other
1.A.b.4.2 Personal
1.A.b.4.2.1 Health-related
1.A.b.4.2.2 Education-related
1.A.b.4.2.3 Other
For both business and personal travel:
1.A.b.4.0.1 Goods
1.A.b.4.0.2 Local transport services
1.A.b.4.0.3 Accommodation services
1.A.b.4.0.4 Food-serving services
1.A.b.4.0.5 Other services
Of which 1.A.b.4.0.5.1 Health services
Of which 1.A.b.4.0.5.2 Education services

4 Travel
4.1 Business4.1.1 Acquisition of goods and services by border, seasonal andother short-term workers
4.1.2 Other
4.2 Personal
4.2.1 Health-related
4.2.2 Education-related
4.2.3 Other
Alternative presentation for travel (for both business andpersonal travel):
4a.1 Goods
4a.2 Local transport services
4a.3 Accommodation services
4a.4 Food-serving services
4a.5 Other services
Of which 4a.5.1 Health services
Of which 4a.5.2 Education services

1.A.b.5 Construction
1.A.b.5.1 Construction abroad
1.A.b.5.2 Construction in the reporting economy

5 Construction
5.1 Construction abroad
5.2 Construction in the reporting economy

1.A.b.6 Insurance and pension services
1.A.b.6.1 Direct insurance
1.A.b.6.2 Reinsurance
1.A.b.6.3 Auxiliary insurance services
1.A.b.6.4 Pension and standardized guarantee
services

6 Insurance and pension services
6.1 Direct insurance
6.1.1 Life insurance
6.1.1 a Gross life insurance premiums receivable (credits) andpayable (debits)
6.1.1 b Gross life insurance claims receivable (credits) and payable(debits)
6.1.2 Freight insurance
6.1.2 a Gross freight insurance premiums receivable (credits) andpayable (debits)
6.1.2 b Gross freight insurance claims receivable (credits) andpayable (debits)
6.1.3 Other direct insurance
6.1.3 a Gross other direct insurance premiums receivable (credits)and payable (debits)
6.1.3 b Gross other direct insurance claims receivable (credits)and payable (debits)
6.2 Reinsurance

34

Balance of Payments and International Investment Position Compilation Guide

Table 3.1 Classiﬁcation of Services (continued )Balance of Payments (BPM6)1

Extended Balance of Payments Services Classiﬁcation(EBOPS—MSITS 2010)
6.3 Auxiliary insurance services
6.4 Pension and standardized guarantee services
6.4.1 Pension services
6.4.2 Standardized guarantee services

1.A.b.7 Financial services
1.A.b.7.1 Explicitly charged and otherﬁnancial services
1.A.b.7.2 Financial intermediation services
indirectly measured (FISIM)

7 Financial services
7.1 Explicitly charged and other ﬁnancial services
7.2 Financial intermediation services indirectly measured (FISIM)

1.A.b.8 Charges for the use of intellectual
property n.i.e.

8 Charges for the use of intellectual property n.i.e.
8.1 Franchises and trademarks licensing fees
8.2 Licenses for the use of outcomes of research anddevelopment
8.3 Licenses to reproduce and/or distribute computer software
8.4 Licenses to reproduce and/or distribute audio-visual and related
products
8.4.1 Licenses to reproduce and/or distribute audio-visual products
8.4.2 Licenses to reproduce and/or distribute other products

1.A.b.9 Telecommunications, computer, andinformation services
1.A.b.9.1 Telecommunications services
1.A.b.9.2 Computer services
1.A.b.9.3 Information services

9 Telecommunications, computer, and information services
9.1 Telecommunications services
9.2 Computer services
9.2.1 Computer software
Of which 9.2.1 a Software originals
9.2.2 Other computer services
9.3 Information services
9.3.1 News agency services
9.3.2 Other information services

1.A.b.10 Other business services
1.A.b.10.1 Research and development services
1.A.b.10.2 Professional and management
consulting services
1.A.b.10.3 Technical, trade-related, and otherbusiness services

10 Other business services
10.1 Research and development services
10.1.1 Work undertaken on a systematic basis to increase thestock of knowledge
10.1.1.1 Provision of customized and non-customized researchand development services
10.1.1.2 Sale of proprietary rights arising from research anddevelopment
10.1.1.2.1 Patents
10.1.1.2.2 Copyrights arising from research and development
10.1.1.2.3 Industrial processes and designs
10.1.1.2.4 Other
10.1.2 Other
10.2 Professional and management consulting services
10.2.1 Legal, accounting, management consulting and public
relations services
10.2.1.1 Legal services
10.2.1.2 Accounting, auditing, bookkeeping, and tax consulting
services
10.2.1.3 Business and management consulting and public
relations services
10.2.2 Advertising, market research, and public opinion polling
services
Of which 10.2.2.1 Convention, trade-fair and exhibition
organization services

Speciﬁc Surveys for Balance of Payments and International Investment Position35

concluded )Table 3.1 Classiﬁcation of Services (continued
Extended Balance of Payments Services Classiﬁcation(EBOPS—MSITS 2010)

Balance of Payments (BPM6)1

10.3 Technical, trade-related, and other business services
10.3.1 Architectural, engineering, scientiﬁc, and other technicalservices
10.3.1.1 Architectural services
10.3.1.2 Engineering services
10.3.1.3 Scientiﬁc and other technical services
10.3.2 Waste treatment and de-pollution, agricultural andmining services
10.3.2.1 Waste treatment and de-pollution
10.3.2.2 Services incidental to agriculture, forestry and ﬁshing
10.3.2.3 Services incidental to mining, and oil and gas extraction
10.3.3 Operating leasing services
10.3.4 Trade-related services
10.3.5 Other business services
Of which 10.3.5.1 Employment services, i.e., search, placement,
and supply services of personnel
1.A.b.11 Personal, cultural, and recreational
services
1.A.b.11.1 Audiovisual and related services
1.A.b.11.2 Other personal, cultural, andrecreational services

11 Personal, cultural, and recreational services
11.1 Audio-visual and related services
11.1.1 Audio-visual services
Of which 11.1.1.a Audio-visual originals
11.1.2 Artistic related services
11.2 Other personal, cultural, and recreational services
11.2.1 Health services
11.2.2 Education services
11.2.3 Heritage and recreational services
11.2.4 Other personal services

1.A.b.12 Government goods and services n.i.e.

12 Government goods and services n.i.e.
12.1 Embassies and consulates
12.2 Military units and agencies
12.3 Other government goods and services n.i.e.

1.A.b.0.1 Tourism-related services in travel andpassenger transport

4.0 Tourism-related services in travel and passenger transport
C.1 Audio-visual transactions
Of which C.1.1 Licenses to use audio-visual products
C.2 Cultural transactions
C.3 Computer software transactions
Of which C.3.1 Licenses to use computer software products
C.4 Call-centre services
C.5 Total services transactions between related companies
C.6 Total trade-related transactions
C.7 Environmental transactions
C.8 Total education services

1

Italicized items are supplementary items.

classification described in the MSITS 2010. The transactions
in services that can be collected by survey of businesses
are listed in model form 6 in Appendix 8, and the notes inthat form describe the services that should be reported.
3.93 The design of surveys of services should follow the description provided in Chapter 2. While athorough approach to population identification isrequired, such as through a screening question in a
general questionnaire sent to all businesses on a business register, or through taxation records (where suchdata sharing agreements exist between the agency
in charge of compiling balance of payments and IIP
statistics and the tax authorities), a list of the types of36

Balance of Payments and International Investment Position Compilation Guide

companies just mentioned is a useful starting point.
“Creating or Updating a Survey Frame” in Chapter 2
discusses population identification more thoroughly.
There are some areas in which the boundaries of international service activity must be established. For
example, the boundary for construction services is acomplex issue, which is discussed in Chapter 12.
Foreign embassies

3.94 Transactions between foreign embassies andtheir host economies are balance of payments transactions. These transactions may take the form of employment of local workers and purchases of goods andservices. The purchases of goods and services by staffof the embassy and assets and liabilities (e.g., bank accounts) in the host economy will also generate balance of payments transactions and IIP.
3.95 Model form 14 in Appendix 8 requests datathat could be collected from embassies and used forcompiling the trade in goods and services, primary
income, secondary income (current transfers), capital transfers, and financial account transactions associated with the presence of the embassy in the hosteconomy. Similar information should be available for
official expenditure of the embassies of the compiling
economy from official records of the external affairs
ministry.

Collections on Primary and Secondary
Income Statistics
3.98 The primary and secondary income components cover a range of balance of payments
transactions. Some of these transactions may be
associated with other transactions in the balance of
payments (e.g., social contributions in the secondary
income account being associated with compensationof employees in the primary income account, or investment income being associated with transactions
and positions in external assets and liabilities). These
relationships can assist in identifying the companies
that need to be covered by surveys on primary andsecondary income statistics, and can also guide theinformation to be requested in the surveys.

Transactions Associatedwith Foreign Workers
3.99 Business surveys of employers and employment
agencies engaging foreign workers, as well as data available from banks, may be used as sources to measure thebalance of payments transactions associated with foreign workers. Foreign workers include border workers(those crossing a border from a residence in one economy to a place of employment in another economy on adaily or other short-term regular basis), seasonal workers (undertaking seasonal work often associated with
agriculture or tourism), and short-term migrants (e.g.,
on working holidays of less than one year’s duration).
They also include foreign workers that are employed
under long-term contracts (more than one year) andare considered residents of host countries.

3.96 Foreign embassies do not come under thejurisdiction of the host economy, so that legislationcompelling businesses and individuals to respond tostatistical requests will not apply to the collection ofthese data. Good response rates from embassies will
require the development of good relationships andsound form design to ease the reporting burden. However, in practice often it is not feasible for the compiler
to establish open relationship with foreign embassies,
and the compiler should consider other approaches
for compiling data on the foreign embassies’ transactions in the compiling economy (e.g., applying ratio ofcosts per embassy staff ).

3.100 The residence of workers needs to be carefully ascertained, particularly given that these individuals may have close links to both the economy inwhich they work and other economies where they
maintain residences. Paragraphs 4.116–4.120 of the
BPM6 discuss the criteria for identifying the residence of households, and paragraph 4.125 discusses
the residence of cross border workers in particular.

3.97 Care needs to be taken to ensure that the distinction between employing local individuals as staff
and contracting local services is applied correctly.
Paragraphs 11.12–11.13 of the BPM6 list the criteria
for determining whether an individual is to be treatedas an employee or as a self-employed person providing services.

3.101 In designing a survey of employers, the compiler should take into account the scope and nature of
information known to employers. Total wages, salaries, duration of the employment contracts, and supplements should be known. Employers probably do
not know workers’ actual expenditures in the domestic economy or amounts remitted to home economies.

Speciﬁc Surveys for Balance of Payments and International Investment Position

Some employers may be able to provide informationon actual cash remittances. Any approach to collecting information from employers should request dataon values of wages, salaries, and supplements and on
numbers of foreign workers employed on a short- andlong-term basis. Such data may be used in the development of a profile of foreign workers, which would
be helpful for estimating transactions that are of interest to the compiler.
3.102 Employers should also be aware of pension
fund arrangements, where appropriate, for their foreign employees. Employers’ contributions to thesefunds on behalf of short-term foreign workers together
with employees’ contributions should be included in
the compensation of employees. The contributions
paid by the employers and employees to both pension
schemes and social security schemes are recorded as
current transfers; however, for the former they are also
recorded in the financial account as pension entitlements while for the latter no financial account entries
need to be registered (see BPM6, paragraphs 12.37–
12.39). In both cases, the social security benefits are recorded in the secondary income account as payable (inthe economy of social security fund) and as receivable(in the economy of employee). Taxes withheld fromthe wages and salaries of foreign workers are recorded
as current taxes in the secondary income account.
3.103 Taxes withheld from the wages and salaries
of short-term foreign workers should be available tobe collected from the employers; however, the crossborder pension services are better captured from theresident pension funds.
3.104 Care needs to be taken to ensure that thedistinction between employing short-term foreign
workers and contracting foreign services is appliedcorrectly. Paragraphs 11.12–11.13 of the BPM6 list thecriteria for determining whether an individual is to betreated as an employee or as a self-employed person
providing services. In particular, responsibility for thepayment of social contributions is one indicator of
employment—if the resident business is responsible
for the social contributions, it is likely that the nonresident is a foreign worker, whereas if the nonresident is
responsible for social contributions, it is more likelythat the nonresident is self-employed and the resident
business is contracting services (with payments to berecorded as trade in services).

37

3.105 Domestic banks may, in special circumstances,have information on foreign workers that could be usedin calculating compensation of employees and personaltransfers (e.g., workers’ remittances) and changes innonresident bank deposits. Another potential source of
information is employment agencies, which may be responsible for recruiting foreign workers to be employedin the domestic economy. Any approach to collecting
information from employment agencies should request
data on values of wages and salaries, duration of the contracts, remittances and the like, and numbers of foreign
workers employed. If employment agencies do not haveactual data, staff may know numbers of workers placed,
employment conditions, contractual arrangements, andso forth, and such information may be useful for constructing a data model on foreign workers.
3.106 Business surveys may also be used to measure
the balance of payments transactions of residents working abroad. A number of sources could be approached
for information. The compiler could survey employment agencies that recruit residents to work abroad.
The amount of detail and the scope of information
possessed by such organizations may vary, but data on
wages and salaries paid in cash and in kind, durationof the employment, living expenses, and remittances
to home economies could be available. Data may also
be available by industry and economy. Informationon the numbers of workers involved and, if possible,
data on their wages and salaries should be collected.
Adjustments may have to be made to ensure that, inthe overall measure of wages and salaries, employers’
contributions to insurance and pension schemes areincluded. In some instances, industry associations may
have information on the numbers of employees working abroad and their approximate remuneration.
3.107 Such aforementioned surveys of businesses
may also need to be conducted in conjunction with periodic household surveys (see this chapter, Collections
from Persons and Households). Such household surveys could capture not just the amounts of compensation of employment but also expenditures by resident
workers abroad (from resident households) or by nonresident workers in the resident economy where theemployees have an abode without it becoming theirpredominant center of economic interest. Such expenditures should be classified as travel. The survey
should also cover remittances sent abroad by workers
that are not citizens of the compiling economy who

38

Balance of Payments and International Investment Position Compilation Guide

reside there for one year or more (residents of hosteconomy), or remittances received from nonresident
workers abroad (citizens of the compiling economy
who reside abroad for one year or more and are residents of their host economies).
3.108 Information on employees working abroad
and their compensation may also be available from tax
authorities, where such data sharing agreements exist
between the statistical agency and the tax authorities.
3.109 Special bank tabulations of data may beavailable to measure components of compensationof employees and personal transfers. In some economies, arrangements exist for banks to establish special
accounts for certain types of clients, such as foreign
nationals working in a host economy or citizens working abroad. These accounts may be a useful source of
information on such balance of payments items as
employee compensation and personal transfers. Monitoring of bank accounts held by embassies, by military
establishments of foreign governments, and by international institutions may be a useful way to measuretransactions with the compiling economy of certain
foreign governments and international institutions.
3.110 Domestic pension funds and social security
schemes may have information on the contributions
that they receive in regard to foreign workers (social
contribution credits) and the social benefits that they
pay out to beneficiaries (social benefit debits). In addition to actual contributions and payments, pension
funds will have access to information on the investment income due to the nonresident members of thefund (investment income debits) and any explicit
fees and charges levied on members’ funds (netted
from social contribution credits). See Appendix 2,“Employment-Related Pension Schemes and Social
Security Schemes,” for further discussion of pension
schemes and social security schemes, including the
calculation of the adjustment item.
3.111 Where individuals are classified as residents
in the economy in which they work, but they haveclose economic ties to another economy (e.g., they
have family residing in another economy), they may
regularly remit payments to the other economy, or
have their salary paid directly into accounts in that
economy. In addition to collecting information onborder workers, information may be collected also on
the remittances by these workers.

Investment Income
3.112 All of the instruments on which investment
income is earned or paid are recorded in the financial
account and IIP. The identification of companies earning or paying investment income will be an importantdimension of the survey of businesses to collect dataon transactions and positions in financial assets. Collections covering external assets and liabilities are discussed ahead. Model form 17 in Appendix 8 requests
information for the compilation of investment income
in a comprehensive survey of transactions, positions,and income accruing on external assets and liabilities.
Private Aid and Charitable Organizations
3.113 Religious organizations and other organizations involved in collecting or distributing goods,
services, and funds to be used for development orother assistance can be approached for information
on related balance of payments transactions. Sometimes the compiler may collect relevant data from anumbrella organization formed for the purpose of coordinating these types of activities.
3.114 Model form 15 in Appendix 8 requests information from private aid and charitable organizations for the compilation of current transfers in thesecondary income account. In addition to grants torelated institutions, disbursements of aid in cash orkind, and investment grants, information is requested
on sources of income (including donations and gifts
from nonresidents and income from investment inexternal assets) and on foreign staff employed within
the organization.
3.115 Lists of charitable organizations will usually
be available from the tax authorities where there are
special taxation arrangements for donations to the organizations. Not all charitable organizations will havetransactions of interest to the compiler, so exploratory
surveys can be used to identify those needing to be
surveyed on a regular basis.

Other Primary and Secondary Income Items
3.116 Exploratory surveys used to identify businesses with operations abroad may identify resident
companies with foreign operations that do not meetthe criteria for the identification of branches (e.g.,
small construction projects). These operations remain of interest to the compiler; in addition to provision and purchase of goods and services in the hostSpeciﬁc Surveys for Balance of Payments and International Investment Position

economy, there may be primary and secondary income transactions associated with the operations. The
number of companies operating in this way is usuallysmall, and so the population is manageable from asurvey perspective.
3.117 When companies have activities abroad that
do not constitute branches, there may still be land andoffices being rented. The rent paid for the use of land
without structures is a primary income transaction to
be recorded as rent debits.3 Also, while not meetingthe criteria for a branch, the operations may still be
subject to taxation obligations in the economy where
they are taking place. To the extent that a tax obligation is accruing, data on primary income (taxes on
production or value-added taxes) and secondary income (taxes on income) debits should be collected.
3.118 Data collected on credit transactions might
have a better coverage because the activities involved
are conducted offshore but not through a formallyorganized branch. As the criteria for identifying
branches have not been met (e.g., the offshore activity
does not have its own balance sheet and it is not possible or meaningful to compile these data), the resident company would have the relevant informationthat could be collected. As far as rent is concerned,
commercial real estate agents may have some information that is able to be used to support the estimation of credits.
3.119 Insurance net premiums and claims due
are generally recorded as secondary income transactions, although in some circumstances, claims may betreated as capital account transactions. Model form
12 in Appendix 8 requests data that can be used tocompile insurance premiums and claims items in addition to the services and financial accounts transactions. Surveys of businesses concerning insurance aredescribed more fully in “Collections on Goods andServices Statistics,” in this chapter, and in “Insurance
Transactions and Positions,” in Appendix 2.
3.120 Model form 16 requests information on current transfers, grants, and technical assistance. Part
A of the form seeks information on transfers in cash
and in kind received by the government and the pri3
The rent paid for the lease of structures and offices is classified as
operating leasing in services account. See also “Other Business Services: Operating Leasing” in Chapter 12 and “Rent” in Chapter 13.

39

vate sector, including nongovernment organizations.
The information can be used for the compilation ofcurrent transfers in the secondary income account andcapital transfers in the capital account. Part B of theform pertains to technical assistance of project work/
staffed missions received by the economy.

Collections on External Assets
and Liabilities
3.121 Surveys of businesses may be used to measurepositions; financial transactions; investment income;financial services; and withholding taxes associatedwith liabilities to, and claims on, nonresidents. Dataon positions of external assets and liabilities are required for the IIP statement; data on financial transactions are required for the financial account of thebalance of payments. Remaining items are required
for the current account: investment income (for inclusion in the primary income item), financial services(for inclusion in services), and withholding tax (forinclusion in secondary income).
3.122 Companies may not always be aware thatsome of their liabilities (which take the form of tradable securities issued in the domestic market) may
be managed by domestic financial intermediaries onbehalf of nonresidents. The measurement of these external liabilities is also complicated by the existence of
secondary markets. Collection issues associated withinternational securities are examined further in thesection “Collections on International Activity Associated with Securities,” in this chapter.
3.123 The compiler often conducts survey of businesses to measure financial flows, positions, investment
income, associated financial services, and withholding taxes. Through these surveys, many different approaches are taken. The compiler may conduct anacross-the-board survey of external assets and liabilities; or use surveys of businesses to measure certain
components, such as direct investment and loans
from nonresidents, and use other methods, such as an
ITRS, for the remainder.

Model Forms
3.124 Model form 17 in Appendix 8 seeks the typeof data on external assets and liabilities that the compiler could collect through a survey of businesses.
This comprehensive form could be sent to any type of40

Balance of Payments and International Investment Position Compilation Guide

company (a direct investor, a direct investment enterprise (DIENT), a public company, or any other type ofcompany) for completion.

requested to enable the calculation of reinvestment of
earnings and reinvested earnings in the direct investment relationship (see ahead).

3.125 The form contains a classification frameworkfor financial flows, positions, reconciliation items,
investment income, and explicit fees and charges
on transactions. These classifications are consistent
with the standard components of the BPM6. Modelform 17 should be of assistance to the compiler who
must record wide-ranging international financialtransactions and wishes to compile comprehensive
data. Less detailed forms (covering only a subset of
information from the model form, or collecting dataon several instruments together) may be used by thecompiler for economies that have less developed financial structures. As separate forms could, in practice, be used for different types of companies, model
form 17 could be divided into several forms; it also
could be used for collecting data for the IMF’s Coordinated Portfolio Investment Survey (CPIS).

3.130 Data are requested by the partner economy
to support the development of bilateral statistics.

3.126 One specific example where a form can be
tailored for specific companies or instruments is thecollection of data on direct investment (DI). Modelform 18 in Appendix 8 is an example of a form tailored in this way. Direct investment is of analyticalinterest in its own right, and is the subject of separate
collection by the IMF in the Coordinated Direct Investment Survey (CDIS).
3.127 In the model form 17, data are requested separately on external assets and external liabilities. In turn,there are separate items for positions (both opening andclosing), transactions (increases, decreases, and net),other changes (exchange rate, price, and other), associated income, withholding taxes and explicit fees andcharges on transactions. The collection of additional
items on withholding taxes and explicit financial fees
within the same form as information on financial positions, transactions, and related income flows can emphasize that reporting of these transactions is required on agross basis before fees and taxes are deducted.
3.128 Assets and liabilities are separately classified as representing claims by direct investors on DIENTs, claims by DIENTs on direct investors, claims
on fellow enterprises, or claims on other nonresident
companies.
3.129 In collecting information on equity claims of
direct investors on DIENTs, sufficient information is

Reconciliation of Positions and Flows Data
3.131 Model form 17 collects data in a reconciliation statement—opening and closing positions andthe reasons for change between the two positions(transactions, valuation changes due to exchange rate
and price changes, and other changes in volume). In
addition, the statement includes investment income
because it is important to link investment income
with corresponding position data. Any data collection of positions, financial flows, and investment
income should be built around these basic relationships. By collecting data in the form of a reconciliation statement and linking it to related income items,
the compiler should ensure the consistency of datacollected.
3.132 Changes in positions will arise from transactions such as the provision of financing (e.g., a newequity investment, a loan drawing, or the purchaseof a security) less the repayment of financing (e.g.,share buyback, repayment of a loan, or collection ofan account receivable). In model form 17, the provision of financing is referred to as an increase, andrepayment/withdrawal is called a decrease.
3.133 Other changes in the value of a financial
asset and liabilities may occur without any transaction. For example, the value of an asset denominatedin one currency may change when the value is expressed in another currency and the relative valuesof the two currencies change. A write-off of debt by
the creditor and a movement in the market price of a
tradable instrument are other examples.
Validation of the reconciliation statement

3.134 In a statistical collection, the nontransaction
components of changes in levels may also reflect errors,
other discrepancies, or changes in the treatment of
items. For example, in sample surveys, the rotation ofunits in and out of collections may introduce sampling errors if the sample is not an accurate representation of the universe. Also sometimes reporters who
discover that previously reported transactions andSpeciﬁc Surveys for Balance of Payments and International Investment Position

position data are incorrect do not provide revised
data. If such differences have significant impacts on
survey results for past periods, revised figures should
be produced. The compiler should attempt to measure
the causes of the other changes item and keep the statistical error component within acceptable bounds.
3.135 As shown in model form 17, the collection of
investment income ensures that investment income,financial flows, and position items are consistently
classified; in addition, the collection of investment
income facilitates income yield analysis, which enables the compiler to verify the quality of data reported on investment income and to identify possible
misreporting of income or positions. Published dataon income yields are useful for purposes of analysis.
Investment income on loans assets and deposits liabilities of deposit-taking corporations should be adjusted by the compiler for FISIM. (Further discussionof FISIM is provided in Appendix 3.)

Reinvested Earnings and Reinvestmentof Earnings
3.136 In addition to the usual reconciliation format, model form 17 collects information on the total
equity value of DIENTs, their total operating profit,
tax payable on the income, and dividends or profits
remitted during the period. The difference between
the profits accruing and the dividends or profits remitted to the direct investor is the reinvested earnings(returned earnings) (primary income account) accruing to the direct investor. An offsetting transaction,
reinvestment of earnings, is to be recorded in the financial account.
3.137 For resident direct investors, model form 17
requests information on dividends or profits remitted
in the reference period and the before-tax operating
profit attributable to the equity holding in the nonresident DIENT. The difference between these twovalues is reinvested earnings credits accruing to theresident direct investor. An offsetting transaction, reinvestment of earnings, is to be recorded in the financial account.
3.138 When collecting data in a reconciliation
statement, care must be taken with the treatment of reinvestment of earnings as a financial transaction, particularly for listed companies. These companies could
consider that the retention of earnings has impacted

41

on their valuation through a price change (as reflectedby an increase in their share price on equity markets)
rather than as a transaction. After the compiler has
calculated reinvested earnings and the offsetting reinvestment of earnings has been included as a financial
accounts transaction, a similar offsetting adjustment
will need to be made to price changes to retain theconsistency of the reconciliation statement. This adjustment may impact the validation of price changes
on equity reported by such companies (which should
be made prior to adjustment) mentioned earlier.

Classiﬁcation of Positions, Financial
Transactions, and Investment Income
3.139 It is important that forms used to obtain information from businesses for classifying transactions andpositions are consistent with requirements of the BPM6.
As financial transactions, investment income, and the
IIP are classified in similar ways, the use of the reconciliation statement to collect information on the external
assets and liabilities of a company facilitates consistentclassification of balance of payments and IIP items.
3.140 Model form 17 is designed to permit classification of transactions into the standard componentsof the BPM6. In addition, the form also allows forcertain supplementary classifications, such as partner economy data (see Appendix 5), currency denomination of instrument, and sector of nonresident
counterparty.

Conversion of Foreign Currency Positions
and Transactions to the Unit of Account
3.141 In surveys of businesses, as in other balance of payments collections, instructions should begiven to reporters on how to convert positions andtransactions expressed in foreign currencies to theunit of account (alternatively, some compilers may
prefer to collect data denominated in original currencies and undertake the conversions themselves—in
which case, it is important that the reporter identifies the different currencies, the amounts associatedwith each, and when the transactions took place).
The instructions should follow the recommendations of paragraph 3.104 of the BPM6, which states
that: positions of external assets and liabilities should
be converted to the unit of account at the midpoint
market rate of exchange applicable to the date of measurement of position data; and transactions should

42

Balance of Payments and International Investment Position Compilation Guide

be converted on the basis of the midpoint rate applicable to the transaction date. If the actual rate ofexchange is unavailable for transactions (e.g., thecompiler is performing the conversion and does nothave access to information on the date of the transaction), an average for the period in which the transaction took place could be used, but the shorter theperiod the better—therefore, an average of the rate forthe day on which the transaction took place is preferable to an average for the week.

Surveys of Banks and Other Financial
Institutions
3.142 In some economies, data collected by compilers of money and banking statistics, or by compilersof other financial statistics, on surveys of businesses(of banks and other financial institutions) are used tocompile some components of the balance of payments
and IIP statements.
3.143 Such surveys generally collect balance sheet
data and request classification by instrument and sector of creditor (in the case of banks’ liabilities) anddebtor (in the case of banks’ financial assets). The
sector classification enables the analyst to identify
financial flows between banks and the monetary authorities and between banks and other sectors. Also,these surveys typically identify claims on, and liabilities to, residents and nonresidents; therefore, the data
may be used as a basis for compiling certain balanceof payments and IIP statistics.
3.144 While these surveys can be a good source of
data, for several reasons, the balance of payments compiler should take care in using data collected throughthem. One reason for caution is that, while survey data
are collected on a balance sheet—or position—basis,
the balance of payments requires data on a transactions basis (Box 10.2 describes a method for compilingflow data from positions data). Using position data toderive transactions is nearly always a second-best solution. It is usually preferable, if possible, to obtain transactions data directly—for example, for loans to andfrom nonresidents, data could be collected on drawings
and repayments—and to use changes in balance sheets(even with adjustments) only when it is not possible
to obtain transactions data. However, obtaining transactions on currency and deposits is usually not possible as the volumes are often very high. In that case,changes in positions can be used, provided there aresufficient other data also available to make the appropriate adjustments.
3.145 A second reason for caution is that data provided on foreign and domestic currencies are sometimes used as proxies for residency. That is, foreign
currency denominated claims (and liabilities) are
regarded as claims (liabilities) on (to) nonresidents,
while domestic currency claims (and liabilities) are
regarded as claims (liabilities) on (to) residents. Theseassumptions are often incorrect, and the compiler
should strive to collect data on a balance of payments
residence basis.
3.146 Furthermore, balance sheet information
may be provided on the basis of historical cost rather
than market value. The difference could have implications for compilation of both the balance of payments
and the IIP. This is important not only for the determination of the current market position of the asset or
liability, but also it is an important adjustment to thedata if transactions are being derived from changes
in positions. If historical cost data are provided, thebalance of payments compiler should approach banks
and/or other institutions for information to adjust
valuations to the preferred market value basis.
3.147 The reference period used in some economies may not be consistent with balance of payments
periodicity. For example, bank accounting periods
may end on a particular day of the week, such as thelast Wednesday of the month, rather than the last dayof the month. The occurrence of large daily fluctuations in the external liabilities and assets of banks maylead to significant timing discrepancies in the balanceof payments.
3.148 Some bank collections do not provide detailsof either nonresident investment in the equity of thebank or of the bank’s equity in companies abroad. Thisomission may be important, especially when the bankis partially owned by nonresidents or has branches
and subsidiaries located abroad. In these cases, thebalance of payments compiler may have to collectdata on equity separately.
3.149 The treatment of offshore banking units may
not be consistent with balance of payments requirements; therefore, the compiler may have to collectinformation directly from offshore units. According
to the BPM6, offshore banking units are resident entities of the economies in which they are incorporated,

Speciﬁc Surveys for Balance of Payments and International Investment Position

registered, or have their legal domicile. The same datacollected from other resident banks on financial flows,
positions, income, services, and so forth should becollected from them.
3.150 Some of the other classifications, such as
partner economy data or currency composition of financial assets and liabilities, required by the balanceof payments compiler may not be available from thesesurveys. Therefore, the compiler should approachbanks and other financial corporations separately forthis information.
3.151 The surveys for use in the compilation ofmoney and banking statistics may not be designed forbalance of payments purposes and therefore may notsatisfy the requirements of the balance of paymentscompiler. A good approach (described previously inthis chapter) may be to include banks and other financial institutions in a survey of businesses of external
assets and liabilities. In such circumstances, balanceof payments and money and banking data compilers should attempt to coordinate their requirements
so that the same definitions of instruments and ofresidency are used. It is highly desirable that positions
reported in the balance of payments and money andbanking surveys should be compared on a bank-bybank basis to ensure consistent reporting and treatment as far as possible. Differences existing between
the two data sources should be reconciled; if necessary, any difference between treatments in the two
sets of statistics should be drawn to the attention ofusers from time to time—special articles could be
published to call attention to and, if possible, quantify
the various differences between these data sources.

Collections on International Activity
Associated with Securities
3.152 Earlier in this chapter, “Collections on External Assets and Liabilities” discusses surveys of businesses that are used to approach principals to measureliabilities to, and claims on, nonresidents. However,additional collection arrangements may be requiredin economies in which (1) securities are issued byresidents and acquired by nonresidents—particularly
if the securities are held by resident custodians on behalf of the nonresident principals; (2) securities areissued by nonresidents and acquired by residents; or(3) portfolio managers place funds abroad on behalf of43

clients. Similarly, an economy that uses an ITRS may
have to make special arrangements to collect data on
transactions that involve resident intermediaries acting on behalf of nonresidents. This section examines
the role of financial intermediaries in transactions(and positions) in securities with nonresidents andtheir impact on the balance of payments, and outlines
ways in which the compiler may collect appropriatebalance of payments data on securities traded/held
between residents and nonresidents.
3.153 The term “intermediaries” is used broadly toinclude deposit-taking corporations, security dealers,and custodians—which may also be deposit-taking
corporations—as well as companies that manage large
share or bond registers in respect of their own sharesor bonds. The term “securities” includes shares in corporations, bonds, notes, and money market instruments (see BPM6, Chapter 5, for a fuller descriptionof securities). An important feature of a security is thefact that it is designed to be traded.
3.154 International security markets are complex, and the compiler may require a number of data
sources to compile the balance of payments statistics
related to these markets. Also, security transactions
between residents of securities issued by nonresidents are not included in the balance of payments.
However, such changes in holdings should be captured in the other changes in financial assets andliabilities account in order that the correct sector
holdings be recorded in the IIP and the CPIS, aswell as to ensure consistency with the national accounts. In practice, however, it may not be possible
to identify such transactions between residents as
the parties involved may not know, and may have noreason to know, which the counterparty is. Under
such a situation, it may be unavoidable that transactions between residents in securities issued by anonresident are included in the balance of payments.
As such transactions should in theory often cancel
each other out, there is no net effect in the financial account of the balance of payments. Likewise,in principle, the converse applies: that is, transactions between nonresidents in a security issued bya resident should not be included in the balance of
payments but should be included in bilateral positions data. However, the resident compiler often
is unaware of these transactions. Accordingly, thecompiler may wish to use counterpart asset data in44Balance of Payments and International Investment Position Compilation Guide

the CPIS as a possible source of information to use
for estimating bilateral holdings.

Data Requirements
3.155 It is useful to think of data requirements interms of a data model. The data model should contain
information on positions, financial and income flows,
financial service flows, and withholding taxes. Also,
the data model should distinguish the following categories of information:• The type of instrument• The issuer of the instrument—that is, the company with the liability• The economy of residence of the issuer• The sector of issuer• The owner of the instrument• The sector and economy of residence of the owner• The economy (market) in which the instrument
is issued• The issue price• The currency in which the instrument isdenominated• The date of maturity (for a debt instrument)• The coupon rate (if any)
• Whether the interest is fixed or floating rate, andif the latter, what determines the change(s) in interest rate
• The frequency and date(s) of the coupon payments.
3.156 Other useful information that could be obtained is as follows:• Any embedded (put or call) options• Any convertible features (such as from debt into
equity)• Whether the instrument has a reducing balance(such as with some asset-backed securities, suchas mortgages).
3.157 Additional information needs to be obtainedon securities involved in a repurchase agreement or
securities lending transaction—for example, if lending is with or without cash collateral.
3.158 The BPM6 classifies securities into equity(such as ordinary shares and voting stock); long-term
debt securities (such as bonds, debentures, certifi-

cates of deposit and notes with original maturities ofmore than one year, and nonparticipating preference
shares); and short-term debt securities (such as bills
and notes with original maturities of one year or less).
3.159 Ascertaining issuers and owners of securities is essential to identify external assets and liabilities. For the balance of payments, the compiler
should measure securities that are issued by residents
and acquired (and held) or relinquished by nonresidents and, similarly, securities that are issued by nonresidents and acquired (and held) or relinquished byresidents.
3.160 The economy (market) in which a security isissued (the domicile of the issue) can be an importantpiece of information. It may be a decisive factor in
determining the appropriate collection mechanism,
and it may be of analytical interest. It should be remembered, however, that the domicile of the issue
does not determine the residence of either the issuer
or the holder of the security—the security may be issued in an economy other than that of either the issuer or the holder. Securities that are issued abroad
by residents, and held by residents, are not within thescope of the balance of payments or IIP as they are
resident-to-resident transactions despite being intermediated through a foreign market. However, there
may be explicit fees and charges levied on either (orboth) the issuer or the purchaser by nonresidents associated with the security.
3.161 Depository receipts are securities that represent ownership of securities listed in other economies.
Depository receipts listed on one exchange represent
ownership of securities listed on another exchange,and ownership of the depository receipts is treatedas if it represents direct ownership of the underlying
security. Generally, depository receipts are listed on
an exchange in an economy other than that in which
the underlying securities are listed. The treatment ofdepository receipts is the same as where the issuer ofthe security has listed directly onto the nonresident
exchange—local holders of the depository receipts
have a claim on the issuer that is within the scope ofthe balance of payments and IIP.
3.162 Data on the currency in which the instrument is denominated is important for analytical purposes and may facilitate compilation if the compiler
must estimate certain data items (such as flows orSpeciﬁc Surveys for Balance of Payments and International Investment Position

income) from other data items (such as positions).
In particular, the interest or coupon rates on debt instruments are likely to be related to the currency ofdenomination as well as the creditworthiness of theissuer.
3.163 For certain types of securities, it may not be
possible to obtain data from a single source. Rather,
the compiler may have to use information from different sources and collate data to ensure consistency.
Anomalies appearing in collated data should be investigated and resolved. In fact, such anomalies may
point to important gaps in data. Therefore, the collation process may be a useful tool for improving theoverall quality of the balance of payments.
3.164 To measure transactions in securities, it ishighly desirable to collect gross data on new issues
and redemptions, and on secondary market sales andpurchases. Such information is especially useful forinternational debt analysis—as in the calculation ofdebt service ratios.
3.165 Security transactions should be recorded
apart from related fees and commissions, whichshould be included in financial service items (or secondary income, in the case of taxes) in the balance of
payments. Similarly, when data on interest receivableand payable are collected, withholding taxes should
be included in the gross amounts of income recorded,
and offsetting entries should be included in withholding taxes in the secondary income account.

Identifying Security Issuers and Owners
3.166 Institutional arrangements for security transactions vary from economy to economy. However,some features seem to be generally applicable.
3.167 Prior to issuing a security, the issuing company—or a security broker acting on behalf of the issuing company—usually must approach a government
regulatory body or quasi-official body, such as a stock
exchange, to obtain certification that the security issue
meets certain statutory requirements. Each security is
usually assigned a unique reference number, and certain information about the security is published. This
information consists of the identity of the issuer, thetype of security, coupon payments, maturity, and currency of denomination. (In the case of equities, not allof these categories apply.) It would therefore be possible
for the compiler to develop a database containing in-45

formation about each security issued—or at least about
those issued in the home economy. This database could
be useful for checking information reported by respondents or for estimating items that may not be directly
measurable. If, in some economies, a unique reference
number is unavailable, the compiler may wish to devise a coding system. “Portfolio Investment” in Chapter 10 provides more details on a security-by-security
database.
3.168 Security ownership may be documented. In
most cases, financial institutions (such as custodiansor other major financial intermediaries) will maintainrecords of the security owners’ details. In some economies, primary registers of security owners are held bycompanies issuing the securities or by security dealersauthorized by issuers. In many European economies,banks maintain primary registers of security owners.
Security registers are usually in the form of electronic
files—paper records are increasingly rare. The register may identify the owner as a resident individual orcompany, a resident nominee holding a security on
behalf of a client, or a nonresident owner or nominee.
The resident nominee may be regarded as holding asecond register—which, in turn, records the names
and addresses of owners. From the second register,
one can determine whether the security owners areresident individuals, resident companies, resident
nominees acting on behalf of clients, and/or nonresident owners or nominees. (The word “nominee”
is used in a broad sense to cover portfolio managers,
trustees, custodians, fund managers, banks performing similar functions, etc.) It is possible for a security
to be recorded in a number of secondary registers thatare maintained by nominees; however, each security
must ultimately be attributable to a resident or nonresident company or other entity. However, where asecurity is a bearer instrument, such information isusually not readily available and the balance of payments compiler will need to use alternative sourcesof information to attribute such an instrument to its
owner.
3.169 It may be possible for resident organizations
managing primary or secondary registers to identify (for each security that they manage) the issuer,
the number of units held, and the value of a security
or securities on issue, and whether they are held on
behalf of residents or nonresidents. From these registers, it should also be possible to identify income

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Balance of Payments and International Investment Position Compilation Guide

transactions with nonresidents and financial fees andwithholding taxes paid by nonresidents.
3.170 Some purchasers of shares or other securities may not wish to have their names recorded on the
primary register of a company and therefore arrange
to have a nominee registered as the nominal owner.
Sometimes the purpose is to mask the identity of ashareholder who is planning some takeover action, although many economies have enacted legislation requiring a shareowner with a beneficial interest greaterthan a certain threshold, such as 10 percent, to declare
his or her ownership interest.
3.171 More often, the use of a nominee is a matter of administrative convenience. For example, if aninvestor maintains a portfolio, it may be convenient
to have all holdings administered by a portfolio manager (or bank) that may also perform the functionsof a nominee. The nominee receives annual reports,
ballot papers, income payments, and so forth fromthe holder of the primary register. In turn, the nominee acts according to the general instructions of theinvestor.
3.172 Often, nominees also act on their own behalf;
therefore, any approach to resident nominees shouldcapture both own-account and client claims that are
relevant to the balance of payments. However, under“Know Your Customer” legislation in many economies, nominees are required to know for whom they
are acting. So, if the compiler approaches a nominee(which may or may not be a custodian), it is important to stress that the data on transactions and positions should be reported on the basis of the customer.
3.173 When securities issued by nonresidents are
owned by residents, it will generally be necessary toapproach either the owner of the security or a resident custodian to obtain data required to compile thebalance of payments and the IIP because the security
register will typically not be available to the balanceof payments compiler. However, for securities issued
by nonresidents in the compiling economy’s financial
markets, a register may be maintained in the compiling economy. This register could provide informationsuch as the value of, and the income earned on, securities owned by residents.
3.174 It may not be necessary to approach resident
owners of nonresident securities when securities arepart of portfolios managed by resident fund manag-ers, trustees, and so forth. In these cases, fund managers should be able to provide relevant information ontransactions, positions, and income, as well as related
information (such as withholding taxes collected byforeign governments and any financial services provided by nonresidents). Such companies may use
local and foreign custodians.

Identifying the Transactors
Issuance and redemption of securities

3.175 Security issuance and redemption are frequently managed by security brokers; in many European economies, this function is carried out by banks.
Intermediaries arranging a security issue act on behalf of clients. Also, it is not uncommon for issuers
to bypass brokers and make direct placements withinvestors.
3.176 From their computer-based records, security
brokers should be able to identify securities that they
have issued and redeemed and the acquirers and relinquishers of these securities. Security dealers may
also have own-account transactions that are relevantto the balance of payments. In addition, security brokers may deal with resident nominees acting for nonresident principals. Therefore, it is important that any
collection of information from security brokers encompass all of the previously described transactions
and that care is taken when reporting rules are specified. For direct placements or direct redemptions of
securities by issuers, data should be reported by theparties involved.
Secondary market transactions

3.177 In most markets, secondary market transactions—that is, purchases and sales of existing
securities—are largely arranged by brokers. In many
European economies, this function is usually undertaken by banks. In a typical transaction, one broker
acts for the buyer and another for the seller of a security. There may also be off-market transactions inwhich buyer and seller come together directly without
a broker.
3.178 Security brokers should be able to identify
from their (largely computer-based) records the securities they have bought and sold and the residence ofclients on whose behalf they acted. In any collectionof data on security transactions, care should be taken

Speciﬁc Surveys for Balance of Payments and International Investment Position

to include own-account transactions of dealers andoff-market transactions.
3.179 When a resident enterprise buys or sells asecurity through a nonresident broker, it is generally
the resident principal who should be approached forbalance of payments information as there often is noother means presently available for collecting the data.
In the absence of any other information, it may be appropriate to assume that all transactions by residents
through nonresident brokers are balance of payments
transactions.

Data Sources
3.180 For economies that do not have establishedsecondary security markets, the collection of security
data should be relatively simple. Should a company
issue securities abroad or acquire securities issued
abroad, relevant data can be collected from the company issuing or acquiring the security. Model form 19
in Appendix 8, discussed further in this part, is suitable for this purpose. However, additional collection
arrangements may be required in economies in which:• Securities are issued by residents in domestic financial markets and acquired by nonresidents—
particularly if the securities are held by resident
nominees on behalf of nonresident principals.
• Securities are issued by nonresidents in domestic
financial markets.
• Portfolio managers (banks or other fund managers) place funds abroad.
3.181 There are two primary approaches to obtain data on cross border positions in securities. The
first method is to have an “end-investor” survey. Suchsurveys approach resident enterprise that are likely
to be major holders of securities issued by nonresidents (such as deposit-taking corporations, insurance
corporations and pension funds, mutual funds / unit
trusts, or similar entities) or who manage securities
portfolios on behalf of others. End-investors should
be requested to identify those securities that are managed by resident portfolio managers to make sure that
there is no double counting.
3.182 The end-investor approach will ensure thatthe respondent covers all its holdings, whether heldin the compiling economy or in another economy.
With this approach, securities in repurchase agreements and securities lending would be attributed to47

their economic owner (for the recommended treatment of securities under repurchase agreements andsecurities lending arrangements, see BPM6, paragraphs 5.52–5.54). However, this approach is unlikely
to cover holdings by smaller investors, especiallyhouseholds. This could become a major shortcoming
as households increase their cross border investment
in securities through the use of the Internet and otherchanges in financial markets that make it easier forhouseholds to buy securities directly, without using
the services of a local broker.
3.183 The alternative approach is to use a surveyof custodians. Such an approach has the advantage ofcovering all residents, including households that use
the services of resident custodians. However, it will
not capture those resident holdings that are held incustody abroad and it is often difficult for custodians
to identify a security that is under a repurchase agreement or a securities lending arrangement.
3.184 A possible way around this problem is tocombine the two approaches: to survey custodiansand end-investors. To avoid double counting, endinvestors could be asked to report only their holdings
with nonresident custodians. End-investors could also
be asked to identify those securities that are under arepurchase agreement or securities lending. If the securities are reported on a security-by-security basis byboth the custodians and the end-investors, it may bepossible to run (electronic) checks to see that thesehave been treated correctly by both respondents. In
using the combined approach, the compiler shouldcarefully define the boundary between the collections
to ensure that no duplication or omission of reporting occurs. Typically, a combined approach would be
successful only if security registers and intermediaries can identify the types of owners. However, none ofthese approaches will capture households’ holdings of
securities issued by nonresidents that are held directlyor held with nonresident custodians. These may be an
important, and probably growing, element in crossborder holdings.
3.185 The foregoing approaches may also be used
for transactions, which would produce better reconciliation between transactions, other flows, and balances.
However, they may involve too much respondent burden, as well as being somewhat resource-intensive forthe compiling agency, especially for subannual data

48

Balance of Payments and International Investment Position Compilation Guide

needs. Moreover, they may be too time-consuming
for data processing. An alternative is to approach brokers for transactions data, as indicated earlier. They
should be able to provide data for many of these transactions at a significantly lower resource cost and in amuch more timely fashion, especially for subannual
data. Even so, if data on transactions, other flows, andbalances can all be obtained from the same sourceon an annual basis that would mean that the integration of the data would be maintained. Such annual

reconciliation could then be used to improve the quality of the subannual data.
3.186 Table 3.2 illustrates a set of collection arrangements. These suggest a particular approach, butother approaches (such as the use of an ITRS for someor all of the data) are possible. It is important for collection rules to be clearly defined so that there are noomissions or duplications in the recording of security
transactions.

Table 3.2 Sources of Data Associated with International Securities (concluded )Place of issuance

Data item required

SourceNonresident holdings (positionof liabilities); income payable tononresidents (debit); fees and withholding
taxes payable by nonresidents (credit)Primary and secondary registers of securities(e.g., Central Securities Depository), or
custodians

Issues to and purchases by nonresidents(increase of liabilities); redemptions
from and sales by nonresidents (decreaseof liabilities); brokerage and other fees
payable by nonresidents (credit)

Security brokers, investment dealers, domestic
stock exchange; adjustments to include offmarket transactions

Nonresident holdings (position of
liabilities); issues (increase of liabilities)
and redemptions (decrease of liabilities);
income and fees payable to nonresidents(debit); withholding taxes payable bynonresidents (credit)

Resident enterprise issuing securities,
domestic stock exchange or other ofﬁcial
bodies informed about new issues by quoted
companies, BIS international securities
database

Net purchases or sales by residents

Resident enterprise issuing securities (fromanalysis of registers), resident companies
involved in transactions, or security
brokers

Nonresident holdings (position of
liabilities); issues (increase of liabilities)
and redemptions (decrease of liabilities);
income payable to nonresidents(debit); withholding taxes payable bynonresidents (credit)

Resident enterprise issuing securities orresident investment managers, resident
custodians

Net purchases or sales by residents

Resident companies issuing securities orresident portfolio manager (from analysisof registers); resident companies involved intransactions

Resident holdings (position of assets);
income receivable by residents (credit)

Resident owners of securities or primary andsecondary registers of securities, resident
custodians

Issues to and purchases by residents(increase of assets); redemptions fromand sales by residents (decrease of
assets)Resident owners of securities or security
brokers, adjustments to include off-market
transactions

Securities issued by residents
1. In domestic capital markets

2. In foreign capital markets
through a nonresident
intermediary

3. In foreign capital markets
through a resident
intermediary or managed(on behalf of the issuer)
by resident investment
managers

Securities issued by nonresidents
4. In domestic capital markets

Speciﬁc Surveys for Balance of Payments and International Investment Position

49

Table 3.2 Sources of Data Associated with International Securities (concluded )Place of issuance

Data item required

SourceSecurities issued by residents
5. In foreign capital markets;
owned by residents; notmanaged by resident
investment managers

Resident holdings (position of assets);
issues to and purchases by residents(increase of assets); redemptions fromand sales by residents (decrease of assets);
income receivable by residents (credit);brokerage, other fees, and withholding
taxes payable by residents (debit)

Resident owners of securities or resident
nominees

6. In foreign capital markets;
owned by residents;
managed by resident
investment managers

Resident holdings (position of assets);
issues to and purchases by residents(increase of assets); redemptions fromand sales by residents (decrease of assets);
income receivable by residents (credit);brokerage, other fees, and withholding
taxes payable by residents (debit)

Resident investment managers, resident
owners of securities, or resident nominees

Source: IMF staff.

3.187 Some comments on Table 3.2 are necessary.
Data on transactions in securities issued in domestic
financial markets both by residents (category 1) andnonresidents (category 4) may best be collected insurveys of security registers and intermediaries, suchas brokers. Alternatively, in the case of category 4,
resident owners of the securities could be surveyed assources of data. However, if there are numerous resident owners or if the owners are difficult to survey,
this approach may not produce the best results. These
problems are particularly likely to occur if resident
households have significant holdings of securities issued domestically by nonresidents.
3.188 For securities issued abroad by resident
companies (categories 2 and 3), most of the necessary information could be collected from the resident
companies issuing the securities. However, when aresident intermediary is involved in the issue or whena resident institution manages the register on behalf of
the issuer, it may be preferable to survey these organizations for some or all of the data items. Also, it would
be important to define reporting rules clearly. Theremay be an assumption that securities issued abroad
are wholly acquired by nonresidents or that any resident acquisition is small enough to ignore. However,this assumption sometimes may not be valid, in whichcase data on acquisitions by residents should be collected so that nonbalance of payments transactions
can be deducted from the total reported by the issuing

company. Such information on resident ownershipof securities issued abroad by residents could be obtained from issuing companies (or the security register manager), residents involved in the transactions,or resident security dealers. For bearer securities, thefirst-mentioned approach would not be feasible.
3.189 Data on securities issued abroad by nonresidents and acquired by residents could be collected using either the end-investor approach or thecustodian approach (or a combination of these) as
described earlier. Apart from any other reason, theseapproaches are more cost-effective (the number ofcompanies to approach will probably be relatively
small, in comparison with the number of owners) andthe quality of the responses is likely to be much higher(these companies will more likely have the information required in a more readily accessible format).
These observations are particularly true for securities
owned by households that use resident custodians.
However, as noted earlier, such surveys cannot measure investments made directly abroad by the resident
household sector.
3.190 It may not be possible to collect the full range
of information outlined in the “Data item required”
column of Table 3.2. However, it may be possible toestimate missing items by using other information.
For example, if it is not possible to collect data on financial transactions, it may be possible to derive thesefrom positions information. On the other hand, it50Balance of Payments and International Investment Position Compilation Guide

may also be possible to derive positions from transactions. Techniques that can be used to make these derivations are discussed in Chapter 10, though they must
be regarded as very much second-best alternatives.
Investment income may be derived from informationon the scheduling of coupon payments and current
market prices, or from known (or assumed) relationships between positions and income. Techniques for
estimating income are described in Chapter 13.
3.191 All the collection approaches set out inTable 3.2 are based upon the assumption that owners
and intermediaries can distinguish between resident
and nonresident issuers and holders. Many institutions may not readily know which companies areresidents and which are nonresidents. To overcome
this problem, at least as far as the issuing company
is concerned, having the data reported on a securityby-security basis will allow the compiler to determine
the residence of the issuer, especially if the compiler
maintains its own register of issues, or has access to
one in which it has confidence.
3.192 To determine the residence of the holdersof securities, companies and intermediaries could
be asked to enter codes or flags in their databases to
identify resident and nonresident clients. In manycases, the distinction may be made with reference tosome type of legislation or official administrative arrangement that “classifies” companies as residents ornonresidents for particular purposes. For example,
companies that are exempt from value-added tax or
those that pay withholding taxes may be regarded as
nonresidents—although such “classifications” maybe made on the basis of address. Some cases may
not always be clear, and the compiler should provide
guidelines to owners and intermediaries, and advise
them of the residence status of particular companies.
It is important for the compiler to have a good understanding of institutional arrangements and the natureof record-keeping practices in order to give the best
advice to companies.
3.193 Alternatively, the compiler may have to examine security registers directly. This task could be
immense and may be only a periodic option. The aim
should be to capture large transactions and holdings,
and this activity should be supplemented by properly
designed sample surveys to measure smaller holdings
and transactions.

Model Collection Form
3.194 Model form 19 could be used to collect dataon securities issued by resident companies and owned
by nonresidents and securities issued by nonresidents
and owned by resident companies. However, different
approaches may be preferred and additional collection forms may be necessary for some types of securities. Whichever methodology is adopted, instructions
should be added to model form 19 to specify clear
rules about what should be included and omitted fromthe survey form. If resident companies hold bearer securities that are issued internationally by other resident companies, model form 19 could be amended tocollect the necessary information for clarifying datareported by the issuing company.
3.195 Similarly, ITRS forms may be used to collectdata on security transactions. However, in economies
where international intermediation is significant, therules of the ITRS must clearly define which institutions should report which transactions. Also, it will
generally be necessary to supplement the ITRS with acollection of data on positions.
3.196 Model form 19 has been designed to collectdata from intermediaries (such as brokers, nominees, custodians, and/or institutions responsible formanaging security registers) and is based on a number of assumptions. Via the form, intermediaries are
asked to report—for each combination of security
and owner—details of positions, transactions (issues,
redemptions, sales, and purchases), income, fees,
and withholding taxes. However, in practice, it may
not be possible to obtain the full range of information about each combination from one respondent.
For example, for securities issued by resident companies, nominees might have details on positions
but not on transactions—which, in turn, may have tobe reported by brokers. Other cases will arise as reflections of circumstances in the compiler’s economy,
and the compiler should take care to ensure that reporting instructions are clear and appropriate. It isparticularly important that duplication of reporting
be avoided or, if this is not possible, identified so thatany double counting can be eliminated.
3.197 For resident companies issuing securities,
reporters are asked to provide an identification or reference number and an owner code for each combination of security and owner. The reference code, whenSpeciﬁc Surveys for Balance of Payments and International Investment Position

51

linked to a database on security issues, would establish
the type of security, the currency of denomination, theredemption date, coupon payments, and so forth. The
owner code would identify the economy of residence(and, perhaps, sector) of the nonresident party.

form, it should be possible to introduce, if the use ofsuch techniques reduces reporting and processing
costs, suitable thresholds or sampling techniques forsmaller holdings and transactions. These techniques
are discussed in further detail in Chapter 2.

3.198 For nonresidents issuing securities, reference numbers of securities and resident owner codes
would be provided. Security reference numbers would
permit identification of sectors and economies ofresidence of nonresident parties, and resident owner
codes would permit identification of sectors and industry codes of resident owners.

Overcoming Possible Problems
3.204 It may appear that model form 19 represents
a highly ambitious approach. However, a number of
economies collect data on this basis.4 Respondents,
whether end-investors, portfolio managers, or custodians, could be asked to provide an electronic fileof all their holdings, which reduces the burden on
the respondents to sort the information requested.
However, it can place considerable burden on thecompiling agency, and for economies with relatively
small securities activity or with limited resources forbalance of payments / IIP purpose, this may not bea viable option. That being the case, requesting dataon an aggregated basis may be sufficient, especially ifthere are other data checks embedded in the information (such as a reconciliation between opening andclosing balances, via financial transactions and otherchanges, and income transactions). Failing that, certain assumptions about undercoverage, income, otherchanges, and so forth may need to be made to develop
a complete set of financial and income transactions
and position data, but these assumptions should be
reviewed and verified from time to time (preferably
no less frequently than annually).

3.199 With regard to security reference numbers, it
is possible that these could be specially established by
the balance of payments compiler. The disadvantage
with this task, though, is that it would be onerous tomaintain the list and communicate the information to
respondents. A better alternative would be to use a domestic, or preferably international, security reference
system that has been accepted by organizations most
likely to be approached in the collection of information.
3.200 Security reference numbers—when properly
utilized—allow the compiler to develop comprehensive information about each security traded internationally. Such information would be of assistance in
identifying and rectifying any errors, duplications, oromissions in reporting.
3.201 The categories of securities reported are broadly
consistent with Table 3.2. They include the following:• Securities issued in the domestic economy byresidents and owned by nonresidents• Securities issued in the domestic economy bynonresidents and owned by residents• Securities issued abroad by residents and owned
by nonresidents• Securities issued abroad by nonresidents andowned by residents
3.202 Model form 19 does not contain precise
rules (such as who should report what) about reporting arrangements or define the relationship between
model forms 17 and 19. The individual compiler is left
to determine these arrangements. The model form
also collects data on the intermediary’s own account.
3.203 It is assumed that intermediaries will report
data electronically. While not stated on the model3.205 When data come from two or more sources,
such as both nominees and brokers, it may be difficult
to collate the information. By collecting the data on asecurity reference number basis, it should be possible
to resolve most inconsistencies between positions andtransactions through accurate validation and careful
querying procedures. When data come from different
sources, it may be necessary to develop several typesof forms to collect appropriate information.

4
One of the important developments in the collection of data on
cross border transactions and positions in securities has been the
CPIS. This survey prompted many economies to set up collection systems that would be a considerable improvement overtheir previous approaches. Many of the participants in the CPIS
collect data on a security-by-security basis. These data, whencompared with databases on securities issued in and outside theirown economies, have resulted in major improvements in the data
quality of these economies’ balance of payments and IIP.

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Balance of Payments and International Investment Position Compilation Guide

3.206 Some compilers may not have the necessary
authority to collect all data required or may prefer not
to collect detailed information. In these instances, anintermediary (such as a securities exchange) could be
asked to prepare tabulations that the compiler would
otherwise prepare. At a minimum, the compiler
should attempt to obtain items that are classified by
sector of issuer and owner’s economy of residence (forsecurities issued by residents) and issuer’s economy ofresidence and sector of owner (for securities issued bynonresidents and held by residents). The use of analyses undertaken by intermediaries to provide the compiler with various tables is akin to the use of an ITRS
that does not give the compiler access to individual records. In these situations, the compiler should attempt
to ensure that those who undertake the basic compilation (in the case of an ITRS, commercial banks, and,in the case of securities, intermediaries) have a thorough understanding of the requirements and the typeof approach that the compiler wishes to be taken.
3.207 There may be numerous problems in collecting information on international security transactions, which constitute one of the most complex areasof the balance of payments. However, more accurate
data are likely to be collected if the compiler is very
familiar with institutional arrangements and recordkeeping practices, has the necessary legislative authority to require that suitable information be reported,can persuade the industry to provide necessary data,and is in a position to analyze data closely to correct
any apparent anomalies. One should not underestimate the research necessary to gain an understanding of institutional arrangements in each economy.
Intermediary companies are often complex, and thecompiler may wish to review the activities of the intermediary in some detail, to determine whether it
performs one of the many functions that the compiler
should measure. Chapter 2, which examines the issue
of form design and testing, is particularly applicable
to collections from intermediaries.
3.208 One particular challenge for security-bysecurity collections is the stapling of securities. In someinstances, different securities are “stapled” together sothat transactions can take place only in the combination of the securities—the individual securities cannot
be traded in isolation. The securities can be treated asa single security when the issuers of the componentsof the staple are resident in the same economy, areclassified to the same institutional sector, and the se-curities are classified as the same instrument (equity,
long-term debt securities, or short-term debt securities). Where any of these do not hold, the compiler
should attempt to “unstaple” the securities, in whichcase estimates will need to be made of the value of eachof the components as there is no observable market
valuation.

Collections of Data on
Financial Derivatives
3.209 A financial derivative contract is a financial
instrument that is linked to another specific financial
instrument or indicator or commodity and throughwhich specific financial risks (such as interest raterisk, foreign exchange risk, equity and commodity
price risks, credit risk, and so on) can be traded intheir own right in financial markets.
3.210 Transactions of resident companies thathave derivative contracts with nonresidents can becovered through a survey. Respondents will include
mostly banks and other financial corporations, andsome large nonfinancial corporations.
3.211 Model form 20 could be used to collect information on holdings of and transactions in financial
derivatives contracts with nonresidents. The data arecollected by types of derivative instruments (options,futures and forwards, and swaps). The reporting instructions explain how the forms are to be completed.

Collections from Persons
and Households
3.212 This section discusses collections of datafrom individuals and households, which are groups of
persons with common economic interests, for measurement of various household sector transactions in
the balance of payments. It describes migration statistics and similar statistics on movements of persons
across national borders, surveys collecting data on
travel expenditure, and other household surveys. The
household sector transactions included in the balanceof payments and the categories where they typicallyfall are presented in Table 3.3.
3.213 Sources described elsewhere in this Guide
could be used to collect data for the household sector.
For example, many household transactions should
be included in a well-designed ITRS. However, the
ITRS must be designed to capture and classify smallvalue transactions that are typical of households.

Speciﬁc Surveys for Balance of Payments and International Investment Position

53

Table 3.3 Recording of Household Transactions in Balance of Payments
Category

Recording

Import of goods and services by households(e.g., via Internet)

Is recorded in the current account under the respective category of goods
and services

Expenditure on goods and services by
persons traveling abroad

Is recorded in the current account under passenger fare and travel items

Expenditure by students studying ineconomies other than their home

Is recorded in the current account under travel services, and, if the student
is ﬁnanced under a foreign aid program, an offset entry is included in thesecondary income account as miscellaneous current transfers

Health care services provided tononresident patients

Are recorded in the current account, under travel

Employment earnings of residents who
work abroad for nonresident employers forless than 12 months

Are included in the primary income account, under compensation of
employees

Expenditures made by these workers on
goods and services in host economies

Are included in the current account, under travel

Employment earnings by persons who work
for a nonresident entity such as a foreignembassy

Are included in the primary income account, under compensation of
employees

Remittances, by residents, of funds tohouseholds abroad (e.g., by foreign
workers living in an economy for 12 months
or more)Are included in the secondary income account, under personal transfers

Pensions and social security contributions
by residents to nonresident governments or
pension funds

Are included in the secondary income account, under social contributions

Pensions and social security payments
received by residents from nonresident
governments or pension funds

Are included in the secondary income account, under social beneﬁts

External ﬁnancial investments byhouseholds

Are included in the ﬁnancial account and the IIP

Migrants’ ﬁnancial assets and liabilities thatremain in the economy of origin
Migrants’ personal effects that areimported

Are not included in the balance of payments but should be included in
the other changes in ﬁnancial assets and liabilities account, under othervolume changes for the relevant functional category and instrument (and,by extension, be included in the relevant category of the IIP), until suchtime as these assets are liquidated (and the proceeds sent to the migrants’new economy of residence) or the liabilities are redeemed. When that
happens, these transactions should be included in the ﬁnancial account of
the balance of payments.
Are excluded from goods in the current account (as no change ofownership took place and, consequently, no transaction has occurred)

Source: IMF staff.

Surveys of businesses of transportation companies
could be used to measure passenger fares; survey ofbusinesses of the travel industry to measure travel;
official sources or surveys of businesses of health andeducation institutions to measure health and education services provided to nonresidents; surveys of
employers and employment agencies to measure compensation of employees and possible personal transfers (such as workers’ remittances); various official

sources and surveys of pension funds to measurepensions and social security transactions; and fundmanagers to measure financial investment abroad byhouseholds. In addition, the compiler may be able
to approach some partner economies to collect required data. However, such sources may not always
be adequate for the compiler’s purposes, and conducting personal and household collections may benecessary. In addition, household collections may be

54

Balance of Payments and International Investment Position Compilation Guidea useful check on the validity of data collected fromother sources.
3.214 The remainder of this section reviews theprimary types of household collections (migration
statistics, alternative statistics on across-the-border
movements, surveys of individuals traveling, andother household collections) that could be available
to the balance of payments compiler.

Migration Statistics
3.215 Migration statistics are designed to measure
the number of persons crossing an economy’s frontier;these statistics usually distinguish between visitors, othershort-term individuals traveling abroad, and migrants.
A visitor is defined as person staying, or intending tostay, in an economy other the one in which the person
is normally a resident for less than 12 months for purposes other than to be employed by a resident employer.5
Other short-term individuals traveling abroad include
border, seasonal, and other short-term workers andnomads. Migrants are persons moving permanently orfor periods of 12 months or longer; the persons do notneed to be resident for 12 months before being classified as residents (exceptions to the 12-month rule are
made for students and medical patients who may be inan economy for longer than 12 months and not change
residency if they intend to return to their home economy
at the completion of their studies/treatment). The intention of doing so at the time of entry into the economy isusually sufficient. Migration statistics should not include
movements of military personnel or civilian government
employees and their dependents living abroad because
they are considered residents of their home economies.
3.216 Visitors, other short-term individuals traveling abroad, and migrants are all of interest for balanceof payments purposes. For visitors and other shortterm individuals traveling abroad, the objective is tomeasure their earnings and expenditures abroad (forresidents) or in host economies (for nonresidents). For
balance of payments purposes, migrants are regarded
as having changed residence. Migrants are of interest
because they are likely to move financial assets (and liabilities) when they move from one economy to another,or they may maintain financial assets and liabilities intheir former economies of residence. These aspects of
migration do not represent transactions (until suchtime as the assets/liabilities are liquidated / paid off,
5

See Tourism Satellite Account: Recommended Methodological
Framework 2008.

when they should be recorded in the financial accountof the balance of payments), but they should be measured for inclusion in the other changes in financial assets and liabilities account, and by extension, in the IIP.
3.217 Data on the number and characteristics of
migrants and visitors and other short-term individuals traveling abroad are usually obtainable from international migration statistics, guidelines for which
may be found in Recommendations on Statistics on International Migration, Revision 1, 1998, in the United
Nations Statistical Papers.
3.218 International migration statistics may bebased on measurements of persons as they cross national borders or arrive at airports, population registers, or field surveys. Recording of persons at bordercrossings and at airports is likely to provide better dataon visitors and other short-term individuals travelingabroad than population registers and field surveys.
Whatever the data source used, the compiler should
be aware of its limitations.
International guidelines on migration statistics

3.219 The Recommendations on Statistics on International Migration represent an update on the 1976
recommendations. These guidelines define categories of arrivals and departures that migration statistics should measure. In the guidelines, emphasis isplaced on measuring the length of stay and on using
12 months as the dividing line between short-termand long-term migrants.
3.220 The guidelines identify four broad methods
for measuring migration—administrative registers,other administrative sources, border collection, andhousehold-based field inquiries. The guidelines also
contain discussion of the relative merits and challenges of each approach to measuring migration.
Measuring the number and characteristics
of arrivals and departures

3.221 Data on border crossings are typically produced as a by-product of an administrative process
designed to identify and control persons entering andleaving an economy. The essential procedure requires
such persons to complete and submit a migration cardor form. Data collected may include the person’s name,sex, nationality, date and country of birth, passportnumber, marital status, intended address in host economy, flight number or other transport details, intended

Speciﬁc Surveys for Balance of Payments and International Investment Positionor actual length of stay, and purpose of visit. These data
are required for migration officials to check the identityof the person traveling, as well as to administer migration policy. The information may also be used for statistical purposes; for this reason, requests for additional
data may be added to migration cards or forms. The
compiler may, from time to time, have the opportunity
to influence the design of these documents and shouldtake advantage of these opportunities to facilitate datacollection for balance of payments purposes. Data
from these cards or from population registers or fieldinquiries are the basis of migration statistics.
3.222 From the compiler’s viewpoint, the information shown in Table 3.4 is generally required tocompile various balance of payments transactions
data. For each category shown in the table, data may
also be required on economy of destination or origin,purpose of journey, and so forth. Also, supplementary data may be required on nonresident students
or patients who stay in host economies for periodsof 12 months or longer, or on national students or
patients who leave for a month or longer, in order totreat these cases correctly in the balance of payments.
Table 3.4 Number and Surveys of Travelers

Arrivals

Departures

Residents visiting
abroadNonresidents
visiting compiling
economyNumber ofarrivals andactual length ofstay abroad from
migration records

Number of arrivals
and expected
duration of visit
from migration
records

Actualexpenditure
while abroadfrom survey

Anticipatedexpenditure while
visiting compiling
economy fromsurveyNumber of
departures andexpected lengthof stay abroadfrom migration
records

Number of
departures andactual lengthof stay from
migration records

Anticipatedexpenditure
while abroadfrom survey
Field
inquiries

Actualexpenditure
while abroad

Actualexpenditure while
visiting compiling
economy fromsurveyNot applicable55

3.223 Model forms 21 (returning residents) and
22 (departing nonresidents) request information thatcan be useful for compiling estimates of travel expenditure. Further information on the use of surveys of
individuals traveling abroad is provided ahead.
3.224 These data, together with data on patterns ofexpenditure and compensation of employees, could
form the basis for a data model to estimate various
balance of payments items. In particular, travel services can be estimated by multiplying the actual
number of visitors and other short-term individuals
traveling abroad (residents visiting abroad) by the estimate of per capita expenditure from surveys of actual expenditure. Preliminary estimates for a period
can make use of data on the expected length of stay
and anticipated expenditure.

Alternative Statistics
on Across-the-Border Movements
3.225 An economy’s official migration statistics areusually compiled, in conjunction with the migration
authorities, by the central statistical agency. However,these statistics—especially in relation to visitors andother short-term individuals traveling abroad—may
not always be available, so the compiler may require
another source of data on short-term movements.
As an alternative to migration statistics, the compiler
could investigate using data, to be provided by transport companies, on the number of passengers moving across an economy’s borders by means of varioustransport modes (such as aircraft, ship, train, or bus).
Data on passengers traveling by road may also be available from official sources. For island economies andeconomies where the majority of across-the-border
movement of persons is via organized transport, datafrom transport companies can be an effective source
for measuring such movements. Data on the number ofnonresidents registering at hotels may also be available
as a source of information on some visitors and othershort-term individuals traveling abroad (although hotel
registrations will double count such travelers staying at
more than one hotel and miss those who do not stayat hotels). The compiler should become aware of thesesources and seek to influence their development when
they prove useful in balance of payments compilation.
Surveys of Individuals Traveling Abroad
3.226 Surveys in various forms are conducted bymany economies to measure activities of individu-

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Balance of Payments and International Investment Position Compilation Guide

als traveling abroad. Some surveys may be designed
purely to meet balance of payments requirements formeasuring travel and possible other forms of expenditure and income. Other surveys with broader purposes may contain information on travel expenditureand therefore be of interest to the compiler. Individuals traveling may be surveyed when they arrive or
depart or sometime after they have returned to theirhome economies. Table 3.4 sets out various categories
of surveys and whether these surveys measure anticipated or actual expenditure (and receipts).
3.227 Surveys of arrivals measure actual expenditures abroad of residents returning home and anticipated expenditures of nonresident visitors and othershort-term individuals traveling in the economy.
Conversely, surveys of departures measure actual
expenditures of departing nonresident visitors andother short-term traveling individuals and anticipatedexpenditures of departing resident visitors and othershort-term traveling individuals. Surveys of returned
individuals from travel abroad collect data fromresidents sometime after they return home. In some
economies, these surveys include questions on employment income (compensation of employees) andother possible balance of payments transactions, suchas transfers and financial account transactions.
3.228 Survey methodology may take a number offorms. If a survey is made in respect of arrivals or departures, it may take place on board aircraft or in passenger terminals. If conducted in passenger terminals,
access to passengers in airline lounges will need to benegotiated as these passengers are likely to have different characteristics to those not located in lounges—
for example, a higher proportion of individuals inlounges may be business travelers. The survey may be
conducted by distributing and collecting forms or bypersonal interview. Surveys of returned visitors andother short-term traveling individuals may be conducted by mail or by personal or telephone interview.
In these surveys, returned visitors and other shortterm traveling individuals can be identified from
migration cards or similar sources. Surveys may be
carried out by an official statistical organization, another government agency, or a private agency working on behalf of an official agency.
3.229 A number of economies, particularly those
whose primary territory consists of one or more islands,

conduct surveys based on interviews of departing
nonresident visitors and other short-term travelingindividuals. In some economies, this approach is also
used to measure expenditure by returning residents.
These surveys are often conducted on behalf of the national tourist authority by a private survey company.
The primary purpose of the survey is to gather information on travel activities and attitudes of departing(or returning) visitors and other short-term travelingindividuals to facilitate tourism analysis and policy
development. Interviews include many questions;those of particular interest to the balance of paymentscompiler concern travel expenditure by, and earnings of, nonresident visitors and other short-term
traveling individuals in the host economy and similar information for residents returning from abroad.
Travel expenditure may be broken down into a number of categories, including expenditure at hotels andrestaurants and on transportation, entertainment,
shopping, and other services. Additionally, travel expenditure may be classified by type of payment used
(e.g., package tour, credit cards, cash, wire transfers,
and traveler’s checks) to reconcile such data with datafrom other sources.
3.230 Some economies use surveys of international air passengers to provide information on traveland passenger fare receipts and payments. Cooperating airlines distribute questionnaires (to be completed on a voluntary basis) to all passengers on
selected flights, collect completed forms, and returnthe forms to the balance of payments compiler. Like
surveys based on interviews, these typically serve theinterests of the tourism industry as well as those of
the balance of payments compiler. Key items for thecompiler include destination or origin, expendituresin host economies, length of stay, and passenger fares.
Information is combined with migration statistics toproduce final results. However, where the data are
obtained on a voluntary basis, such as surveys conducted on aircraft, the compiler should be consciousof potential bias in the results. These can be addressed
through the use of estimation techniques.
3.231 As surveys of visitors are typically sample
surveys, results should be expanded to determine aggregate results for the population of visitors and othershort-term individuals traveling abroad. Aggregatescan be obtained by number raising (i.e., results foreach person sampled are expanded by the inverse ofSpeciﬁc Surveys for Balance of Payments and International Investment Position

their chance of selection adjusted for nonresponse)or by using a poststratified estimator (the results are
expanded by the ratio of the number of persons in
the population in a particular category—as identified
from migration statistics—to the number of persons
in the sample in the category). A poststratified estimation procedure should produce more accurate results
but can be subject to bias. Less rigorous sampling techniques may be acceptable if the survey is simply designed to derive per capita estimates for input into data
models rather than actual aggregate travel expenditure. In any case, the compiler should either gain somefamiliarity with statistical theory and mathematical aspects of sample design and selection and/or seek professional assistance from mathematical statisticians.
Sample surveys are discussed further in Chapter 2.
3.232 In surveys of visitors, group travel, which islargely associated with families, requires particular attention. It is important to determine whether a visitor
or other short-term individuals traveling abroad is amember of a traveling group. As sample expansion
procedures usually are based on the individual as thestatistical unit, it is necessary to assign group travel
expenditure to individuals. It is possible to adopt avariety of procedures, but the procedures must be
consistent. One procedure is to prorate all group expenditure to adults in the group (an adult could be defined as a person of more than a certain age). A related
issue is the expenditure of children. In many surveys
of visitors, children are not included in the sample. As
children (other than students) often travel in groups
with adults, their omission should not be a concern,
especially if there are alternative methodologies formeasuring students’ expenditures when amounts are
significant. Procedures should be developed, however,for assigning the expenditure of nonstudent children
traveling in a group. For example, all expenditure ofchildren could be assigned to the head of the household or to another adult. Also, it is important that theabsence of children be taken into consideration in any
sample estimation.
3.233 One problem with surveys of visitors ismemory recall. This difficulty can be partly overcome in interview surveys by encouraging the interviewee to consult records and/or by providing suitable
prompts. During the interview, the interviewer may
encourage the interviewee to consult credit card slips,
traveler’s checks records, and so forth. Economies

57

that conduct surveys of individuals traveling abroad
sometime after their return almost always collect expenditure information classified by type of payment,
rather than by types of goods and services acquired,because the financial records required to support thisapproach are more likely to be retained by individuals
traveling abroad than the recollection of which items
were acquired.
3.234 Another problem, particularly for package
tours, is the splitting of expenditures into passenger
fare (included in transport, except for any transport
provided internally to the economy visited) and travelcomponents such as accommodation and meal costs,
transfers between airport and hotel, or site entry
charges. To overcome this problem, survey questionnaires may seek the total value of a trip—that is, passenger fares plus those travel costs that are covered by
the package cost. The balance of payments compiler
could then estimate the travel expenditures by deducting from the total value of the trip an estimate ofinternational passenger fares obtained from anothersource, such as a survey of businesses of transportation companies (described in Collections of Goods
and Services Statistics, this chapter). Alternatively,
the balance of payments compiler could consult withtravel industry representatives to break down trip expenditure into the two components. If the package
tours have been arranged by nonresident organizers,
the balance of payments compiler may explore thelikely breakdown between transport and travel costswith resident organizers.
3.235 In collecting the information from individuals traveling abroad (regardless of whether for package tours), it is important that the compiler ascertain
the residence of the transport company to determine
whether the services provided would be included in
the compiler’s economy’s balance of payments. For
example, if a resident airline is providing transport
services to residents, this is not a balance of payments transaction. Similarly, if a nonresident airline
is providing transport services to nonresidents; these
services are not included in the compiling economy’sbalance of payments. On the other hand, where a resident airline is providing transport services to nonresidents, this is a transport credit for the resident
economy. Where a nonresident airline is providing
transport services to residents, this is a transport debit
for the resident economy.

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Balance of Payments and International Investment Position Compilation Guide

3.236 The compiler should play an active role inthe development and monitoring of survey of visitors conducted by other agencies. Particular attention
should be paid to the wording of questions, the location of questions on forms or the sequence of questions in interviews, the training of interviewers, anddata validation and sampling techniques. It is desirable that individual records (or completed forms)
from surveys be given to the compiling authority forvalidation checks of data, examination of collection
procedures, review of possible sample problems (suchas outliers), and expansion of sample results via, forexample, a poststratified estimation procedure usedin conjunction with international migration statistics.

Other Collections
3.237 Many economies conduct household expenditure surveys (e.g., to arrive at weights for consumer price indexes). These surveys could be used toestimate travel expenditure abroad, which is a component of household expenditure. Experience withthis approach is not particularly encouraging as the
sample of persons who travel abroad is usually notlarge enough to provide robust estimates for balanceof payments purposes. This problem with samplingsparse populations can be addressed if there is a special supplementary survey to expand the number of
responding households. However, in the absence ofalternative data sources or a larger sample, this approach could be used to generate broad estimates oftravel and also to provide estimates of remittances topersons abroad (the survey could include a supplementary question on this issue).
3.238 Another strategy to improve the proportionof the sample that provides information of interest to
the compiler is to limit the sample in some way. For

example, it may be limited to areas close to borders (forborder workers and seasonal workers); to workers employed in particular industries (for seasonal workers
and short-term workers—for example, on fly-in-fly-out
contracts); or to lists of immigrants available from therelevant authority. The survey could target transactionsof particular interest to the compiler, including income
from employment, taxes paid in the economy of employment, social contributions paid, social benefits received, travel expenditure, or financial transactions andpositions (for border workers, etc.). In addition or instead, transport and travel associated with visits to theeconomy of former residence, remittances, financial
assets and liabilities, and social benefits received (forimmigrants) could be covered. Model form 23 in Appendix 8 requests data that would be of specific interestfor these populations.
3.239 A further population of particular interestis that of nonresident students, who can be identified
from the visa-issuing authority or from education institutions. Surveys can be used to seek information on
where the students source their funds and to identify
their expenditure patterns.
3.240 Closely related to household expenditure
surveys are household income surveys, which obtain
information on household sources of income. Thebalance of payments compiler could investigate thepossibility of using (particularly in the absence of alternative data sources) these surveys to measure personal transfers received from relatives working abroadand employment income earned from household investments made abroad. As the number of households
may not be sufficiently large to provide robust estimates of balance of payments data, a supplementary
survey may be conducted to endeavor to address thesparseness of the population of interest.

4International Transactions
Reporting System

4.1 The international transactions reporting system (ITRS)1 is part of the broader institutional datacollection framework of many economies. It differsfrom economy to economy, drawing from economies’ legal framework, accounting systems, and foreign exchange regulations; however, virtually all such
systems have certain features in common. Most ITRS
(formerly known as foreign exchange record systems)
evolved as by-products of foreign exchange control
systems. However, as foreign exchange restrictions
were eased or lifted, many systems were extended beyond their original purpose of measuring foreign exchange transactions; hence, a broader designation isnecessary to describe them. This chapter outlines features of an ITRS and also discusses the use of an ITRS
in compiling balance of payments and IIP statistics.
4.2 As a general rule, an ITRS is a data collection
system that obtains data from banks and companies atthe level of individual transactions. The most comprehensive “traditional” ITRS measures: (1) cash transactions with nonresidents that pass through domestic
banks; (2) cash transactions that pass through enterprise accounts with banks abroad; (3) transactions on
intercompany accounts with nonresident companies;(4) positions; and (5) noncash transactions. Statistics
are compiled from forms submitted to/by domestic
banks and from forms submitted by companies.

ITRS Reporters
4.3 An ITRS typically collects data from reporters inthe banking sector including the central bank, and selected companies called direct reporters that report directly to the balance of payments compiling institution.

1
ITRS sometimes refers to an international transaction reporting
system (singular), and sometimes refers to international transactions reporting systems (plural).

4.4 The banking sector is central to the ITRS. Banks
report all operations that are carried out between residents and nonresidents through their books on theirown account and on the account of their clients. In
economies with foreign exchange restrictions that do
not allow residents to hold foreign exchange accounts
with resident banks, clients’ foreign exchange purchases and sales transactions with nonresidents canbe captured. Also, nonresidents’ accounts in domestic
currency with resident banks should be monitored, if
nonresidents are allowed to hold such accounts.
4.5 In economies where residents can hold foreignexchange accounts, the ITRS is focused on collecting
transactions going through banks’ correspondent accounts. Such accounts include (1) nostro accounts—
correspondent accounts of resident banks with banks
abroad2 and (2) vostro accounts that are nonresident
banks’ accounts with resident banks.3 In addition, the
ITRS includes resident companies’ accounts with nonresident banks and nonresidents’ accounts (other thanbanks) with resident banks. Regarding the banks’ own
transactions, banks should account for foreign currency(banknotes) accounts, their correspondent and deposit
accounts with nonresident banks, nonresident banks accounts in domestic banks, and other security and loanaccounts that involve transactions with nonresidents.
4.6 Other ITRS reporters are companies called direct reporters. Two types of direct reporters could be
identified:(1) Full direct reporters (FDR) are companies witha high degree of cross border transactions that2
In some cases, ITRS also includes nostro accounts with resident
banks, for banks that are not licensed to have correspondent accounts with nonresident banks.
3
A vostro (your) account is another bank’s account with the reporting bank, while a nostro (our) account is the reporting bank’s
account with another bank.

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Balance of Payments and International Investment Position Compilation Guide

conduct their transactions through accounts
with domestic banks and, in some cases,
through accounts with banks abroad and intercompany accounts. FDRs report to balanceof payments compilers all transactions and positions with nonresidents conducted throughall mentioned accounts. In a closed system,
domestic banks will also report FDR transactions conducted through domestic accounts;
however, they will classify these transactions
as neutral, to avoid duplication.
(2) Partial direct reporters (PDR) are companies
that have accounts with nonresident banks
and are not FDRs. PDRs report directly to thecompiler only transactions through accounts
abroad.

Comprehensiveness of ITRS
4.7 The comprehensiveness of ITRS may vary, andit in general determines to which extent the compilation of the balance of payments depends on othersources. A fully comprehensive ITRS must include
banks and direct reporters’ transactions, which arereconciled with resident banks’ foreign currency
positions or with external assets and liabilities positions of direct reporters. In terms of comprehensiveness, the ITRS can be closed, partial (semiclosed),or open. A closed ITRS accounts for all transactions and reconciles all transactions going throughtargeted accounts with corresponding changes inpositions. An open ITRS does not allow such complete accounting and reconciliation. In a partial
ITRS, certain balance of payments transactions are
not recorded or the system allows for reconciliationof flows and positions only for some accounts. For
example, the system may not include transactions
involving exports and imports of goods, although
it may provide for reconciliation of data on certain
flows and positions.

Data Items Collected
4.8 The report form is completed by the bank client and/or by the bank staff based on information/
documents provided by the client. The report form
includes the reference number of the transaction, thereference period, the identity of the transactor, theidentity of the bank accepting the form, the currency
used in the transaction, the value of the transaction(either in terms of the currency used, the unit of account, or both), the classification and description of
the purpose of the transaction (i.e., payment/receipts
for import/export of goods), and the economy of thenonresident party. Banks record also their own transactions and details of their foreign currency (andother external asset and liability) positions for purposes of providing IIP data and for reconciling transactions and positions.
4.9 Appendix 8 presents model ITRS collection
forms, as well as their outline. The model collection
forms are designed for a closed ITRS and include thefollowing:• Form 3-1 ITRS-Payments and Receipts—Single
transactions reported to the banking system
by banks’ clients or by banks on behalf of theirclients• Form 3-2 ITRS-Imports and Exports—
Demonstrates how an ITRS could be used to capture data on goods transactions; although it is notrecommended to compile goods statistics based on
ITRS due to limitations described in Chapter 11• Form 3-3 ITRS-Companies—For FDRs it covers
transactions passing through company foreign
currency accounts at domestic banks, bank accounts with nonresident banks, noncash transactions, and external asset and liability positions. For
PDRs, it includes transactions passing throughcompany bank accounts with nonresident banks,
including positions• Forms 3-4 ITRS-Banks and 3-5 ITRS-Banks’ Record of Transactions—Includes the reporting ofbanks’ own transactions and positions and data
reconciling positions and flows.
4.10 The presented forms could be used for collecting data with or without a threshold. If a thresholdis established, it is beneficial if transactions below thethreshold level, if material, are reported in an aggregated amount classified using the appropriate code.
4.11 A list of model classification codes for transactions (and positions) is presented in the Annex toForms 3-3–3-5 for ITRS-Classifications. In the list,
infrequently used codes are not shown. (In some
economies, individual codes are added to the classification framework after compilers consult with particular companies engaged in specialized activities
and with the central bank in respect of government

International Transactions Reporting System

activities and of reserve assets transactions.) Excluding specialized codes on the general forms avoids the
problem of overburdening respondents with instructions and classifications. The list includes codes forselected neutral transactions such as transfer of funds
between accounts or transactions of FDR includedin the banks report. These transactions should bereported to allow for reconciliation of flows and positions, although they are not included in balance of
payments statement.

Reporting Threshold
4.12 In many ITRS, thresholds are established forreporting transactions. Large numbers of transactions are of small value and, in aggregate, also may
account for insignificant values. The use of thresholds prevents undue reporting burdens and processing costs. The thresholds can be simplification or
exemption. With an exemption threshold, the smallvalue transactions that fall below the predeterminedamount are not reported. The simplification threshold requires reporting of small value transactions inan aggregate amount or without being classified by
the purpose of transaction. The collection of smallvalue transactions allows for the reconciliation offlows and positions and also assures a full coverage of ITRS in aggregate transactions in balance of
payments statistics. It is important that judgment beapplied in adopting thresholds so that overall data
quality remains acceptable.
4.13 When a simplification threshold is applied, thecollected information on transactions falling below
the threshold should be attributed to the balance of
payments accounts. Different approaches could beapplied. Particularly, the information on purpose ofsmall value transactions may be collected from periodic sample surveys (which could be small, ad hoc
surveys carried out via special arrangement with one
or more commercial banks). The examination of survey results will help in determining appropriate classifications for transactions so that data on transactions
occurring above the threshold may be supplemented
with data on small transactions that are appropriately
classified. Also, information on data below the threshold can be gathered from an analysis of small transactions before the threshold is raised. If one of thesemethods is utilized, relatively high thresholds can beused without jeopardizing quality.

61

4.14 In some cases, when the small value transactions are collected but without their classification bypurpose, the compiler can attribute them to balanceof payments accounts by analyzing the description oftransaction purpose or the information on resident
transactor, if such information is available. In somecases, the compiler could classify only transactions
that prevail by purpose (e. g., transfers by individuals that could be attributed to remittances measures)and the remaining small value transactions could be
attributed to accounts applying the same approach as
described in the previous paragraph.

Classiﬁcation of Transactions
4.15 To compile a balance of payments statement,
it is necessary to ensure that the classification of transactions used in the ITRS conforms, as closely as possible, to the classification required for the balance of
payments statement. The coding system should be intuitive and could be customized for different reporters. For example, the list of codes for banks and PDRs
may include only cash transactions, while the list ofcodes for FDRs could include also codes for noncash
transactions (examples of noncash transactions areprovided in paragraphs 4.43–4.44). This would reduce
the number of codes and lessen the reporting burden.
4.16 The list of codes should include codes for allbalance of payments components; however, transactions that occur rarely (e.g., some types of services)
could be classified as “other n.i.e.” Special codes (alsocalled neutral codes) should be identified for transactions that are not included in balance of payments
statement but are recorded in the ITRS to improve theefficiency of the system and for cross-checking purposes. For example, neutral codes should be included
for FDR’s transactions reported by the bank or forcross border transactions carried out by one residentbank on behalf of another resident bank, if the former
is also an ITRS reporter. A model list of codes of transaction purposes is presented in the Annex to Forms
3-3–3-5 for ITRS-Classifications in Appendix 8; it addresses main balance of payments items. The list ofcodes should be accompanied by a detailed description/
explanation of transactions classified under each code.
4.17 An important and often difficult part of datacollection is the classification of transactions. It canbe executed by the transactor (bank’s client) while

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Balance of Payments and International Investment Position Compilation Guide

ordering a payment, by the bank staff based on theinformation from the client, or by balance of paymentscompilers. The reporter should provide informationthat is sufficient to ensure correct coding and coding
cross-checks. A system in which the reporter both
describes and codes the transaction usually produces
the best results, especially if the codes are checkedby the compiler. It is important that the compiler review the codes for accuracy, because accurate balanceof payments classifications require the input of specialists with knowledge both of commercial practices
and balance of payments classifications.

Currency Conversion
4.18 The balance of payments methodology generally recommends that transactions expressed in one
currency be converted into domestic currency or inother currency in which the balance of payments iscompiled (unit of account) by using the daily average
midpoint exchange rate for transactions aggregatedfor a day. If data are collected in currency of transaction but aggregated for a longer period (e.g., week,
month) the average midpoint exchange rate for the
given period is used for converting into the unit ofaccount. Corresponding position data should be converted by use of a midpoint market rate applicable tothe date on which the position is measured.
4.19 Systems that record the value of each transaction in the unit of account, rather than in the transaction currency, are consistent with recommendationsof the balance of payments methodology, assumingthat prevailing market exchange rates are used by reporters for the conversion. In these systems, the reconciliation of settlement transactions to changes inpositions must be undertaken in the unit of account.
In this circumstance, it may be difficult for the compiler to discern whether the nontransaction changes
in positions, which are derived as residuals, are due toerrors in the recording of transactions and positions,or to use of inexact exchange rates.
4.20 In systems in which the values of transactions are recorded in the currencies in which they aredenominated, data are aggregated by currency, andreconciliations are performed in each individual currency. The advantage of this approach is that it avoids
errors arising from use of inexact exchange rates. Exchange rates prevailing at the time of the transaction
should be used for matching transactions involving

different currencies. However, for practical reasons,
period average exchange rates are often used for thisprocess. After reconciling and matching processes
are completed, data are converted—typically by useof period average exchange rates—to the common
unit of account and aggregated. The disadvantage ofthis method is lack of consistency with recommendations in the balance of payments methodology, which
recommends the use of the exchange rate prevailingwhen a flow takes place or over a very short periodof time, not an average rate over a prolonged period.
4.21 In practice, particularly when exchange rates
are not volatile, the use of the second methodology
may yield results similar to those of the recommendedbalance of payments methodology. One possible approach (although burdensome) is to collect (by using
the midpoint rate applicable to the transactions) dataon the value of each transaction in the unit of accountand in the currency used in the transaction. If transactions were initially recorded in both the common unitof account and the foreign currency denomination, it
would be possible to compile results by using both of
the alternative methodologies described earlier. Results from use of the two methods could be compiled
from a sample of transactions and compared. While
this procedure adds an additional cost to the ITRS,
collection of data in both relevant currencies provides
a potential cross-check that transactions are correctly
recorded; a set of conversion ratio checks could be
developed to validate reported data. Any ratio fallingoutside predetermined limits could be investigated.

Time of Recording
4.22 It is important that banks and FDRs record
transactions in an ITRS at the same time. Simultaneous recording should be achieved by individual bankreporters within a closed system because a uniform
time of recording can be maintained by matching
entries that pass through a bank’s nostro and vostro
accounts against collection forms completed by FDR.
A record should be created for any nostro and vostro
account entries for which no corresponding collection forms exist. Similarly, collection forms for which
no nostro or vostro account entries can be identified
should be investigated and cancelled if underlying
transactions are cancelled or otherwise not completed.
4.23 Another example could be when a bank receives a draft to be sent for collection—the draft mayInternational Transactions Reporting System

be recorded when it is purchased from the client,when it is sent for collection, or when it is recorded by
the correspondent bank.
4.24 However, all banks in the system will not keep
books in the same manner unless required to do soby law. Different banks may have different views regarding when to record foreign exchange assets. As
mentioned earlier, ideally, banks should account forforeign currency, foreign exchange bank balances, bills
and notes of other banks sent for collection or held forinvestment purposes, and other foreign securities andloans. Also, banks should account for any foreign liabilities. If these items are not included in an ITRS, data
covering transactions in excluded assets and liabilities
and corresponding positions should be collected separately and included in balance of payments and IIP
compilations. Banks may choose to record transactions
in some of these assets and liabilities when claims are
created, when claims are sent for collection, or whenamounts are recorded in nostro accounts.
4.25 Even if all banks included all the transactions covered by the assets and liabilities mentioned
previously, and chose similar reporting procedures,
there nonetheless may be timing discrepancies; forexample, two domestic banks involved in a foreignexchange settlement may not record the settlement in
the same accounting period. This circumstance could
give rise to a discrepancy in the total settlements item;
hence, the compiler should check each large settlement transaction between domestic banks and ensurethat both sides of the transaction have been recordedin the same period. If both parties have not recorded
the transaction in the same period, it is necessary tohave the reporting banks correct their data, or, if different accounting practices make that inappropriate,
the compiler should make an adjustment.
4.26 It is important for the compiler to investigate
and obtain an understanding of the accounting practices used by banks and to determine the impact ofthese accounting procedures on both the scope andtiming of ITRS statistics.

Valuation, Bundling, and Netting Practices
4.27 An ITRS may not achieve uniform valuations. For example, goods may be recorded, depending on the contract price in individual transactions,on an f.o.b., c.i.f., or some other basis. The balance63

of payments methodology requires the compiler torecord goods on a uniform—namely, the f.o.b.—basis.
Therefore, the compiler may have to make certain
valuation adjustments to ITRS statistics to compile abalance of payments statement.
4.28 Bundling of transactions occurs when severaltransactions relating to more than one classification
category are covered by a single payment. For example, a payment on a loan may include the loan repayment, an interest payment, and some fees for financial
services. It is necessary for transactors to report the
separate components, or for estimates to be made if
the amounts involved are significant.
4.29 Another example of bundling is the recording of transactions on a net, rather than a gross, basis.
Some foreign exchange payments may cover a number
of offsetting gross credit and debit transactions; thismay often be the case with transactions undertaken
by transportation, travel, communication, moneytransfer operators, financial companies, and companies in a direct investment relationship. Therefore, it
may be necessary to collect additional information in
respect of certain types of transactions or from certain
types of companies, or it may be necessary to split certain transactions into component parts.

Scope of a Simple ITRS
4.30 A model of a simple closed ITRS is used toillustrate operation of this type of collection system. The model is based on the assumptions that:(1) residents can hold foreign exchange accounts withresident banks; these accounts can be used only for
payments to nonresidents; (2) payments in foreign
currency between two residents are not allowed;(3) residents cannot hold accounts with nonresident
banks; and (4) ITRS is focused on collecting transactions going through banks’ correspondent accounts(nostro / vostro). These assumptions, which would bevalid in an economy with foreign exchange controls,
are dispensed with later in the chapter. Under theseassumptions, four types of foreign exchange transactions may be recorded by resident Bank A:(1) A bank client makes a payment for improved
goods in foreign exchange to a nonresident,
and receives payment for reselling the goods
to another nonresident. Both payment and receipt will be made on the client’s foreign exchange account with Bank A.

64

Balance of Payments and International Investment Position Compilation Guide(2) To travel abroad, a resident individual acquires
foreign currency traveler’s checks from Bank A.
Bank A purchases traveler’s checks issued by anonresident bank from a nonresident individual.
(3) Bank A undertakes a foreign exchange transaction with a correspondent nonresident bankabroad. These may be foreign exchange transactions or other transactions settled in foreign
currency.
(4) Bank A undertakes a foreign exchange transaction with resident Bank B. This transaction
may be undertaken to settle balances in various currencies or to sell (or buy) foreign exchange to (from) the central bank.
4.31 Under a closed ITRS, the payments/receipts
of foreign exchange by the client will be recordedby the bank on behalf of its client using model form
3-1 and the corresponding reduction/increase in the
bank’s foreign exchange position will be recorded in
the bank’s transactions through model forms 3-4 and3-5. The payments and receipts are recorded according to the purpose(s) of the transactions.
4.32 For example, in case (1), if Bank A’s client
pays 100 units of foreign exchange (currency y) topurchase goods from abroad and receives 120 units ofcurrency y from selling goods abroad, the following
entries would be recorded in a closed ITRS:Current accountGoods
Financial accountBank, deposits—
currency yReceipts(Credit)120

Payments(Debit)100

Net acquisitionof financial
assets
100
+120

Net
incurrence ofliabilities

4.33 In case (2), a transaction arises as a result ofa domestic bank selling traveler’s checks to a resident
traveler. Under the assumption that ITRS is collecting transactions through bank nostro accounts, thepurchase of traveler’s checks will be recorded at thetime of settlement with the correspondent bank.4

4
If ITRS captures transactions of foreign exchange purchase andsale, this transaction is recorded at the time of the purchase of thetraveler’s checks.

For example, Bank A conducts the following transactions in currency y: purchases 50 units of traveler’s checks (issued by a nonresident bank) fromthe nonresident travelers and sells 60 units of traveler’s checks issued by the bank to resident traveler.
Further, Bank A claims 50 units settlement for thepurchased traveler’s checks and pays 60 units as
settlement claimed by nonresident banks that purchased traveler’s checks issued by the bank. The
appropriate ITRS entries for the settlement transactions are as follows:
Current accountServices—travel
Financial accountBank, deposits—
currency yReceipts(Credit)50

Payments(Debit)60

Net acquisitionof financial
assets60+50

Net
incurrence ofliabilities

4.34 An example for case (3) would be a foreign
currency exchange transaction in which Bank A sells
20 units of currency y for 24 units of currency z toa nonresident bank (one unit of currency y equals
1.2 units of currency z). The appropriate ITRS entries
would be:Financial accountBank, deposits—
currency yBank, deposits—
currency z(amount is presented
in currency y)

Net
Net acquisition
incurrence ofof financial
liabilities
assets20+20

4.35 Case (3) also covers transactions other thanthose of a foreign currency exchange nature. For example, Bank A may acquire (at a cost of 5 units ofcurrency y) the services of a nonresident accountant;receive a commission of 6 units on the sale of traveler’s checks issued on behalf of a nonresident bank;and make payments of principal and interest of 37
units and 8 units, respectively, on a loan. Payments
for all of these items would be made through Bank
A’s foreign exchange account (nostro) with a nonres-

International Transactions Reporting System

ident bank. The following entries should be recordedin ITRS:
Current account

Receipts(Credit)Services—otherbusiness services(accounting)Services—financial
Primary income—interest
Financial accountPayments(Debit)5

6
8
Net acquisitionof financial
assets

Bank—loans
Bank, deposits—
currency yNetincurrence ofliabilities37

5 8 37
+6

4.36 Entries for case (4) are similar to entries forforeign currency exchange transactions recorded incase (3). For example, Bank A sells 25 units of currency y to another domestic Bank B and 33 units ofcurrency y to the central bank. Settlement is under-

65

taken in domestic currency (one unit of currency yequals one unit of domestic currency). The following
entries should be recorded in ITRS:Financial accountNet acquisitionof financial
assetsBank, depositsbank A—currency ybank B—currency ycentral bank—currency yNetincurrence ofliabilities25 33+ 25+ 33

4.37 In all cases described earlier, domestic banks
will reduce or increase their holdings of foreign exchange in nostro accounts with nonresident banks.

Aggregation of Results
4.38 Using the examples from the foregoing paragraphs, Table 4.1 illustrates aggregation of the resultsof an ITRS collection. Initially, results should be compiled by bank and by currency. In aggregation of results, it is important that all significant transactions

Table 4.1 Summary of ITRS Transactions from Previous Examples (in currency y) (concluded)
Credit (receipts)

Debit (payments)

120

100

Travel

50

60

Other

6

5

Summary, bank A, currency yCurrent account
Goods
Services—

8

Primary income

Financial accountNet acquisition of ﬁnancial
assets−37

Bank—loans
Bank foreign currency

Net incurrence of liabilities−100−60−20−5−8−37−25−33+120+50+6

Summary, bank A, currency z
Financial account—
Bank foreign currency
Summary, bank A domestic currency

Net acquisition of ﬁnancial
assets

Net incurrence of liabilities+20
Net acquisition of ﬁnancial
assets+25+33

Net incurrence of liabilities

66

Balance of Payments and International Investment Position Compilation Guide

Table 4.1 Summary of ITRS Transactions from Previous Examples (in currency y) (concluded)

Summary, bank B, currency yFinancial account—
Bank foreign currency
Summary, bank B domestic currency

Credit (receipts)

Debit (payments)

Net acquisition of ﬁnancial
assets

Net incurrence of liabilities+25
Net acquisition of ﬁnancial
assets

Net incurrence of liabilities−25
Summary, central bank, currency yFinancial account—Reserve assets
Summary, central bank domestic currency

Net acquisition of ﬁnancial
assets

Net incurrence of liabilities+33
Net acquisition of ﬁnancial
assets

Net incurrence of liabilities−33
Source: IMF staff.
Note: ITRS = international transactions reporting system. The conversion rate of y to z is 1 to 1.2, and of y to domestic currency is 1 to 1.
Entries in domestic currency are between two residents and are not reported in ITRS; however they are shown for balancing purposes.

be recorded; results should be balanced by bank andby currency.
4.39 The next step in the aggregation process is toreconcile flows and positions. Reconciliation can beachieved by comparing opening and closing foreign
currency positions (by bank and by currency) withtotal increase and decrease entries. The opening andclosing positions are reported by banks for each monitored account (including nostro and vostro accounts)
or aggregated by currency. Table 4.2 shows such reconciliation where the opening position plus increase
entries less decrease entries should equal the banks’closing foreign currency positions (assuming no priceor other changes). Any discrepancy discovered in thisreconciliation process would be shown in the otherchanges column. In a closed ITRS, the balance of payments compiler should obtain a full reconciliation;
any discrepancy indicates errors or omissions in data.
Table 4.2 shows that the sum of increase entries lessthe sum of decrease entries accounts for the changes
in foreign currency positions of the banks shown in
Table 4.1; therefore, a full reconciliation has beenachieved.

Modifying the Modelof the Simple ITRS
4.40 The model of a simple ITRS presented in previous paragraphs is based on assumptions suitablefor economies with foreign exchange restrictions. In
economies with relaxed or abolished foreign exchange
regulations, the system should be modified so that:• Residents who have accounts with nonresident
banks report details of account transactions andbalances.
• Transactions performed through nonresident accounts with resident banks are monitored. Undera closed ITRS, transactions going through theseaccounts with both resident and nonresident
counterparts will be recorded; however thosewith a resident counterpart will be classified as
neutral.
• FDRs report details of their noncash transactions, such as the granting of trade credit orloans, with nonresidents and the corresponding
positions.
4.41 One important data collection issue for an ITRS
is the inclusion of offshore banking units established inInternational Transactions Reporting System

67

Table 4.2 Reconciliation of Opening and Closing Positions with Transactions(in currency y)
Opening foreign

Other

Closing foreignchangescurrency position

currency position

Increase

Decrease

Bank A

1.120

+196

–288

1,028

Currency y

1,000

+176
[+120+50+6]–288[–100–60–20–5–8–37–25–33]

888

Currency z

120

+20

140

1,022

+25

1,047

999

+33

1,032

3,141

+254

Bank B
Currency yCentral bank
Currency y
Total

–288

3,107

Source: IMF staff.
Note: Values for opening positions are given, not derived from calculations. The conversion ratio of y to z is 1 to 1.2.

an economy. Often the existing regulation in economies
classifies offshore companies (banks and nonbanks)
as nonresidents. Moreover, offshore banks are usuallypermitted to accept deposits from, and make loans to,nonresidents only. Offshore banking units should betreated—for purposes of the balance of payments and
IIP statistics—as residents of the economies in which
they are incorporated. The same treatment should prevail for the nonbank offshore companies incorporated
into the economy (see BPM6, paragraphs 4.134 and
4.135, regarding the residence of corporations withlittle or no physical presence). Consequently, transactions and positions between these companies and nonresidents should be included in an ITRS, and offshorebanks should report transactions and corresponding
positions with nonresident clients following the same
rules as for resident nonoffshore banks. If resident companies have accounts with offshore banks, the accounts
may be used to settle transactions with nonresidents;
these transactions should be measured in an ITRS. It is
important for the compiler to ensure that reporting arrangements cover all balance of payments requirements
and that omission or duplication of data is avoided.

Measurement of Noncash Transactions
4.42 A closed ITRS can provide a complete statement of transactions that take place between residents and nonresidents and involve cross border cash
payments. This system collects also some noncash

transactions that occur between residents and nonresidents and do not involve cash payments. Suchtransactions are reported by FDRs using the model
form 3-3 presented in Appendix 8.
4.43 Examples of noncash transactions that can berecorded by FDRs include exports and imports financed
by loans that may not involve cash payments. For example, an exporter may arrange for a financial institution
to provide financing to a nonresident importer, andthe exporter may be paid in domestic currency by thelender. Consequently, there may be no entry in a banknostro (or vostro) account until the loan is repaid, andthen the transaction may be recorded (correctly) as aloan repayment rather than as an export. Similarly, an
importer may borrow funds to purchase goods abroad.
In most circumstances, the borrowed funds would passdirectly from the financier to the nonresident exporter
and, therefore, no cash payment would be involved.
4.44 Examples of other noncash transactions coverdebt rescheduling, debt cancellation (with the concurrence of both parties), reinvested earnings, dividend to equity conversion, interest and debt to equity
conversion, and so forth.

Preparation of a Balance of Payments
Statement
4.45 This part presents general issues in compiling a balance of payments statement based on

68Balance of Payments and International Investment Position Compilation Guide

data collected through ITRS. More details on using
ITRS data in compiling balance of payments components are described in the subsequent chaptersof the Guide dedicated to balance of paymentscomponents.
4.46 While most compilers prefer to use international merchandise trade statistics for compiling thegoods item in the balance of payments, compilers
in some economies use ITRS for the compilation of
goods account that may have to be adjusted in a number of ways.
4.47 In respect of coverage, goods financed via
loans, goods that form part of foreign aid programs,
and goods traded between direct investment enterprises (DIENT) are examples of goods transactions
that may not be captured in an ITRS and should be
identified and included. Any adjustment made to
the goods item in an ITRS represents one side of thetransaction. Data sources should be checked for coverage of the counterpart entries, and a corresponding
adjustment should be made to the other item in theaccount if appropriate.
4.48 The value of goods for which prepayment
was made or the value of goods sold on short-term
credit is recorded in many ITRS when payment
is made. Therefore, the period in which payment
is recorded may be different from that in whichchange of ownership of the goods occurs. It is possible to record goods and associated finance flows
if supplementary data are collected to indicate theperiod in which the goods changed ownership orwere shipped. Also, such reconciliation can be conducted by cross-checking ITRS data on payments
for goods with customs declarations data on importand export of goods. Such a reconciliation can be
conducted at least for important high-value transactions. For example, in a specific period, an ITRS may
be used to identify export receipts of 240 units, 20of which represent prepayments for goods to be delivered in a future period and 21 of which represent
goods delivered in a previous period. Supplementary sources identify prepaid delivery of 23 units ofgoods and delivery of 27 units of goods for which
payment will be made at a future date. The results
would be as follows:

Current account

Receipts
Payments(credit)(debit)Goods
240−20−21+23+27
Net
Financial accountNet acquisition
incurrence ofof financial
liabilities
assetsTrade credit and21+20
advances+27
23
Bank, deposits, foreign+240
currency

4.49 When a change of ownership for goods andpayment for these goods are recorded in different
periods, a timing adjustment may be required. Suchadjustments would be necessary for goods transactions involving prepayments or other trade credits.
Corresponding adjustments would be required in thefinancial account to record transactions arising fromthe creation and extinguishment of these short-term
assets and liabilities.
4.50 Certain goods and services that are provided
under foreign aid programs (and for which payment
is made by the donor to the supplier) would not be recorded as cash transactions in an ITRS. The compiler
should identify these transactions and record themin the balance of payments. In the following example,
an aid donor provides food aid to another economy
and pays a food producer in the home economy. The
resulting balance of payments entries are as follows:
Current accountFor the exporting
economyExport of goods
Secondary income—transfers (foreign aid)
For the importing
economyImport of goods
Secondary income—transfers (foreign aid)

Receipts(credit)

Payments(debit)

73
73

73
73

4.51 In respect of valuation, it is important to
identify the basis on which goods are imported orexported. For imports and exports recorded on an
f.o.b. basis, no adjustment is necessary. For goods tradeInternational Transactions Reporting System

69

recorded on some other basis, adjustments are necessary. For example, for goods traded on a c.i.f. basis, theinsurance and freight elements should be identified toenable the valuations to be brought onto an f.o.b. basis.

essary to record any transfers in kind (particularly
those that form part of foreign development assistance and military aid) that are not encompassed in
ITRS statistics.

4.52 In respect of transportation and travel, it isusually necessary to supplement ITRS data on transport and travel companies to ensure that sufficient
data are collected and that data are correctly classified. The ITRS measurement of travel may have to beaugmented to take account of transactions involving
foreign currency notes and coins that do not passthrough the domestic banking system.

4.56 Financial account transactions measured by
ITRS statistics tend to coincide with the balance of
payments requirement on time of recording of financial flows—namely, when investment takes place
and when drawings and repayments on loans occur.
However, the financial account should also include
financial transactions that are not captured in an
ITRS, such as increases in claims or liabilities due todividends that are declared payable but not yet paid,or goods or services provided on credit. The compiler
may have to supplement ITRS statistics with dataon financial transactions that may not be measured by an ITRS (e.g., loans involving trade finance, debt rescheduling, debt cancellation, anddebt to equity conversions). Also, adjustments thatare made to other items in ITRS statistics and thatinvolve financial items (e.g., goods involving tradecredit and prepayments, interest accrued but notpaid) would have offsets recorded in the financial
account.

4.53 Reasonably good-quality statistics on otherservices can be obtained from an ITRS. These statistics reflect the time at which payment for the services
is made rather than when services are rendered. Most
compilers who use an ITRS consider payments data
to closely approximate data on the time when services
were rendered. However, it may be useful for the compiler to obtain information on these relationships toensure that this view is correct.
4.54 Income should be recorded when it is accrued
rather than when it is actually received or paid. Most
compilers who use ITRS view payments data as appropriate approximations, in many cases, for time whenincome is accrued. However, the compiler should adjust ITRS data for reinvested earnings on direct investment and for significant cases in which interest
income is accrued and not paid (e.g., deep discounted
and zero coupon bonds, discounted bills, and interestin arrears). In these cases, the compiler should keepa special tabulation, or collect supplementary information, to make the necessary adjustments. Further,
it is important to ensure that income and financial
account transactions are clearly separated in ITRS
statistics. For example, in some systems, loan repayments and interest payments are reported as a single
item by transactors. This type of reporting is likely tooccur, for example, when financial leases are involved,
and in these instances the compiler should distinguish between income and loan repayment elements.
4.55 Transfers recorded in ITRS statistics are usually reported at time of payment. Most compilers who
use ITRS consider payments data to be reasonableapproximations for times when change of ownershipoccurs in underlying resources. In addition, it is nec-

4.57 Reserve asset transactions would be included
in ITRS statistics if the central bank (or other institution in charge of managing the reserve assets) is oneof the ITRS reporters. The reporting by the central
bank will be following the same reporting rules as forcommercial banks; however, the list of codes for thecentral bank should include specific codes for transactions on reserve assets (e.g., SDRs holdings, and reserve position with the Fund). However, due to theunique characteristics of reserve assets and the importance of a correct attribution of assets to official
reserves, the detailed information on transactions inreserve assets should be collected from the central
bank unit in charge of managing the reserve assets.
4.58 To assure the coverage in balance of payments
and IIP statistics of transactions that are not coveredin ITRS, additional collections should be developed
through supplementary forms and added to the basic
ITRS. For example, supplementary forms must be
developed to measure reinvested earnings on direct
investment, transportation, travel, insurance, and soforth. The compiler should cross-check the data

70

Balance of Payments and International Investment Position Compilation Guide

collected through additional forms with ITRS data inorder to avoid duplication.

Collecting and Processing Data
4.59 This section contains a summary of collection
features applicable to ITRS. More details are presented
in Chapter 2. Figure 4.1 shows the primary processing
activities in a typical ITRS. It depicts a representative
system; actual systems may use somewhat different approaches. The figure shows three types of basic input:
bank client forms (completed by bank clients or by bankofficer based on information provided by client), bankreports (completed by banks), and companies reports(completed by FDRs and PDRs in respect of accounts
with nonresident banks, noncash transactions, andpositions of external assets and liabilities). Bank client forms are checked by banks that receive the forms
and submitted to the balance of payments compiler or

introduced in the clients’ report database. Ideally, theclient forms for ordering payments should include
fields related to balance of payments reporting; that
information is stored in the bank’s system. The banks
have applications that retrieve those data and provide
them to the balance of payments compiler under anagreed format.
4.60 Forms not coded by the client are coded at thisstage by the bank officer. The clients’ report database,as well as reports completed by banks, is submitted tothe balance of payments compiler. It is very importantthat the submission be done by electronic means; thisreduces the burden on processing data by the compiler. Data are then entered in the compiler’s databaseand subjected to initial validation—an important stepto identify any obvious errors, such as noncompleted
fields or inaccurate coding. Also various other quality
control procedures are conducted.

Figure 4.1 Processing System in a International Transactions Reporting System (ITRS)Bank client forms

Reconciliation of
position/flows

Data queried andamendedDatabase
Bank officer
checks andcodes forms

Compiler initiallyvalidates the form

Quality control
procedures applied
Conversion
procedures

Aggregation andestimation

Bank reports on
own transactions
Aggregated data

Data entered
Enterprise reports

Results analyzed
Balance of
payments enterpriseregister

Results
disseminatedInternational Transactions Reporting System

4.61 Quality control procedures may include: (1)checking the conversion rate between the foreign currency value and the domestic currency value if bothamounts are reported; (2) checking the comparability of patterns of transactions reported by companies
from period to period; and (3) listing large transactions likely to affect overall results. Reporting banks orcompanies may be queried about large transactions;
responses may result in amendments to the database.
Another quality control procedure consists of reconciling reported positions and flows for individual
reporting banks and for individual companies. This
procedure involves collating data from all sources andexamining residuals—activities that may, in turn, leadto data queries and amendments. Transaction values
may then be converted to the domestic currency if thevalue in domestic currency was not collected.
4.62 Because of the complexity of an ITRS andthe volume of transactions covered, a large computer
processing system is usually required. To calculate
resource requirements in this area, it is important toquantify: (1) the volume of records to be processed;(2) the average number of characters per record to beentered and stored; (3) the numbers of interrogations
and tabulations to be submitted and the frequency ofsubmission; and (4) the number of staff necessary toorganize the system efficiently.
4.63 Many international transactions reporting
systems require large numbers of processing staff tocheck, code, and enter data. Staff numbers can be reduced significantly if computer processes are used—in particular, electronic transmission of data fromprovider to compiler. The work of processing staff
should be monitored to identify and correct any errors. In some systems, every coder’s work is checkedby another. This procedure may be expensive, and themere checking of one’s work by another may not identify all errors.
4.64 More effective are quality control proceduresthat tolerate a minor level of error while identifying
significant errors and underlying reasons. Proceduresfor checking all large transactions and a sample ofsmaller transactions should be developed. The checkers should be highly skilled staff. If the error rate on asample of checked records exceeds the acceptable level
for an individual coder, an additional, larger sample ofthe coder’s work should be checked. If the error rate71

on that sample is also found to be beyond tolerance,
remedial action should be taken—including, in the extreme case, the recoding of entire batches. This type of
quality control procedure is more likely to detect individual weaknesses, improve coder skills, and enhancedata quality than complete checking procedures.
4.65 Compiler’s requirements for detailed, timely,
and accurate statistics should be emphasized when an
ITRS is being developed. The compiler should establish priorities in these areas and the collection strategy
should be chosen in accordance with these priorities.
For example, the requirement for timely statistics may
be best satisfied through judicious use of estimation
techniques, which will obviously have an impact oncollection strategy.
4.66 An important component of a good ITRS is
contact (e. g., through regular meetings) between thecompiler and the data providers—particularly banks’
officers and those companies engaging in international transactions of large value. The interaction withdata providers can be conducted through small groupmeetings or through larger seminars for respondents.
These seminars could review the report forms and thecoding system, and could serve as venue for training
respondents on main balance of payments concepts(such as the concept of residence or center of predominant economic interest, functional categories, or
financial instruments). The seminars could also discuss the main errors and inconsistencies identified inreported data and adjustments that need to be introduced to the classification system and report forms for
improving the reporting. Such interaction facilitatescorrect classification of transactions and monitoringof individual banks or companies so that data can bechecked and verified and the compiler kept abreast ofdevelopments affecting the balance of payments.
4.67 The process of summarizing records and analyzing aggregates should include estimation for
nonresponse and any ratio expansion used to takethresholds into account. The analysis may reactivate
some quality control procedures, which may—in
turn—generate new queries and amendments. New
aggregates may have to be generated; this is an iterative process. Results are released after the compiler issatisfied with the quality of the data.
4.68 Figure 4.1 shows a link between the balanceof payments company register and the unit record

72Balance of Payments and International Investment Position Compilation Guide

database. Data from the register may be used to classify transactions by sector and industry. Company
reports may provide additional information, such asname changes, for the balance of payments company
register. Also shown in the diagram is the important
link between bank client forms and the balance of
payments register. This link demonstrates the matching of transactions data to companies and the identification of new companies for inclusion on the register.

ITRS as a Data Source
Advantages

4.69 The most significant advantage of the ITRS
may be its capability to deliver information to thecompiler in a very timely and frequent manner,since data are generally registered at the moment ofsettlement of the transactions. The use of electronictransmission of reports by the financial system alsofunctions towards the timeliness and frequency ofdata availability.
4.70 For economies that have an ITRS derived
from exchange controls, it is a cost-effective sourceof data as it uses the well-defined regulatory, institutional, and data reporting framework developed forthe exchange control purpose. It is likely to remain
cost-effective for the compiling agency even when thiscontrol is lifted, assuming that the processing procedures in place remain effective after the abolition of
the exchange control.
4.71 Well-structured ITRS in an exchange control regime tend to be accurate, since they are generally based on highly comprehensive data reporting
guidelines originally designed for surveillance andthus highly detailed. The compiler’s access to data
is usually facilitated by the fact that data providers(generally banks) are under the compiling authority’s (central bank) supervision and therefore subject
to legislation regarding data collection and reporting
procedures. In case the compiling authority is otherthan the central bank, the regulatory acts should be inplace that would allow the compiler access to primarydata provided by banks.
4.72 ITRS that do not have reporting thresholds are,in general, very adequate for compilation of transactionsof small amounts, such as income, services, and personaltransfers.
Disadvantages

4.73 Misclassification is a frequently identified
problem in an ITRS because the biggest part of transactions is classified by intermediaries—banks—on
behalf of their clients. However, in a system using direct reporting, the reporters have greater knowledgeof their transactions and are able to convey more accurate information regarding foreign counterpartsand level of detail.
4.74 The adoption of thresholds, common in most
ITRS, represents a high risk of data omission. The
higher the thresholds, the more likely it is to incur omissions. Exemption threshold may result in the omissionof small value transactions, such as personal transfers.
Also, for the compilation of personal transfers, an ITRS,
which relies exclusively on remittances sent throughformal channels, may present significant omissions as
many of these flows go through informal channels.
4.75 ITRS might be a burden on data reporters
and banks, especially when it is not a by-product of
exchange transactions. Structuring an ITRS for thecollection of individual transactions is highly costly.
Notwithstanding, after the initial costs of the implementation of the system, its maintenance costs areusually low for both reporters and compilers.
4.76 An ITRS accounts for potential gaps in coverage when exchange controls are loosened and residents
transact directly abroad or through companies otherthan domestic banks. Another example of coverage gap
is related to transactions that do not involve payments,
such as accumulation of trade credits when the payment is made after the delivery of goods and services.
4.77 In some cases, ITRS register only net amounts
instead of gross flows required for the compilationof balance of payments. This arises, for instance, forsome transport services, money transfers transactions, and postal network activity.
4.78 Another limitation is that all transactions captured in ITRS (except for data from FDRs) are on a
cash basis while the balance of payments methodology recommends the accrual basis of recording.

5International Merchandise
Trade Statistics

Introduction
5.1 International merchandise trade statistics(IMTS) measure quantities and values of goods that,by moving into or out of an economy, add to or subtract from a nation’s material stock of goods. IMTS
are compiled from report forms or from electronictransmissions sent by importers and exporters (ortheir agents) to the customs and excise agency or to
the IMTS compiler, which in many cases would be thestatistical agency. Balance of payments compilers inmost economies rely on IMTS to compile the goods
item in the balance of payments, and in some economies it is used in compiling other items in balance of
payments accounts as well.
5.2 The balance of payments compiler should readand use this chapter in conjunction with Chapter 11.

International Guidelines on IMTS
Relevance of the International
Guidelines on IMTS to Balanceof Payments Compilation
5.3 International guidelines on concepts and definitions used in the compilation of IMTS are outlined
in International Merchandise Trade Statistics: Concepts
and Definitions 2010 (IMTS 2010).1 The balance of
payments compiler should be aware of these guidelines of the IMTS 2010 and the extent to which they
are, or are not, implemented by customs and national
statistical authorities in the compiler’s economy. The
guidelines of the IMTS 2010 do not fully conform to
the principles of the System of National Accounts 2008
(2008 SNA) and the BPM6. Customs records essentiallyreflect the physical movement of goods across borders,

1International Merchandise Trade Statistics: Concepts andDefinitions 2010 (New York: United Nations, 2010).

whereas the BPM6 requires the balance of paymentscompiler to measure goods on a change of ownershipbasis. Subsequent sections of this chapter elaborate on
differences between the IMTS 2010 and the BPM6.

Coverage of IMTS
5.4 The IMTS 2010 recommends that international merchandise trade statistics should record all
goods that add to or subtract from the stock of material resources of an economy by entering (imports)
or leaving (exports) its economic territory. The material resources of an economy are those located on
its economic territory whether owned by residents orby nonresidents. The IMTS 2010 follows the BPM6
and 2008 SNA in defining economic territory as thearea under the effective economic control of a single
government. It follows therefore that the coverageof imports and exports as defined in the IMTS 2010
would differ from the coverage of merchandise credits and debits in the BPM6, as the former would include goods not owned by residents and exclude somegoods owned by residents. The following table summarizes the main areas of divergence between the
IMTS 2010 and BPM6 and the corresponding adjustments that should be made.
5.5 On the other hand, it is noted that the IMTS
2010 and BPM6 now have consistent treatment of
the following items where conceptual differences previously existed. Mobile equipment that changes ownership while outside the economy of residence of its
original owner is now recommended to be includedin IMTS, parallel to the treatment in the BPM6. Fishcatch, minerals from the seabed, and salvage soldfrom national vessels in foreign ports or from national
vessels on the high seas to foreign vessels are also now
included in IMTS, similar to the BPM6. Goods procured in port by carriers are also included both in
IMTS and the BPM6.

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Balance of Payments and International Investment Position Compilation Guide

Table 5.1 Reconciliation between the IMTS 2010 and BPM6 (concluded )Item
Goods for processing

IMTS 2010
All goods for processing are recorded
when they enter or leave the economic
territory, irrespective of whether achange in ownership takes place.
The IMTS 2010 includes a new
encouragement to identify goods forprocessing where there is no change ofownership to assist balance of paymentscompilers.

BPM6
Goods for processing without change inownership are excluded.
If the goods are sold to a third economy
after the processing, the value of the goods(including the value of processing) is recordedin the BPM6 as an export of the economyof the owner and an import of the third
economy.
In order to determine subsequent exports,
companies involved in inward and outward
processing need to be identiﬁed, possibly
through customs declarations, and surveyed
for the required information.
The value of processing is recorded as anexport of services of the processing economy
and an import of services of the economyof the owner (see also Chapter 12 on
manufacturing services on physical inputs
owned by others).

Migrants’ personal
effects

Physical movements of migrants’ effects
are recommended to be included in IMTS.

These are excluded from balance of payments
because there is no change in ownership.

Returned goods

Exported/imported goods that aresubsequently returned are included
in imports/exports and identiﬁed as
re-imports/ re-exports at the time when
they are returned.

Revised entries should be made to exports
and imports, and the transactions should be
voided, preferably for the period when the
goods were initially recorded.

Goods imported for
projects by nonresident
construction company

IMTS records all goods imported forconstruction projects by nonresident
companies.

Where construction projects are not sufﬁciently
substantial to constitute a branch of theenterprise, goods imported for construction
projects by nonresident companies are
excluded from trade in goods in the balance of
payments. (They are a component of the valueof construction services.)

Goods that cross borders
as a result of shipments
to a related party

These are included in IMTS, irrespectiveof whether a change of ownershipoccurs.

The BPM6 records a trade in goods
transactions only if it can be determined that
there is a change of ownership between aresident and a nonresident.

Goods transferred fromor to a buffer stockorganization

These are included in IMTS.

The BPM6 excludes goods temporarily
exported or imported, such as goods forstorage, if no change of ownership takes place.

Goods lost or destroyedin transit

Goods lost or destroyed after leaving theexporting economy but before entering
the importing economy and after theownership has been acquired by theimporter are encouraged to be excluded
from IMTS of the importing economy,
but separate recording is encouraged.
When goods are lost or destroyed after
leaving the exporting economy but
before entering the importing economy
when ownership has not been acquired,an export would be recorded in IMTS.

When ownership has already beentransferred, the goods transactions are to
be included in the balance of payments.
No goods transaction will be recorded if
ownership of the goods did not change.

International Merchandise Trade Statistics

75

Table 5.1 Reconciliation between the IMTS 2010 and BPM6 (concluded )Item

IMTS 2010

BPM6

Goods undermerchanting

These are excluded from IMTS.

The BPM6 records goods under merchanting
separately as a negative export when
acquired by a resident from a nonresident,
and as a positive export when sold by aresident to a nonresident.

Goods entering/leaving
the economic territory
illegally

These are recommended to be excluded
from IMTS but encouraged to berecorded separately.

These are included in general merchandise (aswell as smuggled goods that are otherwise
legal).

Nonmonetary gold

Transactions in nonmonetary gold
between residents and nonresidents thatenter or leave the economic territory areincluded in IMTS.

All transactions in nonmonetary gold
between residents and nonresidents arerecorded even when there is no physicaldelivery to the new owner—for example,
when the nonmonetary gold is held at a gold
exchange.

Media

Recorded and nonrecorded media are
included in IMTS. The exceptions are
media used for carrying customized
software or software written for a
speciﬁc client or originals of any nature.
In practice, however, the exclusion of
the latter may not be possible since
they fall under the same classiﬁcation
heading.

The BPM6 includes in general merchandise
only noncustomized packaged softwareand video and audio recordings, on physicalmedia such as disks and other devices, with alicense for perpetual use.

High-value capital goods

Goods are recorded at the time when
they enter or leave the economic
territory of an economy.

Goods are recorded according to the timethat the economic ownership is conveyedfrom the seller to the buyer. The time ofownership change could be a progressivechange based on stage payments or in full ondelivery.

Valuation of imports

The IMTS recommends a cost, insurance,
freight (c.i.f.)-type valuation for imports.

The BPM6 requires a free on board (f.o.b.)type valuation for imports.

Source: IMF staff.

General Trade and Special Trade Systems
5.6 The IMTS 2010 outlines the measurement oftrade flows on the basis of (1) the general trade systemand (2) the special trade system. Under the general
trade system the statistical territory coincides with theeconomic territory.2 Under this system the time of recording should be the time when goods enter or leave
the economic territory of the compiling economy.
For merchandise trade statistics collected through acustoms-based data collection system, the time of recording is approximated by the date of lodgment of2

The IMTS 2010 defines statistical territory of an economy as theterritory with respect to which trade data are being compiled.

the customs declaration (i.e., the date when customs
accepts the declaration for processing). If such dates
differ considerably from the date when goods actually cross the border of the economic territory (e.g., if
goods are cleared well in advance or after their arrival)
or noncustoms data sources are used (e.g., enterprisesurveys) more appropriate dates should be identified
and used (e.g., the date of arrival/departure of thegoods carrier as indicated in the transportation documents). It is the responsibility of economies’ statistical authorities to identify (or estimate) the best proxydate of the general guideline for the time of recording by taking into account the peculiarity of nationalrules on administrative procedures and the need forconsistency in the application of the selected method.

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Balance of Payments and International Investment Position Compilation Guide

5.7 The special trade system is in use when the statistical territory does not coincide with the economic
territory; thus, some goods that enter or leave the economic territory are not covered in imports or exports
statistics, and, on the other hand, other goods that aretraded within the economic territory are covered inimports or exports statistics. There are various definitions of special trade that economies may apply, buttraditionally the strict and the relaxed definitions aredifferentiated.
5.8 The strict definition of the special trade system
is in use when the statistical territory comprises only
the area within which goods “may be disposed ofwithout customs restriction.” Consequently, in sucha case, imports include only goods entering the freecirculation area3 of a compiling economy and exports
include only goods leaving the free circulation areaof a compiling economy. Under the strict definition,
goods imported for inward processing and goods thatenter or leave an industrial or commercial free zone4
or customs warehouses and have not been cleared
through customs for the free circulation area would
not be recorded in imports statistics. Also, under thisdefinition goods that leave the free circulation areaand enter one of the aforementioned zones will be included in exports of goods.
5.9 Under the relaxed definition of the special tradesystem goods that enter or leave a commercial freezone and goods that enter or leave the customs warehouses and have not been cleared through customs
for the free circulation area would not be included
in import/export statistics. Consequently, under thissystem the international merchandise trade statistics
would include only (1) goods entering and leaving thefree circulation area, (2) goods that enter an economy
for or leave it after inward processing, and (3) goods
that enter or leave an industrial free zone.

3
The free circulation area is the part within which goods may bedisposed of without customs restrictions.
4
A “free zone” (or “customs free zone”) means a part of theterritory of the state where any goods introduced are generally regarded, insofar as import duty and taxes are concerned, as beingoutside the customs territory. In a commercial free zone, thepermitted operations are generally limited to those necessary forthe preservation of the goods and the usual forms of handling to
improve their packaging or marketable quality or to prepare themfor shipment such as breaking bulk, grouping of packages, sortingand grading and repacking. In an industrial free zone, processingor manufacturing operations are allowed.

5.10 Figure 5.1 illustrates the import and export
flows entering and leaving different zones of an economic territory.
5.11 Goods entering the port (imports) can be
categorized into the following groups: goods that arecleared through the customs into the free circulation
area (M1), goods that enter the industrial free zones(A1), goods that enter the premises for inward processing (B1),5 goods that enter the commercial freezones (C1), and goods that enter the customs warehouses (D1). The last group of flows (E1) relates todirect transit trade that is not included in goods
statistics.
5.12 The red arrows in the figure indicate the possible flows of goods between different zones of economic territory, including (1) flows of goods fromindustrial and commercial free zones, as well as frompremises for inward processing and customs warehouses (A3, B3, C3, and D3) that are cleared throughcustoms for free circulation area, and (2) flows ofgoods from free circulation areas that are cleared
through customs for industrial and commercial freezones, premises for inward processing, and customs
warehouses (A4, B4, C4, and D4).
5.13 Under the general trade system, the imports
will be equal to M1 + A1 + B1 + C1 + D1. Under thestrict definition of special trade system, imports will
equal to M1 + A3 + B3 + C3 + D3, while under the relaxed definition of special trade, imports will be equal
to M1 + A1 + B1 + C3 + D3.6
5.14 Goods leaving the port (exports) include thefollowing groups: goods exported from the free circu-

5
These can be any premises where goods can be conditionallyrelieved from payment of import duties and taxes (under thecustoms procedure known as inward processing). Such goods
must be intended for reexportation within a specific period after
having undergone manufacturing or processing. Depending on
the customs regulation, premises for inward processing may be
specially designated areas or any premises, provided that otherconditions for inward processing are complied with IMTS 2010[as submitted for reproduction and translation in March 2011],
paragraph 26.
6
When goods from industrial or commercial free zones or frominward processing zones and customs warehouses are cleared
through customs for free circulation area, the trader files the appropriate documentation at customs changing from one customs
regime (e.g., inward processing) to another customs regime (e.g.,
direct importation).

International Merchandise Trade Statistics

77

Figure 5.1 Import and Export Flows

M1

X1

Free circulation area

A3

A4

B3

C3

D3

Industrial
free
zones

A1

A2

B4
B1

B2

Premises for inward
processing

Goodsentering
the port

Goods
leaving
the port

C4
C1

Commercial free zone
zones

C2

D4
D1

E1

Customs warehouses

Transit trade

D2

E2

Source: IMF staff.

lation area (X1),7 goods exported from industrial freezones (A2), goods exported from premises for inward
processing (B2), goods exported from commercial
free zones (C2), and goods exported from customs
warehouses (D2). Group E2 represents goods leaving
the economic territory under the direct transit.
5.15 Under the general trade system, total exports
will be equal to X1 + A2 + B2 + C2 + D2, while under

7
This export includes domestically produced goods with orwithout imported inputs and goods previously imported that are
reexported.

the strict definition of special trade system, exports
will be equal to X1 + A4 + B4 + C4 + D4 and under
the relaxed definition of special trade system exports
will be equal to X1 + A2 + B2 + C4 + D4. As in imports, exports will not include goods in transit (E2)under both the general trade system and the special
trade system.
5.16 The IMTS 2010 recommends that the general
trade system be used for compilation of both importand export statistics. The BPM6 stresses that the basis
for the balance of payments compilation should be thechange of economic ownership rather than the general
trade system (goods entering or leaving an economy)

78

Balance of Payments and International Investment Position Compilation Guideor the special trade system (goods cleared by customs).
The general trade system is the better proxy for measuring change of ownership because it provides broader
coverage and the date of change of ownership may
be closer to the date goods cross the national frontier(shipment date) than when the lodgment of the customs declaration takes place. Some economies that use
the special trade system should make coverage adjustments in the balance of payments for goods that crossthe border and are not included in IMTS or goods that
do not cross the border but are included in IMTS. Thebalance of payments compiler should attempt to ascertain the impact on the balance of payments of the timeof measurement used in IMTS. In some economies
where it is known that the clearance or shipment date
for certain significant goods does not coincide withchange of ownership, the balance of payments compiler
selectively substitutes data from other sources.
5.17 Under the strict definition of special tradesystem, two main limitations in imports statistics
are observed compared to the BPM6 requirements:(1) omission of goods that enter the four zones otherthan a free circulation area and are reexported without passing through the free circulation area; and(2) inconsistency in the timing of recording whengoods enter the free circulation area from otherzones. The timing difference occurs since the ownership has already changed when goods entered thezones, while their recording in goods statistics will
be only when they enter the free circulation area. The
same limitations apply under the relaxed definition,
except that the omissions and inconsistencies in timing will involve only goods going to commercial freezones and customs warehouses.
5.18 In the case of exports, the main limitation of
the special trade system is that it may cover goods
that do not leave the economic territory. Particularly,
under the strict definition, it may cover goods goingout of the free circulation area into the other fourzones, and under the relaxed definition, it may covergoods going out of the free circulation area into commercial free zones and customs warehouses.

Commodity Classiﬁcation
5.19 The IMTS 2010 outlines the various classifications that are used to classify international tradeand goods. These include the Standard International
Trade Classification (SITC) and the HarmonizedCommodity Description and Coding System (HS).
The IMTS 2010 also presents the relationships of theseclassifications to other classifications such as classification by Broad Economic Category (BEC).
5.20 The SITC is mainly used for trade analysis.
Its commodity groupings reflect the materials usedin production, the processing stage, market practices
and uses of the products, the importance of the commodities in terms of world trade, and technologicalchanges. The HS is an international nomenclature forthe classification of products that allows classification of traded goods on a common basis for customs
purposes. It is recommended that economies use HS
for the collection, compilation, and dissemination of
IMTS. The BEC is intended to categorize trade statistics into large economic classes of commodities and to
supplement the summary data compiled on the basisof the sections of the SITC. An understanding of theseclassifications is important for balance of paymentscompilation, publication, analysis, and projection.

Valuation
5.21 IMTS guidelines provide an explanation of
the difference between the transactions value, which isthe price actually paid by the importer, and the value
declared for customs purposes, which is typically thevalue recorded in IMTS. The guidelines also trace thedevelopment of customs valuations. Most economies
have adopted, for purposes of valuing imports, the recommendations in the Agreement on Implementation of
Article VII of the General Agreement on Tariffs and Trade
1994 (GATT) (World Trade Organization (WTO) Customs Valuation Agreement).8 This agreement essentiallyaccepts the importer transactions values. However, customs officials can, under certain conditions, adjust suchvalues if they think importer valuation is based on avoidance (e.g., by false invoicing or use of artificial transfer
prices) of some part of the import duty. The recommendations in the agreement also define the valuation
to be adopted for imports for which no accompanying
movements of cash or credit take place. From examination of available evidence, it appears that, in practice, the8
The Legal Texts: The Results of the Uruguay Round of Multilateral
Trade Negotiations (Geneva: World Trade Organization, 1995):
Agreement on Implementation of Article VII of the General
Agreement on Tariffs and Trade 1994, Part I, Rules on Customs
Valuation.

International Merchandise Trade Statistics

customs valuation for total recorded imports exceeds,
under Article VII of GATT, the transactions valuation
by a small margin. As such, the customs value may beconsidered a reasonable proxy for the transactions value
when the WTO basis of valuation is used. However, thebalance of payments statistics compiler may have toinvestigate the actual situation to determine whether avaluation adjustment should and can be made.
5.22 A specific valuation issue concerns the pointof valuation—namely, whether goods are valued at
the importer’s border—that is, at the cost, insurance,
and freight (c.i.f.) value at the importer’s border—orat the free on board (f.o.b.)9 value at the exporter’sborder. The IMTS 2010 recommends the adoption of
the c.i.f. valuation for imports, whereas for balance of
payments compilation purposes, the f.o.b. valuationis required. In view of this requirement, the IMTS
2010 recommends that supplementary data be collected for imports valued on an f.o.b. basis. Sampling
import entries is suggested as a possible means bywhich this data could be gathered. The guidelines recommend that exports be recorded on an f.o.b. basis,
a practice that is consistent with balance of payments
requirements.
5.23 Neither the f.o.b. nor the c.i.f. basis may represent the contract price, which depends upon delivery
arrangements made by the importer and the exporter.
Therefore, many bases of valuation are possible inpractice, and the f.o.b./c.i.f. bases may require somedegree of estimation by the compiler. Some economies
do not adhere strictly to the f.o.b. or the c.i.f. basis. In
the IMTS procedures adopted by the European Union
for the measurement of intra-union trade flows, information is collected on the basis of contract price,
and adjustments are made to place the statistics on thevaluation basis required by international standards.
5.24 An additional valuation issue concerns currency conversion. The IMTS 2010 states, “(a) where
the conversion of currency is necessary for the determination of the customs value, the rate of exchange to

9
The f.o.b. applies only when goods are dispatched from the exporting economy by sea or inland waterway. When other meansof transport are used for exports and f.o.b. is not applicable,“free carrier” (f.c.a.) at port of export can substitute for it. Ifneither f.o.b. nor f.c.a. are applicable (e.g., exports by railroad or
pipeline), “delivered at frontier” (d.a.f.) of the exporting economy
may be used.

79

be used shall be that duly published by the competentauthorities of the economy of importation concernedand shall reflect as effectively as possible, in respectof the period covered by each such document of publication, the current value of such currency in commercial transactions in terms of the currency of theeconomy of importation; (b) the conversion rate to
be used shall be that in effect at the time of exportation or the time of importation, as provided by each
Member.”5.25 An equivalent approach to conversion should
apply for both imports and exports. In cases whenboth buying and selling (official/market) rates areavailable, the rate to be used is the midpoint between
the two, so that any service charge (i.e., the spread
between the midpoint and those rates) is excluded. If
a rate is not available for the date of exportation or
importation, it is recommended that the average rate
for the shortest period applicable be used. An assessment of the exchange rates prescribed by customs
law or regulation and their conformity to balance of
payments recording principles should be made by thebalance of payments compiler. This assessment shouldbe accompanied by an investigation of actual practice.
Adjustments should be made if inappropriate conversion of import and export values from foreign currencies to the unit of account causes significant errors inbalance of payments accounts.
5.26 How do these valuation principles comparewith balance of payments compilation requirements?
For balance of payments purposes, the point of valuation required for both exports and imports is f.o.b.
When a c.i.f. or other valuation is provided, the balance of payments compiler should estimate the freightand insurance components separately to arrive at an
f.o.b. valuation. The balance of payments compiler
essentially requires a market price for valuing trade.
The transactions price is usually a good proxy formarket price; in exceptional cases of transfer pricing
for transactions between affiliated companies, othermarket-equivalent values could be substituted. An
exchange of information with counterpart economies
may be useful in this respect.

Quantity Measurement
5.27 The guidelines explain various quantity measures required for IMTS. While the balance of payments compiler essentially compiles data in current

80

Balance of Payments and International Investment Position Compilation Guidevalues, quantity measures should be of interest andshould be considered for inclusion in any analysis
accompanying balance of payments statistics. Somequantity measures of goods will also be essential forthe balance of payments compiler charged with making projections of balance of payments goods series.

Partner Economy Classiﬁcation
5.28 Trade in goods classified by partner economy
provides the basis for compilation of a regional balance of payments statement with respect to goods.
The guidelines present various concepts that could
be used to determine partner economy classificationand provide a useful discussion of each. For a more
extensive discussion of this issue, refer to Appendix 5of this Guide.
Compilation of IMTS
5.29 Source documents for IMTS are, in mosteconomies, customs declaration forms (or electronictransmissions sent by traders or their agents to customs officials in lieu of customs declaration forms).
These forms are designed to reflect the various tradeflows identified in Figure 5.1.
5.30 Individuals arriving in, and sometimes departing from, an economy are generally required tocomplete declaration forms. Data (on the value ofgoods declared) from such documents may be used
to estimate expenditure on travel if the value does notexceed a given customs threshold. However, goods forresale are included in general merchandise. There isusually a form for goods sent by parcel post, and thedeclared value of such goods should, in principle, berecorded in IMTS.
5.31 Under the procedures developed for measuring IMTS in the European Union, companies report
directly to the IMTS compiler, rather than customs, inrespect of intra-union trade.
5.32 Customs procedures may have an impact on
the recording, and hence on the quality of IMTS.
A customs procedure is a treatment applied by thecustoms to goods which are subject to customs control, and serves as the basis for the identification of theflow of goods. Examples of customs procedure covering imports are: clearance for home use, customs
warehousing procedure, free zones, inward processing, and processing of goods for home use.

5.33 Finalized customs documents are usually sent
to the national statistical office where staff process the
documents and compile the IMTS. In many economies, the timeliness of IMTS is very good; both broad
aggregate and detailed statistics become available
within a month after the reference period.
5.34 Some factors leading to IMTS of good quality
are as follows:• IMTS compilers should be well versed in international statistical guidelines and should follow
them closely by encouraging customs officials tocollect relevant data or by making supplementary inquiries of importers and exporters.
• IMTS compilers should maintain close contact
with users, such as balance of payments andnational accounts compilers, to resolve difficult
conceptual and treatment issues and to harmonize whatever treatments are adopted.
• IMTS compilers should undertake independent
coverage checks and introduce appropriate coverage procedures.
• IMTS compilers should undertake a number ofvalidation checks, such as price to quantity (unitvalue) checks on data, and query cases that lie
outside the norm.

Uses of IMTS in International Accounts
5.35 IMTS serve many purposes. In most economies, IMTS provide basic data for compilation of thegoods item in the balance of payments. IMTS may be
used, either directly or indirectly, in the compilationof transportation services; services associated withtechnology transfer, entertainment, and the rentingof equipment; and goods provided under foreign aid
programs. IMTS may also provide listings of companies that are engaged in goods transactions and/or
important recipients of international finance, providers of trade credit, and acquirers or providers of otherservices. An IMTS system could therefore be usedin creating a population listing for a balance of payments company register, a subject that is discussed in
Chapter 2.
5.36 Widely ranging data are collected on IMTS
forms. Of most interest to the balance of paymentscompiler are the value of goods, the commodity classification, the quantity, the shipment date (the date
the goods arrive in port for imports or leave port

International Merchandise Trade Statistics

for exports), the mode of transport and residency oftransport operator, the currency of the transaction,and the method of payment.
5.37 The balance of payments compiler should befamiliar with the actual practices adopted in compiling IMTS in order to identify the strengths and weaknesses of IMTS. Of particular concern are: (1) lags
between the dates of shipment or clearance and theprocessing of documents (such lags may cause timing
problems when IMTS are used in balance of paymentscompilation.); (2) the valuation of certain exports forwhich final prices may not be known at the times ofexport (particular problems could be the valuation ofagricultural and mining products); and (3) duty-free
goods that are subject to less attention by customs
officials (often, duty-free goods—especially exports
and government and defense imports—may not havedocuments created for them).
5.38 The balance of payments compiler should also
be aware of the undercoverage by IMTS of smuggled
goods often imported/exported informally by individuals living near the border points.
5.39 International guidelines for IMTS are notfully implemented in all economies. Also, the guidelines do not provide definitive directions in all cases,
and IMTS compilers must make some choices. As
mentioned earlier, the guidelines in the IMTS 2010
are not fully consistent with balance of payments accounting principles specified by the BPM6. Therefore,

81

working with the IMTS compiler, the balance of payments compiler should first review national IMTS
to identify differences between IMTS and balanceof payments requirements. Then, an attempt should
be made to quantify such differences. If possible,
the balance of payments and IMTS compiler should
arrange for adoption of suitable procedures to correct significant differences. Corrective activities may
include encouraging customs authorities to modify
procedures, collection (by the IMTS or balance of
payments compiler) of additional data directly fromcompanies, or provision of additional disaggregations via the IMTS. Sometimes it may be more appropriate for special adjustments to be included in thebalance of payments compilation process because,from a balance of payments viewpoint, some perceived inadequacies of IMTS may arise merely fromthe different conceptual basis of IMTS and balance of
payments statistics.
5.40 IMTS also provide input to the rest of theworld account of the national accounts. (Ideally,
the link should be through the balance of paymentscompilation system.) IMTS can be used directly andindirectly to compile goods statistics in current andconstant price terms that are seasonally adjusted or
unadjusted and accompanied with relevant implicit
price deflators. For many analyses, goods should beclassified according to various broad commodity
groups. At a more detailed level, IMTS are an important input into the compilation of input/output tables.

6

Data from Ofﬁcial and
Administrative Sources

Overview
6.1 This chapter covers sources of data on transactions and positions in external financial assets andliabilities of the general government and the central
bank sectors.1 These transactions and positions canhave a significant impact on the balance of payments;
therefore, their measurement requires careful attention. The chapter also examines data (which may
be relevant to the balance of payments) gathered bygovernment sector institutions as a by-product of carrying out their various functions. Examples are datafrom applications to invest, to acquire foreign exchange, and to export, and data from taxation, education, and health authorities.
6.2 Data sources described in this chapter may be
the sole sources for various balance of payments andinternational investment position (IIP) items. Thesesources also may be used to supplement sources suchas an international transactions reporting system(ITRS) or enterprise survey, or the sources may be
used to validate data collected elsewhere.
6.3 It is useful to consider alternative sources ofdata on the general government and central banksectors. Data on international activities of the central
bank may be obtained directly from the bank or froman ITRS—if the central bank is included as reporter.
While many agencies of general government may be
involved in international activities, payments or receipts associated with most of these activities would
be recorded, in the government ledger, by the central
accounting unit of the government. These transactions and positions are often settled through the central bank, when it acts as banker to the government.

1
Monetary authorities sector has to be identified when institutions other than the central bank carry out certain operations
usually attributed to the central bank (see BPM6, paragraph 6.66).

6.4 Government debt management functions arelikely to be organized separately in a debt control ormanagement office, and the central bank is likely tobe the banker. Therefore, to collect data on international transactions and positions of the general government sector, as well as of nonfinancial or financial
corporations debt guaranteed by the government, thecompiler may need to approach either the central accounting office or the debt office (through a specificcollection) of the government or the central bank.
6.5 It may be necessary to approach other unitsof government to obtain complete information onsome general government international activities. Tax
authorities may be an appropriate source of data on
withholding taxes and other taxes payable by nonresidents. Port and transport authorities may be goodsources of various transport fees payable to the government. Certain government entities that take delivery of goods and services from abroad may have theresponsibility for making payments, and it may benecessary to approach these entities directly to acquire
information required for balance of payments and IIP
purposes. These entities may include the ministry ofdefense, the ministry of foreign affairs, the ministryof public works (particularly if the ministry is responsible for organizing projects funded from foreign aid),
the foreign aid office, the ministry of education, andthe ministry of health. It may also be necessary to approach government agencies providing technical staff
or employing staff on secondment from abroad in respect of these activities.
6.6 Furthermore, in addition to the central government, there may be other levels of government, such as
state, provincial, and local, that are involved in international transactions and positions. If so, the compiler may
have to approach the appropriate institution(s) withineach level of government in order to measure particular
types of international transactions and positions.

Data from Ofﬁcial and Administrative Sources

6.7 While many government-owned companies
may be involved in international activities, these corporations are considered companies and, as such,are not considered to be part of the general government sector. Government-controlled companies that(1) produce market output (i.e., charge prices that areeconomically significant), and (2) have complete setsof accounts are excluded from general government
and are included as public companies in the appropriate nonfinancial or financial corporations sector(BPM6, paragraph 4.92).

Data on the General Government
and the Central Bank
6.8 The compiler should develop a good understanding of expenditure, revenue, and finance patterns of general government and the central bank. It
is especially important, as well, for the compiler tounderstand how data are recorded in government accounts at different (central, regional (state, province),
and local) levels. Government institutions that have asignificant impact on the balance of payments shouldbe accorded high priority for the purpose of datacollection.
6.9 For the central government, there is often acentral accounting unit—typically within the ministry of finance—that is responsible for collecting information on most, if not all, receipts and expenditures.
While there may be some delegation of authority tomake payments, the central accounting unit shouldhave reliable accounting data on the majority of international transactions and positions undertaken by thecentral government. Therefore, it should be possible
to use these central accounts—often called “the general ledger”—to extract the balance of payments and
IIP data required. In some economies, all government
payments made abroad are identified and extracted
each month from the central government ledger forthe purpose of compiling balance of payments items
relating to government transactions, and IIP items
relating to government positions. As the government
accounting system is generally computerized, required data may be available a day or two after the endof the month (though there is sometimes a longer lag
than this).
6.10 However, as these centralized accounting units
are usually concerned with receipts and expenditures,

83

they may not be a good source for all data items.2
For example, to measure trade credit on imports, itis necessary to establish actual change of ownership(delivery) dates for goods and services, as well as dates
when payments are made. For information on delivery dates, a government accounting unit at a lower
level may be a more satisfactory source of information
because central government accounting units often
rely on lower levels of government to organize contractual arrangements, ensure that goods have beendelivered, and so forth. Similarly, for data on foreign
military and development assistance, government authorities directly concerned with these activities may
be the most appropriate source as many of the transactions may not involve cash payments. It may evenbe desirable and necessary to collect such data on a
project-by-project basis.
6.11 Once appropriate source(s) of data have been
identified, the compiler should negotiate with relevant authorities to achieve any modifications required
to extract required data and classifications from thegovernment accounting system and to arrange a suitable and timely reporting mechanism. It is desirable
for the balance of payments compiler to coordinate
requirements with the compiler of government finance statistics (GFS). The linkages between balanceof payments and GFS are presented in Appendix 6,“Linkages of the International Accounts with theGovernment Finance Statistics.”

Embassy and Defense Transactions
6.12 Direct expenditures made abroad for goods
and services used by embassies, consulates, military
installations, aid missions, information agencies, andother government institutions located abroad are included in government goods and services n.i.e. in thebalance of payments. Wages and salaries payable tohost economy residents who work for embassies andthe like should also be measured and included in thebalance of payments as compensation of employees.
Wages and salaries paid to diplomats and other staff
posted to these institutions do not represent balanceof payments transactions. However, the compiler may

2
Moreover, in some economies, there may be a more decentralized system of accounting. All units involved in general government transactions and positions with nonresidents need to becovered in any process for compiling data involving nonresidents.

84

Balance of Payments and International Investment Position Compilation Guide

assume that all or a certain percentage3 of salaries paid
to such personnel will be spent in the host economy
and, as such, included in government goods and services n.i.e. Expenditures associated with provision of
joint military arrangements and peace-keeping forces
should also be included in this item (BPM6, paragraphs 10.174–10.178).

dent employees and to former residents who haveemigrated. These data should be available from government accounts and be appropriately classified forbalance of payments compilation purposes. On therevenue side, data should be available on various fees,
taxes, and charges payable to government. These may
include the following:

6.13 Information on transactions related to embassies, defense, and other government establishments located abroad will typically be available fromthe government ledger or from agencies such as theministries of foreign affairs and defense. For balanceof payments purposes, the times at which these transactions are recorded (usually on a cash basis) in government records are normally considered to provide
reasonable approximations of changes of ownership.
However, if significant discrepancies arise between
provision of a service and payment for it, an accountpayable (receivable) should be created in the balanceof payments and in the IIP.

• Withholding and income taxes collected fromnonresidents

6.14 While classification of embassy, defense service, and similar transactions into income (compensation of employees) and service components are allthat is required for balance of payments purposes, it
may be advantageous if the compiler examines thevarious cost factors involved and classifies the databy partner economy. Subdividing payments into rent,
services, entertainment, salaries, and other components and comparing these with the number of staff
employed by economy may be useful for balance of
payments extrapolation purposes and for estimating foreign government expenditure in the home
economy.

Other Current Expenditures and Revenuesof the Government
6.15 Other current expenditure of the government
includes payments for government imports, travel
abroad by government employees, in some instances
tuition and scholarship, other services acquired bygovernment, and pensions paid to former nonresi3
It is recommended that the basis for making such assumptions
be based on a survey or some other source of information thatmay provide a means for estimating the amounts diplomatic,
military, and similar personnel spend while abroad on official
government business.

• Airport departure tax collected from nonresidents• Offshore fishing and other license fees for use ofnatural resources or other types of activity collected from nonresidents• Transport fees and service payments, such as airport landing fees and stevedoring charges, collected by government authorities

Public Sector External Debt4
6.16 An economy’s debt management office may be
responsible for managing or monitoring government
debt, and, sometimes, for monitoring governmentguaranteed debt. This office could be approached
for data on the external liabilities and assets (otherthan reserves) of the general government sector,
and for data on external debt of sectors that issued
government-guaranteed debt (such as other deposittaking corporations, except the central bank andother sectors). Data on government-guaranteed debt
should not be included in government sector debt
unless actually acquired by the government, but it isvery useful additional information for understanding
potential government exposure. These data should be
included in the sector that incurred the debt; however,the compiler should assure that the double counting
is avoided if data on external assets and liabilities arecollected also through enterprise surveys.
6.17 Basic information on each debt instrument should normally be available from the loan or
credit agreement or related documentation, a copyof which should be deposited—preferably underlegal statute—with the debt office for all govern4
The public sector includes the general government, the central
bank, and those in the deposit-taking corporations, except thecentral bank, and other sectors that are public corporations(see External Debt Statistics: Guide for Compilers and Users,
paragraph 5.5).

Data from Ofﬁcial and Administrative Sources

ment or government-guaranteed debt instruments.
If the debt management office has data on othersectors—for example, government-owned companies
or government-guaranteed debt of other companies—
these data may also be collected but should be compiled separately. The compiler of these data should
consult the External Debt Statistics: Guide for Compilers and Users.5
6.18 Some economies collect external debt data ona loan-by-loan basis, maintaining a comprehensive
inventory of loans. However, not all debt components
required for balance of payments may be available tothe debt management office (e.g., trade credit and advances or other accounts receivable/payable).
6.19 In most of the economies, data on credit
and loans with the IMF are readily available fromthe central bank or debt management office. Close
consultation between the compiler and the central
bank’s accounting office or the debt management office should guarantee that the compiler gathers all therequired data. It is recommended that the compilerof external debt statistics, if outside the debt office,utilize these data rather than develop alternative
sources.
6.20 Table 6.1 sets out the standard components
the compiler should collect from the government andcentral bank with respect to external financial assets
and liabilities, excluding reserve assets.6 Details forcentral bank and general government sectors should
be compiled separately (and monetary authorities
where relevant).
6.21 The information shown in Table 6.1 may beclassified by economy of creditor (liabilities) or debtor(assets). In the economy classification, a separate category should be shown for international organizations (as these are not considered to be residents ofthe economies in which they are physically located).
It may also be desirable to classify data by sector ofnonresident party. That is, each cell in Table 6.1 would
be further subdivided by sector of the nonresident
counterpart (e.g., multilateral organizations (broken
down by central bank of currency union, other international financial organizations, and other multilat5
6

www.tffs.org/edsguide.htm.
Table 10.2 in Chapter 10 includes reserve assets components.

85

eral international organizations), general government(excluding multilateral organizations), central bank,deposit-taking corporations, except the central bank,and other sectors).
6.22 Data collected on the currency composition (currency of denomination) of external assets
and liabilities are particularly important in order tomonitor currency risks facing the economy. For balance of payments compilation, the currency composition is important when the financial flows arecalculated as differences in positions at the end and at
the beginning of the reporting period (e.g., based onmonetary and financial statistics that are compiled
in domestic currency). The currency composition
would be used to split the position data by currencyof denomination and to calculate transactions as differences in positions for each currency of denomination. This would allow for the exclusion of changes
due to exchange rate changes in calculating estimatesof transactions.
6.23 In the case of debt instruments, a split of thedata according to original maturity (short-term or
long-term) is shown in the standard components ofthe external accounts. The compiler is encouraged toalso obtain data on remaining maturity and on theinterest rate structure (variable- or fixed-rate) of external assets and liabilities; these breakdowns are requested as supplementary items in the IIP.
6.24 Securities issued in the domestic market andpurchased by nonresidents can pose special collection
problems, and these are discussed in Chapters 3 and10. For securities issued abroad, the government or
central bank should have the required data or may
be able to obtain data from security brokers locatedabroad. Caution should be used before assuming that
all the issue has been taken up by nonresidents. Discussions with the issuing agent(s) could be undertaken to provide an indication of the amounts that
may have been purchased by residents.

Reserve Assets
6.25 Data on reserve assets should be available
from the relevant department of the central bank.
Ideally, the data set out in Table 10.2 will be available.
6.26 Table 10.2 emphasizes that transactions shouldbe measured separately from other flows that affect86

Balance of Payments and International Investment Position Compilation Guide

Table 6.1 Standard Components for the General Government and the Central Bank1 on External
Financial Assets and Liabilities, Excluding Reserve Assets (concluded)
Other changes in ﬁnancial assets andliabilities accountBeginningof period

Financialaccounttransactions(net)

AssetsDirect investment
Equity and investment fund shares2
Direct investor in direct investment
enterprise
Debt instruments
Direct investor in direct investment
enterprise
Portfolio investment
Equity and investment fund shares
Debt securities
Short-termLong-term
Financial derivatives (other thanreserves) and employee stock options
Other investment
Other equity
Currency and deposits
Short-termLong-term
Loans
Credit and loans with the IMF (otherthan reserves)
Other short-term
Other long-term
Insurance, pension, and standardized
guarantee schemes
Trade credit and advances
Short-termLong-term
Other accounts receivable—other
Short-termLong-term
Liabilities
Portfolio investment
Debt securities
Short-termLong-term

1
2

The same breakdown is required for monetary authorities, where relevant.
Applies only to general government.

Changes in position due to:
Otherchangesin volume

Exchangeratechanges

Other
price
changes

End ofperiodData from Ofﬁcial and Administrative Sources

87

Table 6.1 Standard Components for the General Government and the Central Bank1 on External
Financial Assets and Liabilities, Excluding Reserve Assets (concluded)
Other changes in ﬁnancial assets andliabilities accountBeginningof period

Financialaccounttransactions(net)

Changes in position due to:
Otherchangesin volume

Exchangeratechanges

Other
price
changes

End ofperiodFinancial derivatives (other thanreserves) and employee stock options
Other investment
Currency and deposits
Short-termLong-term
Loans
Credit and loans with the IMF
Other short-term
Other long-term
Insurance, pension, and standardized
guarantee schemes
Trade credit and advances
Short-termLong-term
Other accounts payable—other
Short-termLong-term
Special drawing rights (allocations)
Source: IMF staff.

the positions to obtain reliable data on reserve asset
transactions. The monetization and demonetizationof gold bullion should be included in other changes inthe volume (BPM6, paragraph 3.21). Allocations andholdings of special drawing rights should be reported
as other investment liabilities and reserve assets, respectively. It is important to obtain, if possible, thecomplete instrument breakdown shown in the table.
It is preferable if data are classified by economy of thenonresident party.
6.27 The compiler may have access only to data on
the position of reserve assets. The method for converting such data to a transactions basis is outlined
in Chapter 10, Box 10.2. To apply this methodology properly, the compiler must know the currencycomposition of reserves (as well as any price changes
that may have occurred during the period).

Measurement of Development Assistancein Donor Economies7
6.28 The development assistance agency in donor
economies is a very valuable source for measuring
development assistance because this agency is usually responsible for disbursement of the major partof development assistance grants and loans and foroverseeing and monitoring the foreign development

7

See also Development Assistance Data in Chapter 7.

88Balance of Payments and International Investment Position Compilation Guide

assistance program. While development assistanceis not a standard component item in the balance of
payments, the compiler may wish to compile the item
separately for analytic reasons. The components ofdevelopment assistance will generally be reflected inseveral items in the balance of payments.
6.29 In developing statistics on development assistance for balance of payments purposes, the compiler should distinguish clearly between current
grants (which are included in the secondary income
account), capital grants (which are included in thecapital account),8 and loans (which are recorded in
the financial account and in the IIP). For grants, itis necessary that counter entries (such as exports ofgoods, provision of education services, other technical assistance, and provision of cash) be identified andincluded appropriately in the balance of payments.
Chapters 14 and 15 provide further information onrecording grants in the balance of payments.

Measurement of Development Assistancein Recipient Economies9
6.30 Data on international development assistancein recipient economies are often poorly measured;also in some economies a large portion of development assistance may be channeled through nongovernment organizations. As a result, the value of foreignassistance is understated. Because of this understatement, the impact of such assistance on other major
economic variables is difficult to measure. Measurement problems in recipient economies have also led
to balance of payments global asymmetries for dataon transfers. The following paragraphs provide possible sources that the compiler could use to measure
the receipt of development assistance.
6.31 Most compilers in recipient economies caneasily identify cash grants or payments received indevelopment assistance because the information isoften readily available from government records onrevenue.
6.32 Many economies have established various administrative units to administer program or project8
For the distinctions between current and capital transfers see theBPM6, paragraph 12.12.
9
Measurement of development assistance in donor economies is
described in Chapter 7.

aid. Complete accounts are often established to analyze costs, monitor progress, make reports to donors,
and prepare invoices to claim cash payments fromdonors. These project accounts should include thevalue of materials and services supplied by donors.
The compiler should encourage good record-keeping
practices in this area. In addition, administrators ofsuch aid projects should (if they are not already doingso) be encouraged to obtain, from donors with whomthey maintain contact, data on the valuation of assistance received in kind.
6.33 It is necessary that offsetting entries to theaid be recorded in balance of payments accounts. To
ensure proper recording, the compiler could, for example, undertake audit checks to verify that goods
received under project aid are recorded in internationalmerchandise trade statistics at correct valuations. If
project accounts are the only source of data for certain
noncash items in the balance of payments, the compiler would use information from such accounts to record corresponding items in the balance of payments.
For example, if a foreign technical assistance expert stationed in the host economy for less than one year andfunded under an official aid program is employed by alocal project, income earned by the expert should be included in the balance of payments of the host economy
as a compensation of employees debit in the primary
income account and a transfer credit in the secondary
income account. The balance of payments treatment oftechnical assistance and other forms of project aid isfurther discussed in Chapters 13, 14, and 15.
6.34 Many economies receiving food and other humanitarian aid have a centralized government agency
responsible for distributing the food, and such agencies are generally a good source of information on thistype of aid. When approaching distribution agencies
for information, the compiler should ensure that bothfood imports and offsetting transfer entries are measured in accordance with balance of payments principles. Chapter 14 should be consulted for a discussionof the balance of payments treatment of food aid.
6.35 In economies where residents receive educational assistance from foreign governments, there
may be a government agency responsible for administering the program on behalf of nonresident
donors. This agency could be a useful source of data
for the balance of payments. The value of educational

Data from Ofﬁcial and Administrative Sources

assistance should be measured at the cost to the donor.
If such details are not readily available, balance of payments estimates could be based on the number of students studying abroad, classified by various types of
educational institutions and length of stay. These data
could then be used—in conjunction with per capita
data (either actual or estimated) of the cost of tuition
fees, accommodation, passenger fares, and other expenses paid by donor economies for each category ofstudent—to estimate the transfer credit item. Having
compiled these estimates, the compiler should ensurethat relevant offsets are included in the current account. Typically, offsets (other than those for international passenger fares that are included in transport)
will be shown in the travel item as debits.

Administrative By-Product Data
6.36 While conducting various functions, official
institutions frequently obtain data useful for compiling the balance of payments. Often these functions
require applicants, or persons who must pay fees ortaxes, to complete forms that could be relevant to thebalance of payments. The compiler might be able toinfluence the design of collection forms or administrative procedures to maximize, from a balance of
payments viewpoint, the usefulness of the data. Theinternational merchandise trade statistics (IMTS),
migration statistics, and in some instances ITRS data
are examples of information collected as a by-productof administrative functions and essential to balanceof payments statistics. These particular collections are
discussed in Chapters 3, 4, and 5. This chapter examines lesser-known by-product collections.
6.37 Administrative by-product data may be available at different levels of processing, including individual collection forms, semiprocessed data (which
may consist of records of individual collection forms,
special tables, or reports), or statistical aggregates. The
appropriate level, from the compiler’s viewpoint, will
depend upon a number of factors. If sufficient details
and cross-classifications are available, statistical aggregates may be sufficient for the compiler’s purpose.
Nevertheless, it is often desirable for the compiler tohave access to completed collection forms or records
of collection forms. Even data that cannot be used directly by the compiler may still be useful for balanceof payments purposes. Subsequent paragraphs notesome examples.

89

Foreign investment approvals

6.38 Many economies have foreign investmentboards or similar institutions that promote, place
conditions on, or monitor various forms of foreign
investment. To make certain types of investments or
to expand existing investments, investors may be required to submit application forms to the investmentboard, which may be required to give approval of theinvestment before it can proceed, which may also assist
investors in establishing companies and may ensurethat investments comply with government guidelines.
These application forms may contain useful information, and in a number of economies detailed statistics
are published on foreign investment approvals.
6.39 These statistics are generally not directly usable for balance of payments compilation purposes
as they relate to intended investments rather thanactual investments and reporters sometimes record
the expected value of the investment, including total
financing and not just the external investment. However, they may be useful for some balance of payments
estimation purposes.
6.40 This source is best used to identify new direct investment projects, and the compiler would
need other sources such as financial statements andenterprise surveys to measure these positions and to
capture additional components requested for direct
investment transactions and positions. It is also important to consider that significant time lags between
approvals and actual investments may occur.
6.41 More importantly, individual application
forms may serve as a very useful data source for compiling population lists of direct investment enterprises(DIENT), direct investors, or fellow enterprises. In
some economies, application forms have proved particularly useful for identifying nonresidents who invest in real estate.
Applications to obtain foreign exchangeor to borrow from abroad

6.42 It is a requirement in some economies forresidents to obtain approval to purchase foreign exchange or to borrow from abroad. These approval applications should not be confused with actual foreignexchange transactions measured in an ITRS. Chapter 4 describes cases in which residents borrow orlend abroad, but no corresponding cash transaction

90

Balance of Payments and International Investment Position Compilation Guide

appears in the ITRS until a repayment or interest payment is made. To identify these drawings, foreign borrowing applications could be monitored and followed
up with the borrower or the lender. Once the drawing
is made, details of the operation should be recorded
and included in the balance of payments and IIP. Dataon foreign borrowing approvals could also be used
to establish a list for conducting a survey of residents
with external borrowings.
6.43 In some economies, DIENTs are required toobtain approval before remitting, in the form of foreign exchange, dividends or profits abroad. As part of
the application process, companies submit details of
their profit and loss statements. These details could
be used by the compiler to measure reinvested earnings as well as dividends and profits paid/payable toinvestors.

investment. Tax records often identify income fromforeign sources separately from income earned fromdomestic operations. These records can be useful,for conducting surveys or for checking information
obtained from other sources,10 because they identify
companies and individuals with investments abroad.
6.47 Tax authorities may conduct surveillance of
certain transactions, particularly those associatedwith tax havens, to ensure that certain taxes are not
avoided. Forms filed with tax authorities in respect ofcertain classes of foreign exchange remittances could
provide a coverage source for listing the populationfor enterprise surveys (for more details on coverage oftaxes in government finance statistics see Appendix 6,“Linkages of the International Accounts with theGovernment Finance Statistics”).
Education and health data

Applications to export

6.44 Residents of some economies are required tocomplete applications before exporting goods. Sometimes, these applications are used as a data source tocompile goods items in the balance of payments. Alternatively, applications may provide a starting point
for obtaining a list of exporters to improve coverageof an IMTS, or these applications may serve as a coverage source for an exploratory survey designed to
identify companies engaged in certain balance of payments activities, such as trade credit.
Tax data

6.45 Tax data can be used in a number of ways.
Data, which are obtained from tax authorities, on dividend and interest withholding taxes payable by nonresidents may be used to compile part of governmenttransfer credits (current taxes on income, wealth,etc.). Lists of companies paying withholding taxes onbehalf of nonresident investors may be a useful source
for identifying companies with external borrowings
or nonresident shareholders.
6.46 Tax records of DIENTs could provide dataon intercompany services and remitted and retained
profits when other sources are not readily available.
Lists obtained from tax files of companies with direct investment transactions could also be used asa source of coverage for enterprise surveys of direct

6.48 Governments may maintain data on education (including scholarships) and health services
provided to or by nonresidents.11 For education, data
may be available from the ministry of education orother body in charge of education on the numberof students, costs of tuition, other services provided
by educational institutions (e.g., accommodation forstudents living on campuses or boarding at school),and other expenses of nonresident students studyingin the host economy or resident students studying
abroad. It is also important to know what proportionof these costs is funded by development assistancegrants. The compiler should also seek data that may
be available on health care services and expendituresof patients who cross international frontiers to seek
health care. In economies that have universal healthcare systems funded or administered by the government, nonresident patients can often be identified
separately because such patients will typically be responsible for the full cost of their health care.

10
As used by tax authorities, definition of the terms foreign andincome may differ from those used in the balance of payments.
The compiler should take care in using tax data directly inbalance of payments compilation that any such differences arecorrectly handled.
11
Many of the education and health services provided to or by
nonresidents are provided to persons traveling outside their home
economies. Accordingly, these services should be recorded in thetravel item of the balance of payments.

Data from Ofﬁcial and Administrative Sources

Data from trade, industry, and otherprofessional associations

6.49 In some economies, different trade, industry, professional bodies (e.g., industry and trade associations) may maintain useful information on cross91

border activity. The compiler may consider requesting
the available information from such bodies, including the list of their members and their financial size,
which could be used for improving the coverage ofsurvey population.

7

Selected IMF and Other
International Organizations’
Data Collection Initiatives

Introduction
7.1 This chapter discusses data sources provided
by the International Monetary Fund (IMF) and otherinternational organizations that may be relevant forbalance of payments and international investment
position (IIP) compilation. The main feature of thedata sources discussed in “IMF’s Bilateral Data Collections” and “Bilateral Data from Other International
Organizations” is that they provide detailed geographical breakdown that may be used by the counterpart
economy for balance of payments and IIP statistical
purposes. “Other Datasets” describes other datasetsthat should be consistent with data reported in the international accounts.
7.2 Data compiled directly by partner economies
can also be relevant; however, their relevance depends
on specific circumstances—for example, the coverageof data in partner economy’s statistics, the methodology applied by the partner economy, the accessibility
to the data, confidentiality constraints, and so forth.
The compiler should assess these factors on a case-bycase basis.
7.3 Datasets described in this chapter are maintainedby the IMF, the Bank for International Settlements(BIS), the Organisation for Economic Co-operation
and Development (OECD), and the World Bank, andrelate to portfolio investment, direct investment, loans,
deposits, development assistance, and trade in goods.
7.4 Initiatives that collect data by individual counterpart economy (bilateral data) include the IMF’s
Coordinated Portfolio Investment Survey (CPIS) and
Coordinated Direct Investment Survey (CDIS), the
BIS international banking statistics (IBS), and theOECD development assistance data.

7.5 Data on partner economies compiled by international organizations can be used in two ways:• In a bilateral reconciliation exercise as a checkof the compiler’s estimates; in recent years, there
has been an increased use of cross-economy datacomparisons to enhance the quality of individual
economy statistics.
• Directly in the compiling economy statistics inthe absence of national data or to complement
existing data sources; in this case, the compiler
should make the necessary adjustments described ahead.
7.6 A bilateral reconciliation exercise of balance of
payments or IIP statistics involves comparison of datathat are provided by the reporting economy’s partner economies to international organizations withthe reporting economy’s own data and that purport
to measure the same set of transactions or positions.
For example, economy A’s estimate of the value of
direct investment in economy B could be comparedwith economy B’s estimate of direct investment from
economy A disseminated by the IMF in the CDIS. As
discrepancies are identified and explained, the compiler can improve the quality of the balance of payments or IIP data.
7.7 Direct use of data compiled by internationalorganizations in the compiling economy’s balance of
payments and IIP statistics can be relevant when thecompiling economy does not collect the data itself or
when collected data are partial or incomplete. For example, if economy A does not collect portfolio liabilities, then the CPIS can be used to estimate a liability
position. Before using bilateral data it is important
to assess the coverage of the data sources used by thecounterpart economy.

Selected IMF and Other International Organizations’ Data Collection Initiatives

7.8 While this chapter provides an overview of thevarious sources and their comparability to balance of
payments and IIP needs and methodology, it is recommended to consult the data sources directly for a moredetailed description of coverage and methodology.

IMF’s Bilateral Data Collections1
Coordinated Portfolio Investment
Survey (CPIS)2
7.9 The CPIS provides information on individual
economy year-end holdings of portfolio investment
securities (short- and long-term debt securities andequities), valued at market prices, cross classified
by the economy of issuer of the securities, and it istherefore most suited to be used for IIP compilation.
The CPIS focuses on the geographical breakdown of
portfolio assets of the participating economies. Someeconomies also provide data on portfolio liability positions. Cross border securities trading and settlement
often uses the International Securities Identification
Number (ISIN code) to identify securities. Data arevalued at market prices. The CPIS follows definitions
and classifications set out in the BPM6.3
7.10 The Survey of Securities Held as Foreign Exchange Reserves (SEFER) is conducted in parallel

1
Users can access the detailed nonconfidential data as reported byeach individual economy.
2
Methodology, data sources, and results from the survey are available at http://cpis.imf.org.
3
However, in consultation with the IMF’s Committee on Balanceof Payments Statistics and CPIS participating economies, the IMF
is increasing the frequency of the survey from annual to semiannual (beginning with end-June 2013 data) and to accelerate by
three months the timeliness of reported data. More frequent andtimely reporting of CPIS data could provide improved benchmarks for estimating quarterly portfolio position data. The scopeof the data is also being enhanced to include the identificationof short positions and sector of debtor. Further, with the aim ofaligning the outputs with user demands, an additional disaggregation of the data on the institutional sector of resident holders
cross classified by the institutional sector of the nonresident
issuers of securities is also included in the revised CPIS reporting
forms. However, in order to reduce the potential reporting burden, this disaggregation limits the sectoral detail for nonresident
issuers to the 25 economies with systemically important financial
sectors, the economies for which the IMF Executive Board agreed
should have mandatory assessments every five years under the
Financial Sector Assessment Program.

93

with the CPIS. Accordingly, participating economies
also supply a geographical breakdown of the value of
securities holdings that are included in reserve assets. Although the foreign securities component ofreserve assets appear under a separate heading from
portfolio investment in the BPM6, securities held aspart of reserve assets are part of the portfolio investment liabilities of the issuers. From the perspectiveof the issuer, securities that are held as reserve assets
are indistinguishable from those held in portfolio investment. Another survey is also conducted of large
international organizations, the Survey of Securities
Held by International Organizations, to obtain thevalue of their holdings of securities. In order tomaintain confidentiality of individual returns, special procedures are used by the IMF to collect thedata from these two surveys. Similarly, data fromthese two surveys are published only in aggregatedform so that no economy’s or organization’s data are
identifiable.
7.11 In the absence of a national data collection
system, economies may use the CPIS derived liabilities data—for equity and investment fund shares,
and short- and long-term debt securities—for identifying portfolio investment liability positions bypartner economy and as an input for compiling the
IIP. These data may understate an economy’s actual
portfolio investment liabilities, because some economies do not report in the CPIS and others report
holdings for only selected domestic sectors. Thus, thederived liabilities data should be viewed as a lower
threshold that can be used to cross-check a given
economy’s own estimates. The derived liabilities estimates should be evaluated for the extent of potential under coverage, and usually should be adjusted
higher, before they are used in the IIP. However, thecompiler should view the use of CPIS derived liabilities estimates as a temporary measure and work on
developing a direct collection of data for compiling
portfolio investment liabilities.
7.12 The CPIS derives portfolio investment liabilities positions for all economies, not just for participating economies from the reported data (see Tables 8
and 16 on the webpage indicated in footnote 2). The
derived data can be used for checking a compiling
economy’s portfolio investment liability positions;94

Balance of Payments and International Investment Position Compilation Guide

however, as mentioned in the previous paragraph, thecompiler should consider it as a lower threshold forchecking. The compiler should assess the extent that
CPIS reporting economies included those economies
that were most likely to hold securities issued by thecompiling economies.4
7.13 The IMF plans to increase the frequency of
the CPIS and SEFER surveys from annual to semiannual and to accelerate by three months the timelinessof reported data. The semiannual data will be released
starting in 2014.
Adjustments to CPIS data for compilingthe balance of payments and IIP

7.14 Although CPIS data are consistent with portfolio investment in the IIP, direct use of these datafor partner economies could need some adjustments
considering the absence of data from some counterpart economies either because they are not reporting economies or because they do not provide datawith some partners to preserve confidentiality. Also,
the compiler should keep in mind that the CPIS datafor partner economies attributes security holdings to
portfolio investment (by institutional sector) while
portfolio investment liabilities in the IIP data includes also securities held by partner economies as
reserve assets and securities held by internationalorganizations. Grossing up techniques or models
based on the available reported data could be used
to estimate data for nonreporting economies. Moredetails on grossing up techniques are presented in
Chapter 2.
7.15 As mentioned earlier, the CPIS does not provide breakdown by sector of issuer, and cross bordersecurities trading and settlement often use the ISIN
code to identify securities. If the ISIN code is also
used in a securities database, then this database canallow identifying characteristics of particular securities, including their issuer. Where feasible, the compiler is encouraged to classify portfolio investment byinstitutional sector of the issuer.

4
In 2013, with reference to data for 2012, 77 economies, including
almost all the major economies and most large portfolio investment holders, reported their holdings of portfolio investment
assets issued by nonresidents broken down by nonresident economies and instruments.

Coordinated Direct Investment
Survey (CDIS)5
7.16 The CDIS collects data on direct investment
positions for end-year by economy based on the location of the immediate counterpart to a direct investment position, with equity reported separatelyfrom debt investment. For inward direct investment,
participating economies compile the value of outstanding end-year positions by immediate (first)
counterpart economy (the economy from which theinvestment comes). For outward direct investment,
participating economies provide information on thevalue of end-year outstanding positions by immediate (first) counterpart economy (the economy into
which the investment is sent). Further breakdownsof information are encouraged showing gross debt
instruments positions (total liabilities and assets separately identified), positions between fellow enterprises
separately from those with direct investors/direct investment enterprises (DIENT), and positions of resident financial intermediaries separately from otherdirect investment positions. Also, as part of the overall reporting to the IMF, economies provide metadatathat allow assessing whether data follow the standards. Direct investment relationships are describedin paragraph 10.7.
7.17 Thus, CDIS contains data on direct investment
positions, and is therefore suited to be used for IIP
compilation. Partner economies can use the CDIS data
to obtain information on their direct investment assets
and, to some extent, their direct investment liabilities.
Data collected through the CDIS are consistent in concepts, coverage, valuation, and classification with the
BPM6 and the fourth edition of the OECD Benchmark
Definition of Foreign Direct Investment.6 Data are available on an annual basis from 2009.
7.18 The CDIS does not contain enough information to calculate precisely transactions based on the5
Methodology, data sources, and results from the survey are available at http://www.imf.org/external/np/sta/cdis/index.htm.
6
Around 100 economies, including almost all the major economies, but also many smaller economies, report annually theiroutstanding inward direct investment positions broken down byimmediate counterpart economy. Most of these economies also
report annually their outstanding outward direct investment positions in the same detail.

Selected IMF and Other International Organizations’ Data Collection Initiatives

difference between positions at the beginning and theend of the year. Therefore, it cannot be used without
adjustment in the balance of payments accounts. (Box10.2 of Chapter 10 provides an illustrative example
of deriving transactions using data on positions andother price changes.)
7.19 The valuation method used for unlisted equity in CDIS is own funds at book value (OFBV),
which is one of the methods of approximating market
value of unlisted equity recommended in the BPM6
(paragraph 7.16). More details on different valuation
methods including OFBV are contained in the Guide’s
Appendix 4.
Adjustments to CDIS data for compilingthe balance of payments and IIP accounts

7.20 The CDIS allows deriving from the reported
data the outward and inward direct investment positions for all economies, not just for the participating
economies (see Table 3 on the website indicated infootnote 5). These data can therefore be used either
as a check of a compiling economy’s direct investment
positions or, if direct investment data are not collected by the compiling economy, for use in preparing an IIP. As with the discussion of CPIS data, thecompiler should assess the extent that CDIS reporting
economies included those economies that were most
likely to invest / receive direct investment in/from thecompiling economy.

7.21 Derived data could be an important source of
information to improve direct investment statisticsof the compiling economy but should be treated withcaution. Derived data could need some adjustments
considering: (1) the absence of data from some economies, either because they are not reporting economies, or because they do not provide data with somepartners to preserve confidentiality; (2) the degree ofcoverage of the standard components; and (3) consistency with international standards (e.g., exclusion ofdebt between selected affiliated financial companies,
valuation method used for unlisted equity (OFBV),
and inclusion of reverse investment and data on fellow enterprises). Data coverage can be assessed consulting the CDIS metadata questionnaire reported
by individual participating economies. Grossing up
techniques or models based on the available reported
data could be used to estimate data for nonreporting
economies when reported data cover most of the total
value of the direct investment positions. Chapter 2
provides more details on grossing up techniques.
7.22 CDIS data are presented according to the directional principle, based on the direction of the direct
investment relationship while the direct investment
data in IIP are presented using assets/liabilities presentation (so that, for example, the netting of reverse
investment is not built in). The standard components
for direct investment positions may be rearranged tosupport both presentations. Table 7.1 shows how the

Table 7.1 Assets/Liabilities Presentation Compared to Directional Principle Presentation (concluded )Asset/liability presentation in IIP
Direct investment assets
 Equity and investment fund shares

Directional principle presentation in CDIS
Total outward direct investment
 Equity (Net) = (a) + (c) + (e)  (g)  (h)• Direct investor in direct investment enterprises (a)• Direct investment enterprises in direct investor(reverse investment) (b)• Between fellow enterprises
if ultimate controlling parent is resident (c)if ultimate controlling parent is nonresident (d)if ultimate controlling parent is unknown (e) Debt instruments95

 Debt instruments (Net) = (1)  (2) or (3) + (4)• Direct investor in direct investment enterprises (k)Broken down by:• Direct investment enterprises in direct investor(reverse investment) (l)(1) Debt instruments assets (gross) of DI in DIENT= (k)+ (m) + (o)96Balance of Payments and International Investment Position Compilation Guide

Table 7.1 Assets/Liabilities Presentation Compared to Directional Principle Presentation (concluded )Asset/liability presentation in IIP

Directional principle presentation in CDIS

Direct investment assets

Total outward direct investment• Between fellow enterprises
if ultimate controlling parent is resident (m)(2) Debt instruments liabilities (gross) of DIENT in DI(reverse investment) = (q) + (r)if ultimate controlling parent is nonresident (n)And by:(3) Debt instruments (net) resident ﬁnancial
intermediaries(4) Debt instruments (net) all other resident companies

if ultimate controlling parent is unknown (o) Of which total outward, DI with fellow enterprises abroad(Net) = (5)  (6)(5) Total equity and debt instrument assets (gross) withfellow enterprises = (c) + (e) + (m) + (o)(6) Total equity and debt instrument liabilities (gross) withfellow enterprises = (h) + (r)Direct investment liabilities

Total inward direct investment

 Equity and investment fund shares Equity (Net) = (f) + (i) + ( j)  (b)  (d)• Direct investor in direct investment
enterprises (f)• Direct investment enterprises in direct investor(reverse investment) (g)• Between fellow enterprises
if ultimate controlling parent is resident (h)if ultimate controlling parent is nonresident (i)if ultimate controlling parent is unknown ( j)
 Debt instruments

 Debt instruments (Net) = (1) (2) or (3) + (4)• Direct investor in direct investment enterprises (p)Broken down by:• Direct investment enterprises in direct investor(reverse investment) (q)(1) Debt instruments liabilities (gross) of DI in DIENT =(p) + (s) + (t)• Between fellow enterprises
if ultimate controlling parent is resident (r)(2) Debt instruments assets (gross) of DIENT in DI (reverse
investment) = (l) + (n)if ultimate controlling parent is nonresident (s)And by(3) Debt instruments (net) resident ﬁnancial intermediaries(4) Debt instruments (net) resident all other resident
companies

if ultimate controlling parent is unknown (t)Of which total inward, DI with fellow enterprises abroad(Net) = (5)  (6)(5) Total equity and debt instrument liabilities (gross) withfellow enterprises = (i) + ( j) + (s) + (t)(6) Total equity and debt instrument assets (gross) withfellow enterprises = (d) + (n)Source: IMF staff.
Note: Components (1) and (2) should have positive signs.
Components (5) and (6) have positive sign in most cases. Components (3) and (4) are not speciﬁed in IIP.
Component (3) includes debt of insurance and pension funds and debt of resident ﬁnancial intermediaries with nonresident nonﬁnancial
intermediaries (debt between selected ﬁnancial intermediaries—deposit-taking corporations, including central bank, investment funds,
and other ﬁnancial intermediaries except insurance corporations and pension funds—is not classiﬁed as direct investment).

Selected IMF and Other International Organizations’ Data Collection Initiatives

assets/liabilities presentation can be rearranged to
CDIS (directional principle) presentation.

Bilateral Data from Other
International Organizations
International Banking Statistics
7.23 The Bank for International Settlements’ (BIS)international banking statistics (IBS) provides position data on cross border activities of banks in mostmajor international banking centers. Data can beused to derive deposits assets and loans liabilities. The
BIS statistics contain two datasets—locational andconsolidated statistics. The locational data are basedon the economy of location or residence of the creditor bank, and are consistent with the residence principle set out in the BPM6. These data can be used forbalance of payments and IIP purposes. The consolidated data measure worldwide consolidated claims ofbanks headquartered in reporting economies, including claims of their own foreign affiliates but excludinginteroffice positions.7 Since this classification principle differs from that used in the BPM6, the consolidated data are not a relevant data source for balanceof payments and IIP compilation.
7.24 The locational statistics provide quarterly
data on resident banks assets and liabilities, in theform of deposits and loans, with nonresident counterparts broken down by banks and nonbanks, andby economy.8 The data include both outstanding
amounts and exchange-rate-adjusted changes, but
no maturity breakdown of loans. Thus, the data canbe used in compiling two components of IIP: (1) liabilities, other investment, loans, other sectors, by
taking nonresident banks’ outstanding amount ofloans to the compiling economy, and (2) assets, otherinvestment, deposits, other sectors, by taking thecompiling economy’s nonbanks’ deposits in nonresident banks.
7.25 The BIS debt securities can provide some information on an economy’s liabilities related to issuing international money market instruments, bonds,
and notes. The methodology was revised in December

7
These statistics build on measures used by banks in their internalrisk management systems.
8
BIS International Banking Statistics, Table 7A (all sectors) and 7B(nonbank sector) at http://www.bis.org/statistics/bankstats.htm.

972012 for the full history of the statistics, to enhance
the comparability of the statistics across economies.
International issues were redefined as debt securities issued outside the market where the borrower
resides—that is, offshore issues. These statistics cover
only securities issued abroad by economies; they do
not cover securities issued in the domestic market
that are purchased by nonresidents. In addition, they
make no allowance for international securities purchased by residents of the debtor economy. Caution
should be used when using these data for IIP and balance of payments purposes.
Adjustments to BIS data for compilingthe balance of payments and IIP

7.26 The nonbank sector in BIS statistics includes
other sectors—other financial corporations, nonfinancial corporations, households, and NPISHs—as
well as the general government sector.9 It is important
not to double count if both data on nonbank sectors
from the BIS and national sources for government
sector data are used. The compiler should identify
positions for general government included in the BIS
dataset in order to exclude these positions from thenonbank sector data accordingly.
7.27 The information from the BIS statistics ispartial but close to complete regarding the coverageof IIP components because international banking isconcentrated mainly in the economies participatingin the BIS IBS.10 Partial data can be adjusted using estimation techniques such as extrapolation or application of weights, deriving the weights of the reported
data and grossing up to the universe. See Chapter 2
for more details on grossing up techniques.
7.28 This dataset does not provide a maturity
breakdown for loans and deposits; thus the compiler
will need to apply percentages based on alternative
available data, to obtain these breakdowns.

9
The BIS Committee on the Global Financial System (CGFS) recommendations to enhance the BIS international banking statistics
are being implemented. Stage two of the enhancements relevant
to IIP and balance of payments purposes (collection of new data,
including a finer sectoral breakdown in the locational banking
statistics) will be reported from Q4 2013 data. See “Improving
the BIS International Banking Statistics,” CGFS Papers, no. 47,
November 2012, available at http://www.bis.org/publ/cgfs47.htm.
10
As of March 2013, 44 countries and financial centers reportthese data to the BIS.

98

Balance of Payments and International Investment Position Compilation Guide

Development Assistance Data11,12
7.29 The Development Assistance Committee (DAC)of the OECD is responsible for collecting internationally comparable data on official development assistance (ODA). This collection is referred to hereafteras the DAC Reporting System. The DAC has worked
closely with the IMF’s Statistics Department, other international agencies, and member economies of theOECD to develop reporting directives and to alignreported data to BPM6 concepts. Therefore the data
are generally consistent with BPM6 guidelines forcompiling data on development assistance flows (butsee ahead). The compiler should be familiar with thereporting directives and work closely with the development assistance agency to ensure proper treatment
of development assistance flows for the purpose ofcompiling the balance of payments and reporting to
the DAC. It would be desirable to quantify any differences in treatment advocated by the reporting directives and the BPM6. Some donors, who are not DAC
members, also report to the DAC.
7.30 The components of development assistancewill be reflected in several items in the international
accounts; the compiler should distinguish between
current international cooperation (which is includedin the secondary income account (see BPM6, paragraph 12.47)), investment grants (which are includedin the capital account (see BPM6, paragraph 13.25)),and loans (which are recorded in the financial accountand in IIP). For grants, it is necessary that offsets, suchas exports of goods, provision of education services,other technical assistance, and provision of cash, beidentified and included in goods, services, and currency and deposits accordingly.
7.31 Data in the DAC reporting system should, inpractice, be compiled on a basis that closely parallels
the concepts of timing and valuation advocated by the
BPM6. The reporting directives comment specificallyon the following:• Excluding official subsidies to private firms, since
they support activities with a primarily commercial objective (the BPM6 includes these subsidies
as primary income)11

www.oecd.org/dac/stats.
See also measurement of development assistance in donor
economies in Chapter 6.
12• Including imputed costs of educating nonresident students when fees do not cover the costsof education programs (the BPM6 advocates thesame treatment)• Including the administrative costs of ODA programs, subsidies to resident nongovernmentalorganizations, and refugee costs (the BPM6 does
not include these costs because they involve
resident-to-resident transactions)• Including interest subsidies paid to residents toprovide “soft” financing as part of development
assistance (the BPM6 does not advocate thistreatment because the means of incorporating
the impact within the economic accounts has not
fully evolved); information on concessional debt
could be provided through supplementary information (see BPM6, paragraph 12.51).
• Including in development assistance the costs
associated with technical cooperation, administration, education, and research incurred in thedonor economy (The BPM6 does not advocate
this treatment; however, paragraph 12.47(c) of
the BPM6 indicates that payments associatedwith the salaries of technical assistance staff who
are deemed to be resident in the economy in which
they are working are included in current international cooperation.)• Excluding military equipment or services (Inthe BPM6, the supply of goods and services tomilitary units or bases is included in government
goods and services n.i.e. Transfers of militaryequipment are included in investment grants.)
Adjustments to DAC data for compilingthe balance of payments and IIP

7.32 The coverage differences between ODA andthe BPM6 requirements mentioned earlier should beconsidered by the compiler when DAC data are used
for balance of payments and IIP compilation. For instance, adjustments should be made to include transfers to/from individuals or private companies.
7.33 In reporting forms submitted to the DAC,
the major aggregates such as official development assistance should be classified by economy; however,transactions with international institutions are notclassified by economy. Certain transactions, such asadministrative expenditures in the donor economy are
not—according to the reporting directives—allocatedby economy and are shown unallocated. However, forSelected IMF and Other International Organizations’ Data Collection Initiatives

the purpose of compiling partner economy balance of
payments statistics described in Appendix 5, costs incurred in the donor economy should be classified byeconomy. If it is not possible to allocate specific costs
to specific economies, the compiler could prorate
costs across recipient economies by using aid flowsthat can be allocated by partner economy.
7.34 Reporting forms submitted to the DAC provide information on both commitments and disbursements of development assistance. The latter basis isrelevant in compiling the balance of payments.
7.35 DAC data are compiled with a certain timelag. However, until actual data are available, extrapolations could be used.

Other Datasets
External Debt Statistics
7.36 Two related databases on external debt statistics exist: Quarterly External Debt Statistics (QEDS)
and Joint External Debt Hub (JEDH). An overview
of these statistics is provided subsequently. A fulldescription of the definitions, coverage, and methodology used in these statistics can be found on thehome pages of the respective databases, although it isrecommended to reference the original source data.
Both the JEDH and QEDS are published on the WorldBank’s webpage.
Quarterly External Debt Database13
7.37 The QEDS database brings together detailed
external debt data that are published individually byeconomies that subscribe to the IMF’s Special Data
Dissemination Standard (SDDS), as well as by some
economies participating in the General Data Dissemination System (GDDS).14
7.38 Three main sets of data are available on aquarterly basis: (1) breakdowns of the total external
debt position by sector, maturity, and instrument,(2) domestic-foreign currency breakdown of external

13

The QEDS database, jointly developed by the World Bankand the IMF, brings together detailed external debt data of
economies that subscribe to the SDDS and a selected number of
economies that participate in the GDDS. As of June 2013, about
110 economies report to the QEDS (see http://www.worldbank.
org/qeds).
14
GDDS countries’ participation in the QEDS does not require
producing prescribed SDDS data.

99

debt, and (3) forward debt service schedule. The firsttwo sets are relevant to IIP statistics. In addition, theSDDS QEDS includes six other sets of data that are ofanalytical value.
7.39 The definitions and criteria used regarding
time of recording, concept of residence, and exchange
rate conversion, along with classification by institutional sectors and financial instruments, will be fullyaligned to the principles set out in the BPM6 in 2014.
Accordingly, QEDS data should be consistent with IIP
liabilities. However, it is important to be aware that the
IIP components equity and investment fund shares,
and financial derivatives and employee stock options,are excluded from the external debt statistics.
7.40 In some economies, QEDS data are compiled
and reported by the balance of payments compiler thatderived them from the IIP. In such cases, QEDS data are
fully consistent with IIP. In other economies, QEDS statistics are compiled and reported by an institution otherthan the balance of payments compiling unit/institution. The QEDS compiling agency should assure that all
IIP debt liability components are also covered in QEDS.
This coverage consistency can be achieved by requesting from the balance of payments compiler data on IIP
external debt instruments that usually are not monitored through the external debt monitoring system(e.g., currency and deposits, trade credit and advances,insurance technical reserves, and accounts payable).
The IIP compiler also should assure that all data covered
in external debt statistics are covered in IIP. A close cooperation and cross-checking of data between balanceof payments and external debt compilation agencies
should be undertaken each quarter. Generally, QEDS
data are viewed as a source for cross-checking of IIP
data and not as a data source for compiling IIP.

Joint External Debt Hub15
7.41 The JEDH jointly developed by the BIS, IMF,
OECD, and World Bank—brings together external
debt data and selected foreign assets from international creditor/market and national debtor sources.
These sources include creditor data sources suchas the African Development Bank, the Asian Development Bank, BIS, the Berne Union, the InterAmerican Development Bank, the IMF, Paris Club15

www.jedh.org/.

100

Balance of Payments and International Investment Position Compilation Guide

Secretariat, the International Development Association,
the OECD, and the World Bank—as well as information by various markets sources. The JEDH contains
information on loans, other credits, including official trade credit and advances and bilateral loans,debt securities, and selected foreign assets and liabilities. Since not all sources used in the JEDH follow BPM6 requirements, it is important to consult
the JEDH for detailed metadata description.
7.42 For comparison of the creditor/market data in
the JEDH with the data reported by individual economies in the QEDS, the JEDH provides a comparison
table for three broad instrument categories: loans plus
deposits, debt securities, and trade credit and advances. In this way the compiler can compare national
data with data from partner economies and market
sources in an easy manner. The compiler should use
JEDH data to check or review other data sources, but
it is recommended to use the original data source tocompile balance of payments and IIP data.

Data Template on International Reserves
and Foreign Currency Liquidity16
7.43 The data template establishes standards forthe provision of information on the amount and composition of official reserve assets, other foreign currency assets held by the monetary authorities andthe general government, short-term foreign currency
obligations, and related activities (such as financial
derivatives positions and guarantees extended by thegovernment for quasi-official and private sector borrowing) of the monetary authorities and the general
government that can lead to drains on reserves andother foreign currency assets.
7.44 In principle, official reserve assets specified in
Section I.A. of the International Reserves and Foreign
Currency Liquidity: Guidelines for a Data Template(IRFCL) should correspond to the data on international reserves that economies compile for balance of
payments and IIP purposes under the BPM6 guidelines. The definition of official reserves assets should beconsistent across all macroeconomic statistics sets.17 If

16

http://www.imf.org/external/np/sta/ir/IRProcessWeb/index.aspx.
The concordance between classifications of reserve assets in the
BPM6 and the IRFCL is explained in Table 2.1 of the guidelines:
http://www.imf.org/external/np/sta/ir/IRProcessWeb/
dataguide.htm.
17balance of payments/IIP data and the IRFCL are compiled by different institutions/units, a cross-check ofdata on reserve assets should be conducted each quarter for their full consistency.

Direction of Trade Statistics (DOTS)18
7.45 The Direction of Trade Statistics (DOTS) contains, for about 187 countries, current figures on thevalue of merchandise exports and imports disaggregated according to their trading partners. Data are
available from 1980 for years, quarters, and months.
Reported data are supplemented by estimates whenever such data are not current or are not available inmonthly frequency. DOTS follows concepts and definitions set out in International Merchandise Trade Statistics: Compilers Manual (2004).
7.46 It is sometimes assumed that corresponding export and import data between partner economies should
be consistent—that is, the exports from economy A to B
should be equal to the imports of economy B from A,
after taking into account the insurance and freight costs
when economy B imports are valued on a c.i.f. basis. The
DOTS estimation system uses this assumption in cases
where one partner has not reported data.
7.47 However, different compilation practices may
cause inconsistency between exports to a partner andthe partner’s recorded imports. The principal reasonsare differences in (1) classification concepts and detail (lack of uniformity in determining origin, transshipment, and destination economies), (2) time ofrecording, (3) valuation, (4) coverage (shipments toand from free-trade zones, exclusion of military andother confidential items, value thresholds for customs
registration of shipments, returned goods, and othergood (5) processing errors.
7.48 As most economies report data on exports
and imports by counterpart economy, this dataset, incontrast to those included in “IMF’s Bilateral Data Collections” and “Bilateral Data from Other International
Organizations,” is not used by the counterpart economy
for balance of payments statistical purposes, but it could
be used to check or verify the compiler’s own data, considering possible differences already explained. As discrepancies are identified and explained, the compiler
can improve the quality of his or her trade data.
18
http://elibrary-data.imf.org/FindDataReports.aspx?d=33061&e=
170921.

8

Crosscutting Issues in Compiling
Balance of Payments andInternational Investment
Position Statistics

Introduction
8.1 The preceding seven chapters have focused on
various data sources that may be used to compile abalance of payments statement. This chapter examines
the compilation process itself: the institutional arrangements to support the compilation of the balanceof payments and international investment position(IIP) are described; the broad issues with estimation
are discussed; several issues facing the compiler that
impact across the accounts are analyzed, including
understanding the net errors and omissions term; andthe balance of payments recording system is described.
8.2 Subsequent chapters of this Guide deal withcompilation issues pertaining to particular components of the balance of payments. However, manytransactions affect more than one component, andcross-references are made when appropriate.

Design of the Statistical Process
Institutional Arrangements
8.3 As described in the earlier chapters, compiling the balance of payments and IIP statistics involves
combining information from a range of data sources.
Many of these data sources are the responsibility ofofficial agencies other than the agency in charge of thecompilation of balance of payments and IIP statistics.
Cooperation between these agencies will be necessary
to allow the compilation task to take place efficiently.
It is good practice to formalize the cooperation with
documented understandings of the data to be madeavailable, the format in which it will be provided, thetiming and frequency of provision, and any additional

security requirements (e.g., the protection of confidentiality of individually identifiable data).
8.4 The various official agencies that may be involved in capturing data used in the compilation process may include the following:• Customs authorities for the collection of data
used in international merchandise trade statistics, which in turn can be used as the basis for
trade in goods and some services• Statistical agencies for the collection of data
through different surveys (e.g., household surveys, enterprise surveys, surveys of services, andother surveys)• Port authorities for information that can beused as indicators in compiling transportations
services• Immigration authorities for the number of shortterm and long-term migrants• Tourism authorities who may collect information
on expenditure of nonresident visitors in the compiling economy and residents traveling abroad• Insurance regulators to identify insurance businesses for survey purposes or as a source of information on premiums, claims, and reserves• Banking regulators, supervisory agencies, including those for insurance and nonfinancial
companies, and compilers of monetary and financial statistics for data that may be used in thecompilation process or to confront against data
sourced elsewhere• External affairs department for information on
the operations of embassies

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Balance of Payments and International Investment Position Compilation Guide• Taxation authorities for information on withholding and other taxes, and to identify individuals and businesses that may be involved ininternational transactions or have external assets
or liabilities• The regulator of the international transactions
reporting system (ITRS) (if any)
• The central bank for information on the banking
sector and reserve assets.
8.5 Official sources external to the agency in chargeof compiling the balance of payments and IIP statistics will generally not be sufficient for the compilation of the full range of items of these statements. As
a consequence, it will be necessary for the agency tocollect data itself. The institutional arrangements forthe agency can assist the conduct of successful, highquality statistical collections.
8.6 The legislation establishing the agency in chargeof compiling the balance of payments and IIP statistics
can provide for a number of enablers of high-quality
statistics. The compiler may conduct a self-assessmentof legal and institutional environments, and resources
available for the statistical program using as guidance the May 2012 updated Data Quality Assessment
Framework (DQAF) for Balance of Payments and International Investment Position Statistics.1
8.7 Key to the statistical legislation is the ability of
the agency to require selected businesses and individuals to respond to statistical requests. If the agency
does not have the legal framework or institutional arrangements to make its surveys compulsory then it
needs to rely on reporting on a voluntary basis. Voluntary surveys are exposed to biases, and the lower
the response rate, the greater the likelihood of bias
in the results. For voluntary surveys, response can be
encouraged through good form design; by explaining
the purpose and outcome of the collection (in termsof outcomes for business or individuals); by delivery
and collection of the forms by enumerators; and by

1

The May 2012 version of the DQAF is an update of the July
2003 version of the DQAF to reflect experience and international
statistical developments, particularly updated international
methodological standards. It serves as an umbrella for six datasetspecific frameworks, including the framework for the balance of
payments and international investment position statistics (seehttp://dsbb.imf.org/Pages/DQRS/DQAF.aspx).

providing incentives (e.g., using a monetary or giftincentive in a household survey). Research on the impact of providing incentives suggests mixed results,
with it being unclear as to whether incentives increase
response, and whether they have a positive or detrimental effect on the quality of the response.
8.8 Assuring the reporters of the confidentiality of
their responses is one the most important prerequisites
for improving the response rate and the quality of the responses. The extent to which these assurances generate
more and higher-quality responses depends on whether
they are enshrined in legislation and the record of theauthority in meeting these assurances (and legislative
obligations where they exist). Legislative obligations
to protect the confidentiality of information provide a
better basis for negotiating sharing of information thathas been collected by other official bodies. A proof ofthe confidentiality protection is the dissemination of reported data only as part of larger aggregates, excluding
any direct or derived disclosure of individual data.
8.9 The compiling agency can also hold periodic
meetings with reporters to discuss reporting issues.
This allows reporters to ask questions on data reporting and to better understand how the data reported
are used.
8.10 Integrity of the statistics produced by statistical collections can also improve the response rate
and the quality of the response. Selected businesses
and individuals are more likely to respond, and provide accurate data, if the reporters believe that they
are contributing to a high-quality product free frompolitical influence. The independence of the agency
in charge of compiling the balance of payments and
IIP statistics and the integrity of the release processes
contribute to the perception of integrity by the reporter. The work of the agency should not be subject
to political influence. The products of the statisticalprocess should be released to all at the same time asaccess to partial data during the estimation process by
a minister’s office could create the perception of political interference in the results.

Compilation Process
8.11 As discussed in the previous section, the compilation of the balance of payments and IIP involves
bringing together data from a variety of sources. It is
possible that some of these sources may overlap, so that

Crosscutting Issues in Compiling Balance of Payments and International Investment Position Statistics

information for one item in the balance of payments
and/or IIP may be available from multiple sources.
Compiling the item in question then requires a decision about the relative quality of the different sources,
or how the sources may be used in combination.
8.12 One option is to determine the source of
higher quality and to use that source as the primarysource of data for the items of interest. The compiler may know from discussions with data suppliers, or from errors discovered through data checks,
that certain errors are likely to exist. The size of theerrors may not be of sufficient concern, or available
resources may not permit investigation and correction. Alternatively, analysis of the net errors andomissions item under the use of the chosen source,
in conjunction with confrontation with the alternative information, can inform adjustments that should
be considered to the data from the primary source.
“Possible Issues Faced by the Compiler” provides further discussion of the analysis of the net errors andomissions item. Alternatively, the multiple sources
can be brought together within a data model, as described in “Estimation.”8.13 There may be insufficient evidence to determine which source is more accurate. In these cases,
the compiler can monitor the differences and, if significant, develop a plan for further investigation.
A discrepancy between the two sources may provide
an indication of the size of a possible error.
8.14 Balance of payments and IIP data estimates
may be compared with data from other sources. For
example, data reported by banks in money and banking statistics on the position of external financial assets could be compared with data obtained in an ITRSor an enterprise survey. Existing data sources may be
used to derive alternative estimates. From such a comparison, some judgments may be formed as to the accuracy of existing sources.

103

of payments. This chapter’s “Estimation” discusses estimation strategies, particularly where data are available only from subsets of the population of interestor with insufficient timeliness or frequency. Alternatively, single sources can form the basis of the information set used to populate a data model for items inthe balance of payments.

Estimation
8.17 With data coming from a variety of sources
over which the compiler does not have direct control, it is recognized that the data available for somecomponents may not be adequate. In other cases, data
may be available, but not sufficiently timely, requiringexisting data series to be extrapolated until the actual
data for the reference period become available. Thissection describes a number of techniques to support
using imperfect data in the compilation process, ranging in complexity from simple estimation through tothe use of data models and extrapolation techniques.
8.18 When data become available after an initialextrapolation or lower-quality but more timely data
has been used, revisions may be required to the initial estimates for the period. The revision process
recognizes the challenge for the compiler in trying todeliver timely balance of payments information andensuring the accuracy of the accounts. This section
also discusses revision practices and policies.
8.19 The compilation of balance of payments accounts is subject to a range of data sources, processes,
and estimates at different levels of compilation. However, estimates should not be seen as a substitute forcollecting reliable data.

8.15 One external source that can be used for comparisons is bilateral data from partner economies.
Comparison of balance of payments estimates withthose for partner economies often reveals differences.
The differences may be due to many factors. However, these comparisons may provide some valuable
insights on accuracy.

Simple Estimation
8.20 Simple estimation involves relatively simple
formulas or procedures that may be used to adjust or
estimate source series. For example, certain source series may suffer from undercoverage and the compiler
may, for balance of payments compilation purposes,
apply a ratio or add some amount to the source series. Also, a balance of payments series may be estimated by using an assumed ratio between that series
and other balance of payments or economic statisticalseries.

8.16 Single sources of information can also be deficient in attempting to compile items in the balance

8.21 For example, a fixed amount (from irregular surveys) may be added to trade in goods for post

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Balance of Payments and International Investment Position Compilation Guide

parcel; a ratio can be applied to f.o.b. or c.i.f. values
to estimate freight insurance; or realization ratios canbe applied to foreign investment approvals to estimate
direct investment transactions.

Sample Expansion
8.22 Sample expansion is the process of expanding results from a selection of respondents to measure
the population as a whole. The use of sampling techniques in balance of payments collections is discussed
in Chapter 2. Weighting techniques (the process ofapplying expansion factors to each sample response)
can vary depending on the design of the survey. Results from the sampling units are representative oflarger aggregates, for example, sampling from cities
that are representative of regions. Ideally, the weightof a sampling unit should reflect the relative size ofthe aggregate, the region, rather than the sample, thecity. Therefore, the sum of the weights over the sample
should reflect the population size. If the sampling of
cities is with probability proportionate to region size,
then the simplest sampling weights are the inverse of
the likelihood of being sampled.
8.23 Mathematical statisticians should be consulted if more complex regimes are being considered.
These can include poststratified estimation, where
the results are expanded by the ratio of the numberof units in the sample with particular characteristics
to the number of units in the population with thesame characteristics. Poststratified estimation is used
when the population distribution of characteristics isknown, but for individual statistical units, the characteristics are unknown until measured in the survey.
Poststratified estimates are more accurate than simple
number-raised estimates but can be subject to biases
when the subpopulations with certain characteristics
are quite small.
8.24 Expansion factors can also be used to adjust
for nonresponse in sample surveys. Poststratified estimates automatically include an adjustment for nonresponse. Number-raised estimates can be adjusted
by setting the weights to be the inverse of the ratioof the number of responses to the population size,
rather than the number of selections to the population size (which is the chance of selection in simple
sampling processes). This adjustment effectively imputes a mean response for all nonrespondents, which
is a reasonable approach to imputing for nonresponsewhen no auxiliary information (e.g., past responses)
is available.

Data Models
8.25 A third type of estimation involves bringing
data from different sources together in a data model.
The output of the data model is a particular balanceof payments item. For example, estimates of nonresident visitor or other short-term individual travelingabroad expenditure in an economy could be derived
by obtaining, from migration statistics, the numberof visitors and other short-term individuals travelingabroad, and multiplying this number by estimates of
expenditure per capita that were derived from a surveyof individuals traveling abroad and other sources. Thismodel could be extended with information on lengthof stay from official records, and using expenditure percapita per diem. Selection and inclusion of some data
model elements depend on the compiler’s judgment.2
8.26 The development and use of data models canalso involve confronting related components of the balance of payments and making adjustments to ensure
coherence between these items. For example, there
is a relationship between passenger transport credits
and travel credits, particularly for relatively isolated
economies—the visitors and other short-term individuals traveling abroad making the travel expenditureneed to arrive in the economy by some means. To theextent that these transportation services are provided
by residents, then this will be recorded as a transportation credit. Similar relationships exist between the volume of trade in goods and freight (with the same caveatthat some of the transport services can be provided bynonresidents for exports, or by residents for imports).
Rates of return on investment imply a relationship between the various components of investment income
and the positions in the same instruments recorded in
the IIP, a relationship that can be used to confront andimprove the quality of the respective components.
8.27 More complex relationships can exist within
the other changes in financial assets and liabilities account in the reconciliation of the IIP. Some of theseare discussed in Chapter 3 in the validation of the reconciliation statement in surveys of external assets and2More on estimating different transactions related to visitors andother short-term individuals traveling abroad is presented inInternational Transactions in Remittances: Guide for Compilers
and Users, 2009.

Crosscutting Issues in Compiling Balance of Payments and International Investment Position Statistics

liabilities (see “Collections on External Assets and Liabilities” in Chapter 3). Other relationships that may
hold are particularly concerned with financial derivatives, especially where these instruments are predominantly forward-type contracts (futures and swaps) used
for hedging purposes (e.g., hedging interest rate andforeign exchange risk). The hedging of interest rate riskby an issuer of securities implies that the price change
on derivatives should be in the opposite direction to
the price change on debt securities, while the hedging
of exchange rate risk implies that the exchange rate impacts on financial derivatives should be in the opposite
direction to the exchange rate impact across the otherfunctional categories. These relationships should holdseparately for assets and for liabilities in the IIP.
8.28 Relationships can extend beyond the balanceof payments and IIP to incorporate information inother macroeconomic accounts. Examples include
the relationship between capital equipment recordedin trade in goods (noting that the BPM6 does not require this level of classification in trade in goods) andcapital expenditure in the national accounts. Similarly
there is a relationship between equity investment income debits in the balance of payments and company
profits recorded in the national accounts (dependingon the openness of the economy to equity investment,
and whether foreign investment is clustered in specific industries that may have different profit characteristics to the broader business population).

Extrapolation and Interpolation
8.29 Data from some sources may not be available
on a sufficiently timely basis for compilation of thebalance of payments statement. Therefore, the compiler may extrapolate certain balance of payments
series from earlier periods. Extrapolation also covers
adjustments made to preliminary results from a collection source providing less than complete data. If
the data source or data model used by the compiler
provides data on a less frequent basis than the periodicity of balance of payments compilation, it will benecessary to interpolate data between measurement
periods to obtain sufficiently frequent estimates forthe balance of payments.
8.30 Extrapolation techniques can range from thevery simple to more complex procedures. The simplest
techniques include using the same value as the previous period, or using the same change as occurred be-105

tween the previous two periods and applying it to theprevious period (either as a gross amount or as a percentage change). More complex techniques include
drawing information from relevant data models andtaking account of seasonality in subannual series. The
choice of extrapolation method should be informedby the characteristics of the past series and the range
of information available at the time of compilation.
8.31 Similar techniques are used for interpolation, with the added information of having accessto data for a period after the period of interpolation.
Choices for interpolation include using a constantvalue change for periods between the start and end
point or a constant percentage change. If other, more
frequent indicators provide evidence of seasonality in the series to be interpolated, then data models
and interpolation techniques should take this into
account.

Revisions8.32 The use of extrapolation techniques implies
that there will subsequently be a more reliable value
for the item being extrapolated. This is one case where
initial estimates are preliminary and subject to revision. Besides replacing extrapolations with data froman insufficiently timely source, there are a numberof reasons why initial data may be considered preliminary and subject to revision. For example, morecomprehensive and more accurate data may become
available from less timely sources than those used for
initial estimates, further checking after release may
identify errors in the initial data (whether these are
errors in the data that was supplied, or errors introduced during in-house processing), respondents revise their previously submitted data, new sources are
identified, conceptual improvements are introduced,
and so on. Revisions are a normal consequence ofthe fact that the compiler faces a trade-off between theprovision of timely information and ensuring that thehighest-quality information is available.
8.33 It is desirable for the compiler to publish information on the impact of revisions to the accounts.
In the publication, the compiler could compare initial
estimates with later generations of estimates for thesame reference periods. The average absolute and actual size of revisions could also be published.
8.34 The compiler should also have a publishedpolicy on revisions so that the process of revising data

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Balance of Payments and International Investment Position Compilation Guide

can be understood and anticipated by users. The revision policy could follow the dimensions and elements,
as well as the key points identifying quality features
set in DQAF.3 The policy should cover when revisions
will be introduced to publications, for what periods
and for what data series, and the type of informationthat will be published on the causes of the revisions.
Revision policies generally apply criteria to the size ofrevisions and the length of time over which revisions
will be made.
8.35 Frequent and large revisions are disturbing toand create work for users. Methodologies should be developed to reduce the frequency of revisions. In otherwords, more attention should be given to getting themost accurate estimate on the first or second attempt.
To achieve this, the compiler should examine causesof revision and whether they could be overcome by,for example, increasing the frequency of collections,collecting the most important classifications more frequently, placing less reliance on infrequent benchmark
surveys, speeding up quality control procedures, andimproving estimation procedures for nonresponse andpartial coverage. To introduce such improvements,
greater resources may be required. A cost-benefit analysis may be in order, and user support could be obtained for improvements that would reduce revisions.
8.36 However, the fact that revisions are disturbing to users is no excuse for failing to revise estimates.
When revisions are adequately explained, most users
understand that they are unavoidable. The balance of
payments compiler’s objective is to publish the mostaccurate data possible. Revised data, when more accurate, should be published. A balance of paymentscompiler who does not revise estimates when he or
she learns that published estimates are significantly
inaccurate may contribute to development of economic policies that are inappropriate because they arebased on incorrect data.
8.37 A useful operational tool for information
users about the revision policy is the publication of anadvance release calendar regarding the coming publications and their revision schedule. Also, when therevised data are disseminated, a description of mainchanges due to revisions should also be disseminated.

3
See elements 3.5 and 4.3 in the DQAF for Balance of Payments
and International Investment Position Statistics.

A revisions policy and a release schedule together areimportant factors in encouraging the trust and confidence of users in the balance of payments statistics.
It is also important that the policy and schedule arefollowed meticulously.

Metadata
8.38 Metadata provides information about data.
The Guide stresses that the International Monetary
Fund (IMF) recommends that economies describe
source data used in preparing their estimates and themethodological standards that they follow. In addition,
the IMF recommends that all economies use the latest
international methodological standards—for example,
the BPM6. Doing so supports comparability of data
across economies, as well as the range of economic accounts, and reassures users as to the methodologicalsoundness of the data.
8.39 Economies sometimes deviate from the international statistical standards, usually for practicalreasons (such as because they do not have requisite
source data to compile data according to the BPM6),
but also sometimes because they have chosen not toadopt a particular BPM6 recommendation. In cases
where the deviation from the BPM6 is material, theIMF recommends that economies provide metadatathat describes the deviation so users can assess thedata against the international benchmark. Obviously,
to compare data across economies or across time, it isimportant that all economies consistently follow thelatest internationally agreed statistical standards.

Possible Issues Faced by the Compiler
Unit of Accounts and Multiple
Exchange Rates
8.40 Balance of payments accounts could be prepared both in the national unit of account and interms of an international unit of account, such as the
U.S. dollar or euro, where different. The national unitof account is required to compile the external sector of
the national accounts and to meet the requirements ofmany domestic analysts, while the standard unitof account is required for purposes of international
comparison—for example, in balance of payments statistics published by the IMF. In many economies, thebalance of payments compiler prepares the accounts
only in domestic currency. However, for economies

Crosscutting Issues in Compiling Balance of Payments and International Investment Position Statistics

where the exchange rate of the domestic currency isrelatively unstable, or uses a foreign currency(ies) for
many of its transactions, it is recommended that thebalance of payments also be compiled in terms of amore widely used unit of account, such as the U.S.
dollar.

107

set of transactions—official rates, actual rates usedin transactions, the predominant transaction rate,
and the weighted average conversion rate. Each rate,
apart from the actual rate, represents a unitary conversion rate.
8.44 Table 8.1 shows the application of the actual
exchange rate (column “Actual rate”) and of unitaryexchange rates (columns “Official rate” and “Predominant rate”). It is assumed that an economy has
four exchange rates: an official rate (at par with the
U.S. dollar), a commercial rate that is offered to commercial transactors (2 units of domestic currency are
equal to 1 U.S. dollar), a tourist rate (2.5 units of domestic currency are equal to 1 U.S. dollar), and a parallel (black) market rate (3 units of domestic currency
are equal to 1 U.S. dollar). The first three rates are offered by the economy’s single bank. It is also assumed
that, in the accounting period, the government imports goods valued at US$20 (converted at the official
rate); companies export goods valued at US$100 andimport goods valued at US$80 (converted at the commercial rate); nonresident travelers exchange US$5
with the bank at the tourist rate and US$3 with parallel market operators at the parallel market rate; andthe parallel market operators in turn use the proceeds
to buy goods from abroad.

8.41 In economies maintaining multiple exchange
rate systems, it is essential that balance of payments
statistics be compiled, for the purpose of external
analysis, in terms of an international currency. It isalso necessary for statistics to be compiled in the domestic currency. The existence of multiple exchange
rates raises the issue of the rate that should be used
for converting transactions denominated in a foreign
currency (which will be most balance of payments
transactions) into the domestic currency or into theforeign currency that is used as the unit of account.
8.42 It is recommended to use the actual exchange
rate for each transaction for currency conversion. The
daily exchange rate for daily transactions would provide a good approximation. If daily rates cannot be applied, average rates for the shortest period (e.g., week,
ten days) should be used (BPM6, paragraph 3.105).
8.43 Table 8.1 presents results from applying four
different conversion rate methods to a hypothetical

Table 8.1 Impact of Using Alternative Conversion Methods (in domestic currency)
Ofﬁcial rate
CreditExports

Actual rate

Debit

100

CreditDebit

200

Predominant rate

Weighted average
rate

CreditCredit

Debit

200

Debit

195

Imports by:
Government

20

20

40

39

Companies

80

160

160

156

Other (parallelmarket operators)

3

9

6

6

Travel at:
Tourist rate

5

Parallel rate

3

Bank assets
Total

13
9
5

108

10

108

6
33

222

10

222

6
10

216

216

10
211

211

Source: IMF staff.
Note: The ofﬁcial rate is calculated at par; results are equivalent to U.S. dollar values. Actual rates are those quoted in paragraph 8.42; bankassets are calculated at corresponding transaction values or as a residual. (By deﬁnition, those are equivalent.) The predominant rate is thecommercial rate. The weighted average rate is derived by summing the transactions (excluding bank assets, which are derived residually) at
actual rates and dividing by the equivalent sum valued in U.S. dollars.

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Balance of Payments and International Investment Position Compilation Guide

8.45 From the table, one may see that use of aunitary rate, regardless of the rate chosen, preserves
relationships between each of the items. It may benecessary to calculate two unitary rates: one for transactions conducted using official rates, and another forparallel (unofficial) or black market rates. The official
unitary rate should be calculated as a weighted average of all official rates used for external transactions(BPM6, paragraph 3.107). For example, in the table,
travel credits are 8 percent of exports in each case forwhich a unitary rate is used. However, when actual
rates are used, the relationships between items change.
For example, when actual rates are used, exports ofgoods exceed imports of goods—a result that is contrary to the result obtained by either using a unitaryrate or recording transactions in U.S. dollars.
8.46 The BPM6 advocates also that if the parallelmarket rates exist they should not be ignored in thecontext of a multiple rate regime. The official and parallel market rates should be handled separately, andtransactions in parallel markets should be converted
using the exchange rate applicable in that market(BPM6, paragraph 3.108).
8.47 Positions in external assets and liabilities in a
multiple rate system should be converted at the exchange rate applicable to the specific assets or liabilities at the beginning or end of the accounting period.
The different rates used for transactions and positions
will create entries in the exchange rate changes in theother changes in assets and liabilities accounts.
8.48 It is important that balance of paymentscompilers in economies with multiple exchange rateschemes be aware of the impact of using different
methods of conversion.4

Domestic Use of a Foreign Currency
8.49 Domestic and foreign currencies are definedin Chapter 3 of the BPM6 (paragraphs 3.95–3.96):“[A] domestic currency is that which is legal tenderin the economy and issued by the monetary authority
for that economy: that is, either that of an individual
economy or, in a currency union, that of the common
currency area to which the economy belongs. All

4
It may also be important that the balance of payments compiler
agree with the national accounts compiler on how the two sets ofstatistics will be reconciled.

other currencies are foreign economies. Under thisdefinition, an economy that uses as its legal tender acurrency issued by a monetary authority of anothereconomy—such as U.S. dollars—or of a common currency area to which it does not belong should classify
the currency as a foreign currency, even if domestictransactions are settled in this currency . . .”8.50 The implication of this definition for economies that do not have a domestic currency is that all
cash holdings by residents represent an external financial claim on the central bank of the economy issuing the currency in use (and a liability of the issuingeconomy).
8.51 Information on the claim may be available
from the compiler of money and banking statistics(using estimates of narrow money excluding demand
deposits).
8.52 The central bank, commercial banks, and exchange bureaus may also have information on theirpurchase and sale of the currency. These sources
would need to be supplemented by surveys of businesses and households for amounts of cash in hand,
although experience suggests that surveys of households for “in-pocket” cash can be unreliable.
8.53 The economy issuing the currency may use
bilateral data from the economies using their domestic currency to adjust estimates of currency liabilities
from other sources.

Residency and Multiple Residency
8.54 The BPM6 defines the residence of an institutional unit as “the economic territory with which[the unit] has the strongest connection, expressed as
its centre of predominant economic interest.” In addition, “an institutional unit is resident in an economic
territory when there exists, within the economic territory, some location, dwelling, place of production,or other premises on which or from which the unit
engages and intends to continue engaging . . . in economic activities and transactions on a significant
scale” (see BPM6, paragraphs 4.113–4.114).
8.55 In practice, there are a number of situations
where the application of this definition may be unclear,particularly where institutional units are highly mobile,
have connection to multiple economies, or have a shortperiod of significant activity. This section discusses
these situations and their treatment by the compiler.

Crosscutting Issues in Compiling Balance of Payments and International Investment Position Statistics

Operation of mobile equipment

8.56 Treatment of the operation of mobile equipment, particularly equipment operating in an economy other than the economy of incorporation of theoperator, often poses significant conceptual and practical problems for the balance of payments compiler.
The key to correct treatment of this equipment liesin determining the residency of the operator of theequipment. Once residency has been determined, therecording of transactions becomes more straightforward and the compiler can focus on the best methods of collecting necessary balance of payments
information.
8.57 Included in mobile equipment in this section are various equipment used in the provision oftransport services (aircraft, ships, rolling stock, roadtransport, and spacecraft) and other equipment usedin mining production (drilling rigs and floating production, storage, and offload units). Other transport
vehicles (pipelines, electricity transmission infrastructure) are generally located in an economy for sufficient time for a branch to be recognized (although
period of time is only one of the criteria for determining whether a branch exists).
8.58 Table 8.2 shows various types of mobile
equipment and factors that should be considered inestablishing, for each type of equipment, the economy
of residence of the operator. The table shows that, inmost cases, the operator’s economy of incorporation

109

is used. Exceptions occur with equipment operating for extended time periods in economies otherthan the economy of the operator. If circumstances
described in Table 8.2 exist for such equipment, thecompiler should consider the equipment to be operated by a branch of the operator that is a resident of
the host economy. To ensure (if possible) consistencyof treatment for significant operations, the balance of
payments compiler should discuss residency assumptions with counterparts in partner economies.
8.59 To illustrate recording of the operation of mobile equipment in the balance of payments, Table 8.3
sets out accounts relating to mobile equipment operated by a resident of economy A. This operator is abranch of a company with a head office in economy B.
All transactions, other than the initial provision ofequipment, are assumed to involve a bank accountin economy A. Table 8.4 shows how these transactions would be recorded in the balance of payments ofeconomies A and B.
8.60 Tables 8.5 and 8.6 show, more comprehensively, information that the balance of payments compiler should collect on mobile equipment and how
this information should be recorded in the balance of
payments. Table 8.5 shows the treatment of transactions involving mobile equipment operated by a resident of economy A; the resident is assumed to be abranch of a parent company that is located in economy B and has no other operations in economy A.

Table 8.2 Determining the Residency of Mobile Equipment Operators
Type of mobile equipment
Equipment operating in international waters orairspace
Equipment moving frequently between two or more
economies
Equipment operating for more than one year in theeconomy in which the legal operator is resident

Equipment operating for more than one year within
an economy other than the economy in which theoperator is incorporated

Source: IMF staff.

Economy of residence of operator
Economy of incorporation of operator; for equipment
under ﬁnancial lease, the lessee is considered the operator.
For a ship ﬂying a ﬂag of convenience, the economy of theoperator is the economy of the company directing the ships
operations, which may not necessarily be the economy ofregistration. If the operator establishes, for tax or otherconsiderations, a branch or subsidiary in another economy to
manage the operation, the operation is attributable to theeconomy of the branch.
Host economy; if equipment is accounted for separatelyby the operator and recognized as a separate company by
the host economys tax and licensing authorities, the hosteconomy is the operators economy of residence. Otherwise,
the economy of incorporation of the operator is, if previously
outlined qualiﬁcations are met, the economy of residence.

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Balance of Payments and International Investment Position Compilation Guide

Table 8.3 Sample Accounting Statement for Transactions Relating to Mobile Equipment
Transaction

AmountProvision of equipment by parent company

1000

Funds provided by parent and deposited in bank account in economy A

100

Revenue
Transportation of economy A’s exports to economy B

75

Transportation of economy A’s imports from economy B

60

Passenger fares—residents of economy B traveling within A

15

Passenger fares—residents of economy A traveling within A

105

Passenger fares—residents of A traveling between A and B

25
280

Total revenue
Expenses
Fuel purchased in economy A

50

Provisions purchased in economy B

10Port services in economy A

6Port services in economy B

4

Depreciation90

Total expenses

160

Amounts remitted to parent in economy B

170

Source: IMF staff.

Table 8.4 Balance of Payments Treatment of Sample Transactions Shown in Table 8.3
Economy A
CreditEconomy B
Debit

Credit

10101

10101

Debit

Goods
General merchandise
Transport services
Freight75

75

Passenger
Other
Travel

4

4

15

15

Investment income
1202

1202

Net incurrence ofliabilities

Net acquisition ofﬁnancial assets

10503

10503

Direct investment equity
Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Direct investment
Equity capital
Other investment
Currency and deposits

66[=190  184 ]
5

4[=184  1905]
4

Source: IMF staff.
1

Consists of the original provision of equipment and the provisions purchased in economy B.

2

Operating proﬁt (which is less than the amount remitted to parent).

3

Consists of the initial provision of equipment, the funds provided by the parent, net of amounts remitted in excess of proﬁts.

4Consists of payments/receipts for provisions purchased, port services, and amounts remitted to parent.

5Consists of funds provided by parent, freight receipts, and passenger fare receipts for internal travel.

Financial lease
payments to residentsof economy X

Financial lease
payments to residentsof economy A

Acquisition ofequipment underﬁnancial lease; lessor
resident of economy X

Acquisition ofequipment underﬁnancial lease; lessor
resident of economy A

Disposal of equipment
to resident of
economy X

Disposal of equipment
to resident of
economy A

Outright acquisitionof equipment fromresident of economy X

Outright acquisitionof equipment fromresident of economy A

Type of transaction

Goods—
generalmerchandise(X)

CreditInvestment
income—otherinvestment(X)

Goods—
generalmerchandise(X)

Goods—
generalmerchandise
(X)

Debit

Appropriate
item in ﬁnancial
accounts [increase]

Not applicable

Appropriate
item in ﬁnancial
accounts [decrease]

Appropriate
item in ﬁnancial
accounts [increase]

Net acquisition ofﬁnancial assets

Other investment—
loans (X)[decrease]Direct
investment—
equity capital (B)[increase]

Direct investment—
equity capital (B)[increase]

Other investment—
loans (X) [increase]

Direct investment—
equity capital (B)[decrease]

Direct investment—
equity capital (B)[decrease]

Direct investment—
equity capital (B)[increase]

Direct investment—
equity capital (B)[increase]

Net incurrence ofliabilities

Transaction does not involve operator’s bank account in economy A.

Goods—
generalmerchandise(X)

CreditNet acquisition ofﬁnancial assets

Appropriate
item in ﬁnancial
accounts[increase]

Investment
income—otherinvestment(X)

Appropriate
item in ﬁnancial
accounts[decrease]

Not applicable

Goods—
generalmerchandise(X)

Not applicable

Appropriate
item in ﬁnancial
accounts[increase]

Not applicable

Appropriate
item in ﬁnancial
accounts[decrease]

Not applicable

Goods—
generalmerchandise
(X)

Debit

Other
investment—loans(X) [decrease]

Net incurrence ofliabilities

Transaction involves operator’s bank account in economy A.

Table 8.5 Treatment of Transactions Involving Mobile Equipment—Resident Operator Is a Branch of Parent Enterprise in Economy B (balance of
payments of economy A) (continued )Crosscutting Issues in Compiling Balance of Payments and International Investment Position Statistics
111

Receipts from carriageof persons from
economy X within
economy A

Travel (X)Transport
services—
freight (X)Receipts from carriageof economy Xs
imports (otherthan economy As
exports) and othergoods belonging toeconomy X

Receipts from carriage
of residents ofeconomy A

Transport
services—
freight (X)Transport
services—
freight (X)CreditReceipts from carriageof economy Xs
exports (other thaneconomy As imports)

Receipts from carriageof economy As
imports and othergoods belonging toeconomy A

Receipts from carriageof economy As exports
to economy X

Operational lease
payments to residentsof economy X

Operational lease
payments to residentsof economy A

Type of transaction

Otherbusiness
services—
operational
leasing (X)

DebitAppropriate
item in ﬁnancial
accounts [decrease]

Appropriate
item in ﬁnancial
accounts [decrease]

Appropriate
item in ﬁnancial
accounts [increase]

Net acquisition ofﬁnancial assets

Direct investment—
equity capital (B)[decrease]1

Direct investment—
equity capital (B)[decrease]1

Direct investment—
equity capital (B)[decrease]1

Direct investment—
equity capital (B)[decrease]1

Direct investment—
equity capital (B)[decrease]1

Direct investment—
equity capital (B)[decrease]1

Direct investment—
equity capital (B)[increase]

Direct investment—
equity capital (B)[increase]

Net incurrence ofliabilities

Transaction does not involve operator’s bank account in economy A.

Travel (X)Not applicable

Transport
services—
freight (X)Transport
services—
freight (X)Not applicable

Transport
services—
freight (X)CreditNet acquisition ofﬁnancial assets

Appropriate
item in ﬁnancial
accounts[increase]

Appropriate
item in ﬁnancial
accounts[increase]

Appropriate
item in ﬁnancial
accounts[increase]

Appropriate
item in ﬁnancial
accounts[increase]

Appropriate
item in ﬁnancial
accounts[decrease]

Not applicable

Other
business
services—
operational
leasing (X)

Debit

Net incurrence ofliabilities

Transaction involves operator’s bank account in economy A.

Table 8.5 Treatment of Transactions Involving Mobile Equipment—Resident Operator Is a Branch of Parent Enterprise in Economy B (balance of
payments of economy A) (continued )112
Balance of Payments and International Investment Position Compilation GuideTransport
services—
passenger(X)

Receipts fromcarriage of persons
from economy X oninternational routes

Transport
services—
passenger(X)

CreditAppropriate
item in ﬁnancial
accounts[increase]

Net acquisition ofﬁnancial assets

Appropriate
item in ﬁnancial
accounts[decrease]

Appropriate
item in ﬁnancial
accounts[increase]

Appropriate
item in ﬁnancial
accounts[decrease]

Not applicable

Appropriate
item ingoods orservices (X)

Debit

Directinvestment—
equity capital (B)[decrease]

Directinvestment—
equity capital (B)[increase]

Net incurrence ofliabilities

Transaction involves operator’s bank account in economy A.

Information on depreciation is required to calculate investment income debits

Direct investment—
equity capital (B)[increase]

Direct investment—
equity capital (B)[increase]

Direct investment—
equity capital (B)[decrease]1

Net incurrence ofliabilities

May be recorded as investment income—direct investment—equity debits if funds remitted to the parent relate to the operating proﬁt of the current or a previous period.

Source: IMF staff.

1

Depreciation

Not applicable

Amounts remitted
to parent enterprisefrom bank account ineconomy A

Appropriate
item in ﬁnancial
accounts [increase]

Not applicable

Appropriate
item ingoods orservices (X)

DebitAmounts depositedby parent enterprisein bank account ineconomy A

Expenses (other thandepreciation) in
economy X

Expenses (other thandepreciation) in
economy A

CreditType of transaction

Net acquisition ofﬁnancial assets

Transaction does not involve operator’s bank account in economy A.

Table 8.5 Treatment of Transactions Involving Mobile Equipment—Resident Operator Is a Branch of Parent Enterprise in Economy B (balance of
payments of economy A) (concluded(continued )Crosscutting Issues in Compiling Balance of Payments and International Investment Position Statistics
113

Financial lease
payments to residentsof economy A

Acquisition ofequipment underﬁnancial lease; lessor
resident of economy X

Acquisition ofequipment underﬁnancial lease; lessor
resident of economy A

Disposal of equipment
to resident of
economy X

Disposal of equipment
to resident of
economy A

Invest-ment
income—otherinvestment(B)

Goods—
generalmerchandise(B)

Goods—
generalmerchandise(B)

Outright acquisitionof equipment fromresident of economy A

Outright acquisitionof equipment fromresident of economy X

CreditType of transaction

Goods—
generalmerchandise
(B)

Debit

Other
investment—loans(B) [decrease]
Appropriate
item in ﬁnancial
accounts [increase]

Not applicable

Other
investment—loans(B) [increase]

Not applicable

Appropriate
item in ﬁnancial
accounts [decrease]

Not applicable

Appropriate
item in ﬁnancial
accounts [increase]

Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Transaction does not involve operator’s bank account in economy A.

Invest-ment
income—otherinvestment(B)

Goods—
generalmerchandise(B)

Goods—
generalmerchandise(B)

CreditOther
investment—
loans (B)[increase]

Appropriate
item in ﬁnancial
accounts[increase]

Appropriate
item in ﬁnancial
accounts[decrease]

Net acquisition ofﬁnancial assets

Other
investment—
loans (B)[decrease]

Not applicable

Goods—
generalmerchandise
(B)

Debit

Other
investment—
currency anddeposits (B)[decrease]

Other
investment—
currency anddeposits (B)[increase]

Other
investment—
currency anddeposits (B)[increase]

Other
investment—
currency anddeposits (B)[decrease]

Other
investment—
currency anddeposits (B)[decrease]

Net incurrence ofliabilities

Transaction involves operator’s bank account in economy A.

Table 8.6 Treatment of Transactions Involving Mobile Equipment—Operator Is Resident of Economy B (balance of payments of economy A) (concluded )114
Balance of Payments and International Investment Position Compilation Guide

Not applicableNot applicable

Receipts from carriageof economy Xs
imports (otherthan economy As
exports) and othergoods belonging toeconomy X

Appropriate
item in ﬁnancial
accounts [decrease]

Receipts from carriageof economy Xs
exports (other thaneconomy As imports)

Receipts from carriageof economy As
imports and othergoods belonging toeconomy A

Not applicable

Appropriate
item in ﬁnancial
accounts [increase]

Not applicable

Receipts from carriageof economy As exports

Transport
services—
freight (B)Debit

Not applicable

Other
business
services—
operational
leasing (B)CreditOperational lease
payments to residentsof economy X

Operational lease
payments to residentsof economy A

Financial lease
payments to residentsof economy X

Type of transaction

Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Transaction does not involve operator’s bank account in economy A.

Transport
services—
freight (B)Otherbusiness
services—
operational
leasing (B)CreditDebit

Appropriate
item in ﬁnancial
accounts[increase]

Appropriate
item in ﬁnancial
accounts[increase]

Appropriate
item in ﬁnancial
accounts[increase]

Appropriate
item in ﬁnancial
accounts[decrease]

Appropriate
item in ﬁnancial
accounts[decrease]

Net acquisition ofﬁnancial assets

Other
investment—
currency anddeposits (B)[increase]

Other
investment—
currency anddeposits (B)[increase]

Other
investment—
currency anddeposits (B)[increase]

Other
investment—
currency anddeposits (B)[increase]

Other
investment—
currency anddeposits (B)[decrease]

Other
investment—
currency anddeposits (B)[decrease]

Other
investment—
currency anddeposits (B)[decrease]

Net incurrence ofliabilities

Transaction involves operator’s bank account in economy A.

Table 8.6 Treatment of Transactions Involving Mobile Equipment—Operator Is Resident of Economy B (balance of payments of economy A) (continued(concluded))

Crosscutting Issues in Compiling Balance of Payments and International Investment Position Statistics
115

Not applicableNot applicable

Amounts depositedby parent company
in bank account ineconomy A

Amounts remitted
to parent company
from bank account ineconomy A

Source: IMF staff.

Depreciation

Not applicable

Appropriate
item in ﬁnancial
accounts [increase]

Expenses (other thandepreciation) in
economy X

Expenses (other thandepreciation) in
economy A

Not applicable

Appropriate
item in ﬁnancial
accounts [decrease]

Receipts fromcarriage of persons
from economy X oninternational routes

Transport
services—
passenger
(B)

Debit

Not applicable

Appropriate
item ingoods orservices (B)CreditReceipts from carriageof persons from
economy X within
economy A

Receipts from carriage
of residents ofeconomy A

Type of transaction

Net acquisition ofﬁnancial assets
CreditAppropriate itemin goods orservices (B)Debit

Appropriate
item in ﬁnancial
accounts[decrease]

Appropriate
item in ﬁnancial
accounts[increase]

Appropriate
item in ﬁnancial
accounts[decrease]

Appropriate
item in ﬁnancial
accounts[increase]

Appropriate
item in ﬁnancial
accounts[increase]

Net acquisition ofﬁnancial assets

Other
investment—
currency anddeposits (B)[decrease]

Other
investment—
currency anddeposits (B)[increase]

Other
investment—
currency anddeposits (B)[decrease]

Other
investment—
currency anddeposits (B)[decrease]

Other
investment—
currency anddeposits (B)[increase]

Other
investment—
currency anddeposits (B)[increase]

Other
investment—
currency anddeposits (B)[increase]

Net incurrence ofliabilities

Transaction involves operator’s bank account in economy A.

Transport
services—
passenger(B)

Not applicable

Net incurrence ofliabilities

Transaction does not involve operator’s bank account in economy A.

Table 8.6 Treatment of Transactions Involving Mobile Equipment—Operator Is Resident of Economy B (balance of payments of economy A) (concluded )116
Balance of Payments and International Investment Position Compilation Guide

Crosscutting Issues in Compiling Balance of Payments and International Investment Position Statistics

Table 8.6 shows the treatment of similar transactions
with regard to mobile equipment operated by a resident of economy B. Both tables show the recording oftransactions from economy A’s point of view. Where
appropriate, the partner economy to a transaction isshown in parentheses. Some transactions shown involve economy X, which is any economy other thanA, and can include economy B.
8.61 In both Tables 8.5 and 8.6, transaction treatments are split between those that involve the operator’s bank account in economy A and those that
do not. In the case of the operator being a residentof economy A, those transactions not involving theoperator’s bank account in economy A are assumed
to involve parent company bank accounts in othereconomies. These transactions are classified as direct
investment, equity capital, unless a debt liability of theoperator to the parent company is created. It can beseen that the distinction concerning the involvementof the operator’s bank account in economy A affects
only financial account entries. The financial aspect oftransactions does not affect entries related to the current account.
8.62 Table 8.5 shows that some entries reflecting
remitted amounts pertain either to investment income (direct investment—equity) or to the financial
account (decreases in direct investment liabilities—
equity capital). The reason is that remitted investment
income can relate only to operating profits earned in
the current or previous periods. Remitted amounts
that exceed these profits lead to negative reinvested
earnings. In case the remitted investment income isin an excess value that allows it to be considered superdividends, it should be recorded as withdrawals
of capital. The calculation of operating profits is discussed in detail in Chapter 13.
8.63 The compiler must determine the collection
method that will produce the most acceptable results.
It may not be necessary to collect information on all
types of transactions shown in Tables 8.5 and 8.6.
Some types of transactions can be assumed to be nilor negligible. Much of the information required could
come from collections other than a survey of mobile equipment operators. For example, information
on imports and exports of goods could come frommerchandise trade statistics, and estimates of some
services and financial transactions from an ITRS.
However, when mobile equipment is considered to be

117

operated by resident companies that are branches ofnonresident companies, it will usually be necessary toapproach operators to obtain some of the information.
8.64 Occasionally, the compiler may encounter asituation in which it is difficult to determine the residence of a company that operates mobile equipment.
For example, the operating company may be registered in two or more economies as a result of special
legislation. In such cases, the economy where the head
office of the company is located should be considered
the operator’s economy of residence, and the affiliates
in other economies could be considered subsidiaries.
Similar problems in determining the residency of themobile equipment operator could arise when equipment is operated jointly by partners that are residentsof two or more economies. In this case, the preferredtreatment is to treat the operation of the equipment asa quasi-corporation resident where the equipment islocated, with investment from the two partners. See
also the discussion ahead on companies that operate
seamlessly across multiple economic territories.
Construction activity

8.65 It is quite common for a company resident in
one economy to undertake construction activity inanother. The first step in determining correct balanceof payments treatment for such construction activity(and the information that should be collected) is toestablish the residency of the company engaged in theconstruction work. Paragraph 4.27 of the BPM6 lists
the criteria for the identification of a branch. If these
conditions are met, the construction activity should
be attributed to a company that is resident in the hosteconomy and involved in a direct investment relationship with a parent company in another economy. If
these conditions are not met, the activity should be
attributed to a nonresident company (from the pointof view of the host economy), and the acquisition by
the host economy should be regarded as an import ofa service.
8.66 Table 8.7 shows the balance of payments treatment of transactions that are typical of a company engaged in construction activity in an economy otherthan the one where the company normally operates.
Two treatments are shown; the first is in respect of theactivity being attributed to a company that is a resident of the host economy (economy A), and the second is in respect of the activity being attributed to aIncome taxes payable
to government of
economy A

Wages and salaries
payable to residentsof economy X

Wages and salaries
payable to residentsof economy A

Acquisition by
construction companyof goods and services
from economy X

Acquisition by
construction companyof goods and services
from economy A

Return of equipment
to parent company ineconomy B (valued atdepreciated value)

Provision ofequipment by parent
company ineconomy B

Type of transaction

Goods—
generalmerchandise(B)

CreditAppropriate
item in ﬁnancial
accounts (X)[decrease]

Not applicableCompensationof employees(X)

Not applicable

Appropriate
item in ﬁnancial
accounts (X)[decrease]

Not applicable

Appropriate
item in goods
and services (X)Goods—
generalmerchandise
(B)

Debit

Net acquisition ofﬁnancial assets

Direct Investment—
equity capital (B)[decrease]

Direct Investment—
equity capital (B)[increase]

Net incurrence ofliabilities

Construction activity attributed to economy A

Secondaryincome—generalgovernment(B)

Compensation of
employees
(B)

Debit

Appropriate
item inﬁnancial
accounts (B)[decrease]

Appropriate
item inﬁnancial
accounts (B)[decrease]

Not applicableNot applicable

Net acquisitionof ﬁnancial
assetsOther investment—
currency anddeposits (B)[decrease]

Other investment—
currency anddeposits (B)[decrease]

Other investment—
currency anddeposits (B)[decrease]

Other investment—
currency anddeposits (B)[decrease]

Other investment—
currency anddeposits (B)[decrease]

Net incurrence ofliabilities

Construction activity attributed to economy B

Constructionin thecompiling
economy (B)CreditTable 8.7 Treatment of Construction Activity in Economy A (balance of payments of economy A)

118
Balance of Payments and International Investment Position Compilation Guide

1

Net incurrence ofliabilities

Construction
services (B)Investment
income—otherinvestment (B)CreditOther
investment—
trade credit
and advances(B) [decrease]

Appropriate
item inﬁnancial
accounts (B)[decrease]

Other
investment—
trade credit
and advances(B) [increase]

Appropriate
item inﬁnancial
accounts (B)[increase]

Debit

Other
investment—
currency anddeposits (B)[decrease]

Other
investment—
currency anddeposits (B)[increase]

Other
investment—
currency anddeposits (B)[increase]

Other
investment—
currency anddeposits (B)[increase]

Net acquisitionof ﬁnancial
assets

Net incurrence ofliabilities

Construction activity attributed to economy B

May be recorded as investment income—direct investment—equity debits if funds remitted to the parent relate to the operating proﬁt of the current or a previous period.

Source: IMF staff.

Information is required to calculate operating proﬁt,
which is used in calculation of investment income
debits, and the written-down value of any equipment
returned to the parent company.

Depreciation during
periodDirectInvestment—
equity capital (B)[decrease]1

Information is required to calculate operating proﬁt,
which is used in calculation of investment income
debits.

Appropriate
item inﬁnancial
accounts (X)[decrease]

DirectInvestment—
equity capital (B)[increase]

Gross value of output
produced during
periodAmounts remitted
to parent company
from bank account ineconomy A

Not applicable

Progress payments
received byconstruction company

Appropriate
item inﬁnancial
accounts (X)[increase]

Debit

Not applicable

CreditInterest earned onbank account ineconomy A

Amounts depositedby parent company
in bank account ineconomy A

Type of transaction

Net acquisition ofﬁnancial assets

Construction activity attributed to economy A

Table 8.7 Treatment of Construction Activity in Economy A (balance of payments of economy A) (concluded)

Crosscutting Issues in Compiling Balance of Payments and International Investment Position Statistics
119

120

Balance of Payments and International Investment Position Compilation Guide

nonresident company in economy B. It is assumed inboth cases that transactions involve a bank accountestablished by the construction company in economy
A. The treatment of transactions is presented from thepoint of view of economy A. When appropriate, thepartner economy to a transaction is shown in parentheses. Some transactions shown involve economy X,
which is any economy other than A and can include B.
8.67 The treatment and measurement of construction activity in the balance of payments is discussed
further in Chapter 12 and Appendix 4.
Companies that operate seamlessly acrossmultiple economies

8.68 Some companies operate seamlessly overmore than one economic territory. Such companies,
even though they have substantial activity in morethan one economic territory, cannot be separated
into a parent and branch(es) because they run as aseamless operation and cannot supply separate accounts for each territory. Multiterritory companies
are typically involved in cross border activities andinclude shipping lines, airlines, hydroelectric schemes
on border rivers, pipelines, bridges, tunnels, and undersea cables. Similar issues can arise for a societas
europaea—that is, a company created under European Union law that is able to operate in any member
state. Some nonprofit institutions serving households
may also operate in this way.
8.69 It is preferable that a parent and branch(es)be identified separately in the case of a multiterritory company. If possible, companies should be
identified in each territory according to the principles for identification of branches. If that is not
feasible because the operation is so seamless that
separate accounts could not be developed, it is necessary to prorate the total operations of the company
into the individual economic territories. The factor
used for prorating should be based on available information that reflects the contributions to actual
operations (e.g., equity shares, equity splits, splits
based on operational factors such as tonnages or
wages). The prorating of the company implies thatevery transaction needs to be split into each component economic territory, a process that may bedifficult to implement by the compiler. For example,
for the economy of residence, each (apparently) domestic transaction would be split into resident andnonresident components. Equally, companies of
those economies outside the territories of the multiterritory company that have transactions and positions with such companies need to make the same
split, so as to capture the counterparty claims in aconsistent manner. Bilateral agreements between
compilers will help to minimize possible asymmetries. This treatment has implications for othermacroeconomic statistics, and its implementation
should always be coordinated with other statisticalinterests for consistency. Compilers in each of theterritories involved are encouraged to cooperate inorder to develop consistent data, avoid gaps, andminimize respondent and compilation burden.
8.70 Analogous treatments can be applied to companies operating in zones of joint jurisdiction—thecompany will need to be split into companies that are
resident in each economy having jurisdiction over thezone, with flows into and out of the company prorated
between these companies. Positions and flows between the companies may also need to be developed.
Individuals with multiple residences

8.71 Some individuals have close connections
with two or more territories—for example, they havedwellings in more than one territory in which they
spend significant amounts of time. For individuals
who do not have continuous actual or intended presence in any one territory for one year, the territory of
the principal dwelling they maintain is the key consideration. In cases of no principal dwelling, or two or
more principal dwellings in different economies, theterritory of residence is determined on the basis of theterritory in which the predominant amount of time isspent in the year.
8.72 In practice, residence principles are generally not applied to specific individuals, but to broadgroups of people. Situations where the principles need
to be applied to individuals are generally limited tohighly mobile, high-wealth individuals. In these cases,
the compiler needs to cooperate to ensure that the residence of these individuals is applied consistently inall of the relevant economies.

Household Sector Transactions
and Positions
8.73 Table 8.8 sets out a number of cases for persons who may be involved in balance of payments

Crosscutting Issues in Compiling Balance of Payments and International Investment Position Statistics

121

Table 8.8 Types of Household Sector Transactions Recorded in the Balance of Payments (concluded )Migrating persons,
including workers
who are residents but
not nationals of theeconomies in which
they work

These are persons who, for balance of payments purposes, change
their economies of residence when they arrive in the economies
where they intend to live for 12 months or more and (if applicable)
when they return to their economies of origin. At these times, thetransfer of positions in ﬁnancial assets and liabilities that arises fromthe change in residence of the individual is recorded as a volume
change in the IIP.
During the periods that migrating persons stay in the host economy,
the compilers in both home and host economies should ensurethat any remittances in cash or in-kind they remit to their home
economies are recorded appropriately (e.g., as personal transfers,
capital transfers, direct investment, or deposits). The compilers
should also measure transactions, positions, and income relating tomigrating persons’ external ﬁnancial assets and liabilities—including
ﬁnancial claims on, and liabilities to, residents of migrating persons’economies of origin.
Migrating persons may make trips abroad during their stay in thehost economy, and their passenger fares and travel abroad shouldbe measured on the same basis as passenger fares and travel
expenditure of any other resident of the host economy.

Persons who are
not residents of theeconomies where
they work

For personaltransfers, see
Chapter 14.
For transactions in,and positions of,external ﬁnancial
assets and liabilities,
see Chapters 9
and 10.
For investment
income on externalﬁnancial assets
and liabilities, see
Chapter 13.
For passenger fares
and travel, see
Chapter 12.
For ITRS methods, see
Chapter 4.

The treatment of initial and return passenger fares depends upon
whether these are paid by migrating persons or their employers.
When fares are paid by an employer, the employer’s residence
determines the economy of residence of the company acquiring thepassenger services. When fares are paid by the migrating person, theeconomy that the migrating person leaves is, by deﬁnition, his or her
economy of residence and is therefore the economy acquiring thepassenger fare service.

For surveys ofhouseholds, see
Chapter 3.

The compilers in both home and host economies should measure:(1) as part of compensation of employees, gross wages and salaries
in cash and in kind, including any employers’ contributions toinsurance, social security, etc. of these workers; (2) as part of travel,
any expenditure of the workers on goods and services in theeconomies of employment; and (3) as part of secondary income,income taxes and social contributions payable to the host economy’s
government, including social contributions paid by employers.

For compensationof employees, see
Chapter 13.
For travel, see
Chapter 12.
For secondary
income, see
Chapter 14.
For ITRS methods, see
Chapter 4.
For surveys ofbusinesses andhouseholds, see
Chapter 3.

Persons (e.g., local
staff of foreignembassies) who workfor entities that are
not residents of theeconomies where theentities are located

The compilers in both home and host economies should measure,as part of compensation of employees, gross wages and salaries,
including any employers contributions to insurance, social security,
taxes, etc. of these workers.

For compensationof employees, see
Chapter 13.
For secondary
income, see
Chapter 14.
For surveys ofbusinesses andhouseholds, see
Chapter 3.

122Balance of Payments and International Investment Position Compilation Guide

Table 8.8 Types of Household Sector Transactions Recorded in the Balance of Payments (concluded )Students studying inforeign economies

The compilers in both home and host economies should measure:(1) as part of travel, student acquisitions (regardless of whether
actually paid for or received in kind) of goods and services, including
education services, in the host economy; (2) as part of compensationof employees, any gross wages and salaries, including any employers
contributions to insurance, social security, taxes, etc., and any goods
and services in kind received by students while working in the hosteconomy; and (3) as part of secondary income, taxes payable to thehost economys government, including social contributions paid byemployers.

For travel, see
Chapter 12.

Medical patients
receiving treatment
in foreign economies

The compiler should measure, as part of travel, patient expenditures,
including those for medical services, on goods, and on services in thehost economy.

For travel, see
Chapter 12.

Persons, excludingtransport crews,
traveling for businessor personal reasons

All acquisitions of goods and services for personal use, regardlessof whether paid for by the visitor or other short-term individual
traveling abroad or provided in kind by residents of the host economy,in the host economy should be recorded as part of travel. Separate
data should be compiled for business and other travel. Paid holidays
by an employer should be treated as personal rather than businesstravel. Visitors’ and other short-term individuals’ traveling abroadinternational passenger fares should be measured as part of passenger
transport services. Travel services may also be acquired by students,
health care patients, and persons working in economies other thanthe ones in which they are residents. The balance of payments
treatment of these persons was discussed previously.

For travel, see
Chapter 12.

Persons such astransport crews
staying in an
economy for a shortperiodof time

The compiler should record, as part of travel, the expenditure ofthese persons on goods and services in the economy visited. The
expenditures of crews should be recorded as a part of business travel.

For travel, see
Chapter 12.

Persons having
external ﬁnancial
assets and liabilities

The compiler should measure transactions, positions, and income
relating to external ﬁnancial assets and liabilities of individuals andhouseholds.

For transactions inand positions ofexternal ﬁnancial
assets and liabilities,
see Chapters 9 and
10.

For compensationof employees, see
Chapter 13.
For secondary
income, see
Chapter 14.
For surveys ofbusinesses andhouseholds, see
Chapter 3.

For investment
income, see
Chapter 13.
For household
surveys, see
Chapter 3.
Source: IMF staff.

transactions. The table describes the treatment of thesetransactions in the balance of payments and indicates
chapters where information on sources and methods
can be obtained. The list of categories in Table 8.8

should not be regarded as an exhaustive statement ofhousehold transactions; rather, it is illustrative of themore common household transactions and relatedbalance of payments treatments.

Crosscutting Issues in Compiling Balance of Payments and International Investment Position Statistics

Regional Arrangements
8.74 Currency unions and economic unions play
an increasingly important role in the world’s economy.
Similarly, customs arrangements between economies
can present challenges for the balance of paymentscompiler. This section summarizes the specific features of the compilation balance of payments statistics
where regional arrangements exist. Appendix 3 of the
BPM6 provides a detailed discussion of regional arrangements. Appendix 5 of this Guide provides information on the related issue of compiling statistics bypartner economy.
Currency and economic unions

8.75 For statistical purposes, a currency union
is defined as a union to which two or more economies belong and that has a regional central decisionmaking body, commonly a currency union central
bank, endowed with the legal authority to conduct
a single monetary policy and issue the single currency of the union. A currency union is established bymeans of a formal intergovernmental legal agreement(e.g., a treaty). The economic territory of a currency
union consists of the economic territory of the Currency Union economies that make up the currency
union, plus the currency union central bank. Anyother regional organizations that comprise the sameor a subset of the same economies are included in thecurrency union.
8.76 For statistical purposes, an economic union
is a union to which two or more economies belong.
Economic unions are established by means of an intergovernmental legal agreement among sovereign
economies with the intention of fostering greater economic integration. In an economic union, some of thelegal and economic characteristics associated with anational economic territory are shared among different economies. These elements include: (1) the freemovement of goods and services within the economic
union and a common tax regime for imports from
economies outside the economic union; (2) the freemovement of capital within the economic union; and(3) the free movement of (individual and legal) persons within the economic union. Also in an economic
union, specific regional organizations are created tosupport the functioning of the economic union. Someform of cooperation/coordination in fiscal and monetary policy usually exists within an economic union.

123

8.77 Like in the case of economic territory of a currency union, an economic union territory consists ofthe economic territory of the member economies andthe regional institutions that comprise the same or asubset of the same economies.
8.78 Net transactions and positions for the currency union or economic union should not be compiled as the aggregation of the national data of themembers of the union, plus those of the institutionsof the union. This approach would be inadequate because transactions between economies belonging to
the union would be included on both sides of the accounts. Furthermore, the compilation would be subject to distortions in case of asymmetric recordingof transactions or positions within the union. In thiscontext, compilers within the union should separately
identify intra- and extra-union transactions and positions within the accounts.
8.79 There is also a need for increased cooperationand coordination between compilers in different economies within a currency union or economic union. The
BPM6 allows for discretion by the compiler in choiceof methods to approximate the concepts defined in the
manual (e.g., there are a number of acceptable alternatives for the valuation of equity in direct investment enterprises (DIENT). Compilers within a currency unionor economic union should consider coordinating theirtreatments so that common methods are applied.
8.80 The coordination extends to the recordingof large and complex transactions involving multiple
economies (e.g., where a large import to one economy
is financed from a bank account in a third economy).
To the extent that compilers in the member economies
treat the transactions differently, imbalances could becreated in the accounts for the currency union or economic union as a whole.
8.81 This coordination is not straightforward asnational statistical confidentiality rules usually do
not allow national compilers to share confidential
information with statistical bodies outside their national borders. To facilitate the maintenance and improvement of data quality through data checking, theestablishment of an appropriate statistical data confidentiality regime is desirable at least. Such a regime
would ideally address the sharing and protection ofconfidential data both among national compilers andbetween national compilers and compilers for the124

Balance of Payments and International Investment Position Compilation Guide

currency union or economic union in order to enable
the compilation of consistent and reliable aggregatedstatistics for the union.
8.82 Other economies outside the union may findit analytically useful to identify certain currency and/or economic unions among their partners. Corresponding data should be equal to the sum of transactions or positions with the economies belonging to
the union together with the institutions of the union
where appropriate.
8.83 In case the composition of the currency unionor economic union changes over time, the compiler
may decide either to show time series according to thelatest composition of the currency union or economic
union, or to show the currency union or economic
union according to its composition at each point in
time, and to take changes in composition into accountin positions as another change in volume.
Customs arrangements

8.84 Regional integration can take the form ofcustoms arrangements between several economies.
In general, these customs arrangements, based on acommon customs tariff vis-à-vis nonmember economies, do not raise specific balance of payments issues.
However, when customs unions generate cross borderflows, such as through a revenue-sharing formula, therecording of transactions and positions in the international accounts is affected by the institutional andadministrative arrangements of the customs union.
8.85 In order to assess the correct treatment toapply to the cross border flows, the compiler needs tounderstand whether levying duties is the responsibility of a designated agency or the member economies;
and whether the agency has, all members have, or one
member has the responsibility of collecting the duties.
8.86 As with economic and currency unions, cooperation between compilers in the various member
economies within the customs arrangement should
coordinate so that the treatment of the customs arrangement is consistent between the various members.

Analysis of Net Errors and Omissions
8.87 The structure of the balance of payments
naturally yields a number of balancing items, including the balance on trade, the balance on the current
account, net lending, and so forth. Chapter 14 of the
BPM6 describes the analysis of the balance of pay-ments and IIP and the balancing items incorporated
within the presentation of the accounts.
8.88 The compilation of the balance of payments
involves bringing together information from a rangeof sources. Although the balance of payments is, inprinciple, in balance, imbalances will occur due to imperfections in the source data and compilation. These
imbalances make up the net errors and omissions item.
8.89 While net errors and omissions is a residual
item, the value of net errors and omissions should beanalyzed by the compiler. The size and trends mayhelp identify data problems, such as coverage or misreporting. Patterns in net errors and omissions may
provide useful information on data problems. For example, a consistent sign indicates a bias in one or morecomponents. Although net errors and omissions canhelp point to some problems, it is an incomplete measure because errors and omissions in opposite directions offset each other.
8.90 A large or volatile value of net errors andomissions hampers analysis of the balance of payments. While it is not possible to give guidelines onan acceptable size for net errors and omissions, it canbe assessed by the compiler in relation to other items,
such as GDP, current account balance, positions data,and gross flows. Statistical discrepancies may also
arise in the IIP statement. In principle, the reconciliation statement provides a fully reconciled measurement of the changes between an opening position anda closing position; however, if these components are
independently measured, discrepancies may arise because of data imperfections.

Revisions8.91 Revisions were discussed earlier in this chapter. Revisions that increase the magnitude of net errors and omissions do not necessarily indicate thatthe overall quality of the accounts is decreasing. It isreasonable to presume that revisions are being madeto improve the accuracy of the revised components.
A consequence of increasing the accuracy of the components is an improved accuracy of the net errors andomissions remaining in the revised components andthat are present in the other components. If the net
errors and omissions term has increased, then errors
or omissions that previously existed in the items thatwere revised were masking errors and omissions inother components.

Crosscutting Issues in Compiling Balance of Payments and International Investment Position Statistics

8.92 If revisions over time result in consistently
adjusting the net errors and omissions in the same
direction (i.e., either usually increasing or usually decreasing), then this provides an indication of persistent biases in the initial data. Efforts should be madeby the compiler to identify the source of the biases andremove them. If the bias is inherent in the source data
used for preliminary estimates, then analysis of thechanges in net errors and omissions over time can inform the introduction of an adjustment that should bemade to the initial data. In practice the compiler may
often make appropriate adjustments to the results fromless reliable data sources to allow for known biases.

Analysis over Time8.93 As indicated earlier, net errors and omissions ofconsistent sign over a period of time are indicative of persistent biases in one or more components. To the extent
possible, the components should be identified (usually
the compiler will have an understanding of deficiencies
in source data and where biases might be occurring), andimprovements made to the quality of the source, alternative sources identified, or adjustments made to offset
the impacts of the biases. If the source cannot be identified, metadata should be provided as to relative quality of credits / net increases in liabilities against debits /net increases in assets to enable users to make their own
assessments of where weaknesses may lie.
8.94 Where the net errors and omissions term fluctuates from period to period, this may be evidence of timing
differences on volatile items—such as financial accounts
items or large, “lumpy” current account transactions.
8.95 Large net errors and omissions that arise
in periods of exchange rate fluctuation may suggest
problems with methods of currency conversion used
to compile the accounts.
8.96 Net errors and omissions that appear tochange when the behavior of some items changes may
be evidence of relationships that indicate inadequate
coverage of certain types of transactions. For example,
a positive net errors and omissions item coinciding
with an increase in imports may suggest undercoverage of trade credit liabilities.

Recording Transactions in Balanceof Payments
8.97 The balance of payments requires that transactions are recorded on a double-entry basis—that125

is, each transaction is recorded as consisting of two
entries and the sum of the credit entries and the sumof the debit entries is the same. The sum of the balances on the current and capital accounts represents
the net lending (surplus) or net borrowing (deficit)
by the economy with the rest of the world. This isconceptually equal to the net balance of the financial
account.
8.98 Transactions can be recorded on a gross andon a net basis. Aggregations or combinations in which
all elementary items are shown for their full values arecalled gross recordings (e.g., all interest credits areaggregated separately from all interest debits). Aggregations or combinations for which the values ofsome elementary items are offset against the same
items that have an opposite sign are called net recordings (e.g., acquisitions of foreign currency are netted
against the sales of the foreign currency). The different accounts within the balance of payments can be
distinguished according to the nature of the economic
resources provided and received as well as their recording of transactions.
8.99 For the current and capital accounts, transactions are required to be reported on a gross basis.
The current account shows transactions in goods,
services, primary income, and secondary income between residents and nonresidents; the capital accountshows credit and debit entries for nonproduced nonfinancial assets, as well as capital transfers.
8.100 In contrast to the current and capital accounts, the financial account registers transactions on
a net basis, which are shown separately for financial
assets and liabilities (i.e., net transactions in financial
assets show acquisition of assets less reduction in assets, not assets net of liabilities). The net recording
principle should be applied at the lowest level of classification of financial instruments, taking into accountthe functional category, institutional sector, maturity,and currency classifications, where applicable. Part Fof the BPM6’s Chapter 3 provides more information
concerning aggregation and netting.
8.101 As data on a gross basis for financial assets
and liabilities are useful for analyzing market turnover and market behavior, and for measuring service fees generated (e.g., a small net value may be theoutcome of large gross flows), data on drawings andrepayments on loans or acquisitions or disposals ofother instruments could be made available—where

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Balance of Payments and International Investment Position Compilation Guide

Table 8.9 Calculation of Financial Account Balance
Financial account (by functional category)

Net acquisition ofﬁnancial assets

Net incurrenceof liabilities

Balance516Direct investment
Portfolio investment

2

8

6

Financial derivatives

21

13

8

Other investment

15

4

19

Reserve assets

4

Total changes in assets/liabilities

33

4
2

Net lending (+)/net borrowing (−) (from ﬁnancial account)31

Source: IMF staff.

practical—to users on a supplementary basis. The
data could be provided comprehensively or only forparticular components.
8.102 The balance in the financial account is calculated by subtracting transactions in liabilities fromtransactions in assets. An example of the calculationof balance on the financial account (net lending/net
borrowing) is presented in Table 8.9. Net errors andomissions in BPM6 are calculated as the balance on
the financial account minus the sum of the balanceson the current and capital accounts.5 For example, if
the current account balance is plus 13, the capital account balance is minus 8, and the financial accountbalance is minus 12, then net errors and omissions is
minus 17 (see BPM6, paragraph 2.24). Mathematically, a negative figure of net errors and omissions indicates an overall tendency that:• the value of credits in the current and capital accounts is too high; and/or
5

The sign for net errors and omissions does not change from the
BPM5 to the BPM6 presentation.

• the value of debits in the current and capital accounts is too low; and/or• the value of net increases in assets in the financial
account is too low; and/or• the value of net increases in liabilities in the financial account is too high.
8.103 Table 8.10 displays the changes in sign convention from the fifth edition of the Balance of Payments
Manual (BPM5) to the BPM6. In the BPM6, gross credit
and gross debit entries in the current and capital accounts are recorded with positive signs in the respective
column, while in the BPM5, all debits were recordedwith negative signs. Furthermore, in the BPM6, theheadings of the financial account have been changed
from “credits and debits” to “net acquisition of financial assets” and “net incurrence of liabilities”—that is, allchanges due to credit and debit entries are recorded ona net basis separately for financial assets and liabilities.
8.104 Table 8.10 presents a numerical example
on the use of signs in balance of payments under the
BPM6 versus BPM5 convention. In the example, theTable 8.10 Changes in Sign Convention from the BPM5 to the BPM6
BPM6

BPM5

Current and capital accounts

Both credits and debits areregistered with positive sign.

Credits with positive sign anddebits with negative sign

Financial account

Increases in assets and liabilities
with positive signs, and decreases
in assets and liabilities with negative
signs

Increases in assets and decreases
in liabilities are debits with negative
signs, and decreases in assets andincreases in liabilities are credits
with positive signs.

Financial account balance (so-called“net lending (+)/net borrowing(−)” in
the BPM6)

Calculated as change in assets minuschange in liabilities

Calculated as change in assets pluschange in liabilities (credits plus
debits)

Source: IMF staff.

Crosscutting Issues in Compiling Balance of Payments and International Investment Position Statistics

127

following assumptions are made for the reported period of economy A:(6) Direct investment in equity capital received byresident companies 115 units(1) Exports and imports of goods 150 and 200 units,
respectively(7) Purchase of debt securities issued by nonresidents 30 units(2) Exports and imports of services 50 and 180 units,
respectively(8) Disbursement of loans from nonresidents 75
units and repayment of principal for loans tononresidents 40 units(3) Investment income received 30 units and paid
110 units(9) Disbursement by the central bank of 65 unitsof loan from the IMF used to increase the reserve assets.

(4) Grants for current needs received 70 units(5) Investment grants received 85 units

Table 8.11 Example of Sign Convention in the BPM6 versus the BPM5 (concluded)
BPM6
Credit

BPM5
Debit

CreditDebit

Current account

+300

+490

Current account

+300

−490

Goods

+150

+200

Goods

+150

−200

Services

+50

+180

Services

+50

−180

Primary income

+30

+110

Income+30−110

Secondary income+70

Current transfers+70

Current account balance−190(credit minus debit)

Current account balance−190(credit plus debit)

Capital accounts+85

Capital accounts+85

Capital transfers+85

Capital transfers+85

Capital account balance+85

Capital account balance+85(credit minus debit)

Financial account(credit plus debit)
Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Credit

Debit

+110

+215

Financial account

+815

−710

+115

Direct investment inreporting economy,
equity+115

Direct investment,
equity and investment
fund shares
Portfolio investment,
debt securities+30

Portfolio investment,
assets, debt securities−30

Other investment,
currency and deposits+150

Other investment,
assets, currency anddeposits

−150

−200

+200
−50

+50
−180

+180
−30

+30
−110

+110

+70

−70

+85

−85

+115

−115

−30

+30

+75
−40

−75
+40

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Balance of Payments and International Investment Position Compilation Guide

Table 8.11 Example of Sign Convention in the BPM6 versus the BPM5 (concluded)
BPM6

BPM5

Net acquisition ofﬁnancial assets
Other investment, loans

Net incurrence ofliabilities+75
40

CreditOther investment,
liabilities, loans+65
Reserve assets
Net lending (+)/ net
borrowing()(net acquisition ofﬁnancial assets minus
net incurrence ofliabilities)
Source: IMF staff

+65

Debit

+75
40
+65
65

Reserve assets
105

Financial accountbalance(credit plus debit)

+105

9

The International
Investment Position

Introduction
9.1 This chapter provides practical advice on how
an economy might improve the availability of external
position data in a relatively short time. The goal is touse available data. This would be the first phase in developing international investment position (IIP) statistics. A subsequent phase would involve developing
survey/reporting systems for compiling comprehensive IIP statements; Chapters 2 through 7 of the Guide
elaborate on these issues. This chapter draws on the advice provided in the Quarterly International Investment
Position Statistics: Data Sources and Compilation Techniques (IIP Guide), which should also be consulted.
9.2 “Data Sources” discusses the existing data sources in the following broad areas—domestic sources,
foreign sources—and presents a summary table of thepossible data sources, while “Deriving Quarterly Positions from Quarterly Transactions” includes an example of deriving quarterly positions from quarterlytransactions data. “Other Changes in Financial Assets and Liabilities Account” discusses possible data
sources for the other changes in financial assets andliabilities account of the IIP.
9.3 This chapter also draws on the internationalguidelines for macroeconomic statistics set out in the
BPM6, the External Debt Statistics: Guide for Compilers and Users (EDSG), the draft Monetary and Financial Statistics Manual and Compilation Guide of 2013
(MFSM-CG), the Government Finance Statistics Manual, 2014 (GFSM 2014), and the System of National
Accounts 2008 (2008 SNA).

Data Sources
9.4 This section discusses the following data
sources—the domestic sources, which are often already available for other statistical systems, foreignsources from international organizations, and otherdata sources. In setting out the range of data sourcesthat economies can possibly use, this section notesthat information that can be obtained from these data
sources is partly overlapping—that is, more than one
source described may provide information on any
given claim or liability.
9.5 Further, some of the data sources may not be
available in particular economies. The compiler will,
therefore, need to choose those sources that provide
the most adequate data in the economy’s specific circumstances. These choices will most probably changeover time as an economy develops more comprehensive sources. The range of data sources available
is likely to change with progressive liberalization offoreign exchange regulations from administrative andbanking records towards survey collection methods.
The EDSG1 outlines the impact of the regulatory environment on the collection techniques for external
debt statistics (EDS), which is also relevant for IIP
statistics.

Domestic Data Sources
9.6 The first step in identifying data sources forcompiling IIP consists of a stocktaking exercise of
macroeconomic datasets and other data collected byan economy for other than purely statistical purposes.
These existing datasets may be relevant for compilingan IIP statement.
9.7 Domestic data sources can be divided into
(1) those collected for macroeconomic statistical
purposes that follow accounting and classification
principles similar to the IIP, and (2) those that serve
other purposes, including administrative data.

1
See External Debt Statistics: Guide for Compilers and Users(2013), Chapter 10.

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Balance of Payments and International Investment Position Compilation Guide

9.8 This section reviews four macroeconomic
statistical datasets:• External assets and liabilities of deposit-taking
corporations,2 except the central bank (DTC)• External assets and liabilities of the central
bank (CB)• External assets and liabilities of general government (GFS)• Balance of payments financial account
9.9 It also reviews three nonstatistical sources:• Financial statements of companies (FS)• Approvals of foreign investment (AP)• The financial press (FP)9.10 The major gap in the sources covered in thissection is in the area of external financial assets andliabilities of the private nonbank sector. Administrative data on the private nonbank sector may exist only
if restrictive capital controls are in place, and in suchcases, the importance of the private nonbank sector’s
external positions might be rather small.
Macroeconomic statistical datasets

9.11 The first two domestic data sources to be
examined—those of deposit-taking corporations andthe central bank—are existing sources for monetaryand financial statistics. The third dataset is drawn
from government finance statistics, while the fourthrefers to statistics of the external sector statistics.
9.12 The MFSM-CG presents an internationally accepted framework that can be used for three sectoralcomponents of the IIP. The Sectoral Balance Sheet for
the Central Bank can be used to compile statistics forthe central bank sector in the IIP, and the Sectoral Balance Sheet for Other Depository Corporations3 can beused for the deposit-taking corporations, except thecentral bank sector of the IIP. If economies complete
the Sectoral Balance Sheet for Other Financial Corporations,4 it may be used to compile IIP data for othersectors—other financial corporations. However, thecompiler should be aware of differences in coverage ofdeposit-taking corporations, except the central bankand other financial corporations (OFC) in the BPM6
and other depository corporations (ODC) and OFC,
respectively in MFSM-CG). Thus, in the MFSM-CG,
ODC are defined to include only those resident financial corporations (except the central bank) andquasi-corporations that are mainly engaged in financial intermediation and that issue deposits and close
substitutes that are included in the national definitionof broad money, which may exclude (include) institutional units that are included (excluded) within the
BPM6 (and 2008 SNA) definition of deposit-taking
corporations, except the central bank. Rather thanas deposit-taking corporations, these excluded institutional units would be classified as other financial
corporations (or vice versa). An example of such institutional units is money market funds.
Deposit-taking corporations, except
the central bank

9.13 Banks5 are closely regulated in almost all
economies; therefore, usually extensive data on theirfinancial transactions and positions are collected formonetary policy and banking supervision purposes.
Such data generally are available on a very frequent(mostly monthly) and timely basis. In principle, they
could thus constitute an important source of information for IIP purposes, including for quarterly IIP.
9.14 The Sectoral Balance Sheet for Other Depository
Corporations,6 which can be used by the compiler to
identify and select the external assets and liabilities of
DTC, except the central bank, is reported to the IMF
through the standardized report forms (SRFs) for reporting monetary and financial data. Summary lines
from the Standardized Report Form 2SR for Other Depository Corporations are presented in Table 9.1. However, as mentioned earlier, the compiler should carefully
review the sectoral coverage as the ODC reports on

2

Acronyms are used in Table 9.5 to identify data sources.
Other depository corporations include deposit-taking corporations, except the central bank, and money market funds.
4
Other financial corporations comprise the following 2008 SNA
subsectors: non-MMF investment funds, other financial intermediaries except insurance corporations and pension funds, financial auxiliaries, captive financial institutions and money lenders,insurance corporations, and pension funds.
3

5
For practical convenience, deposit-taking corporations except thecentral bank are also referred to as banks throughout this chapter.
6“Linkages of the International Accounts with Monetary and
Financial Statistics” of Appendix 6 discusses the use of datacollected from ODC for the purpose of money and banking
statistics in the balance of payments and IIP.

The International Investment Position

131

Table 9.1 Summary Lines from Standardized Report Form (SRF) for Other Depository Corporations
AssetsLiabilities

1.

Foreign currency

2.

Deposits—nonresidents

Deposits—nonresidents

3.

Debt securities—nonresidents

Debt securities—nonresidents

4.

Loans—nonresidents

Loans—nonresidents

5.

Equity and investment fundshares—nonresidents

Equity and investment fundshares—nonresidents

6.

Insurance, pension, andstandardized guarantee
schemes—nonresidents

Insurance , pension, andstandardized guarantee
schemes—nonresidents

7.

Financial derivatives and employee
stock options—nonresidents

Financial derivatives and employee
stock options—nonresidents

8.

Other accounts
receivable—nonresidents

Other accounts
payable—nonresidents

Comments

Direct investment or portfolio
investment—for both assets andliabilities (memorandum item
for liabilities)

Source: IMF staff.

the SRF could include money market funds, which areoutside of the deposit-taking corporation sector in thebalance of payments and IIP.
9.15 Details on the reconciliation of positions of
ODC vis-à-vis nonresidents with the relevant corresponding IIP components for ODC are presented inAppendix 6, Table A6.3. It shows that, although thesectoral balance sheet data can largely correspondwith IIP components, the differences in the classification do not allow a full reconciliation of the twoframeworks. For several items, additional information from the banks’ balance sheets would be needed
for the compiler to identify unequivocally the appropriate IIP components.
9.16 The main criterion for classifying asset andliability components in the IIP is the function of
investment—that is, direct investment, portfolio investment, financial derivatives (other than reserves)and employee stock options, other investment, andreserve assets. The next levels of classification provide
instrument, sector, and maturity breakdowns.
9.17 Sometimes the mapping of other depository
corporations’ items to the various components of
the IIP is not straightforward. For example, external assets in the form of equity could be part of thebank’s direct investment7 in foreign corporations,or part of their portfolio investment in equity andinvestment fund shares of nonresident corporations. Also, the standard components of the balance sheet for other depository corporations do not
identify equity liabilities at market value. These data
are to be reported in memorandum items, but few
economies report these items. To fill in the standard
components of the IIP, additional data that show afurther detailed breakdown by type of investment
would be necessary.
9.18 Careful consideration should be given to thepossibility of expanding banks’ reporting requirements to accommodate the requirements for IIP
statistics. Clearly, compiling agencies would want toavoid requesting similar information for different
purposes from the same group of reporting companies. The agencies could therefore investigate whether
it is possible to incorporate the requests for the IIP

7
The BPM6 recommends that direct investment should be broken down to show the direct investment relationship as follows:(1) direct investor in direct investment enterprises; (2) direct
investment enterprises in direct investor (reverse investment);and (3) between fellows. This breakdown is not available inmonetary and financial statistics.

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Balance of Payments and International Investment Position Compilation Guide

statistics in existing reporting forms for the deposittaking corporations sector. For example, they could
introduce some additional memorandum items or
breakdowns of the data. A compiler could do thiswithout impeding the objectives of the banking statistics (e.g., regarding the timeliness of the provision of
the data). Since the compiler usually requests data for
the IIP at a lower frequency than for monetary statistics, he or she could include such additional reporting
requirements only at quarterly intervals.
9.19 Alternatively, the compiler could investigate
whether approximations could possibly be used to attribute the positions reported in the banking statistics
for specific instruments to the IIP components ofthe deposit-taking corporations sector. This approach
could be considered appropriate if the compiler envisages a separate survey later for IIP statistics andconsiders the use of data from the banking statistics
temporary. In that case, it might not be worthwhile tointroduce additional reporting requirements into existing surveys. Compiling agencies could investigate
whether they could use other information, such as thatcollected for supervisory purposes, to determine theappropriate functional category of the IIP for sharesand other equity assets and liabilities. (Banking supervision information usually encompasses information
on capital ownership relationships.)9.20 Apart from allocating equity positions to direct investment or portfolio investment, the additional
detail required for IIP purposes concerns breakdowns
for most debt instruments by long- and short-term
original maturity. Such information should be available in banks’ records, and the compiler could probably incorporate it in the reporting requirements forbanks. If not directly available, the IIP data for thedeposit-taking corporations sector could still be compiled without maturity detail.
9.21 If economies compile monetary and financial
statistics using the IMF Statistics Department’s Standardized Report Form 4SR for Other Financial Corporations, the compiler could also use this data source
for the other financial corporations sector in the IIP;
however, care should be taken because of the differences in coverage described in paragraph 9.12.
9.22 “Linkages of the International Accounts with
Monetary and Financial Statistics” in Appendix 6 also
discusses other issues in using monetary statistics forthe compilation of an IIP, including valuation, coverage, and sector classification.
Central bank

9.23 External assets of the central bank should
include reserve assets and other external assets that
do not meet the reserve asset criteria. The BPM6 replaced the monetary authorities institutional sector
by central bank; it includes monetary authorities asa supplementary item. However, the BPM6 keeps themonetary authorities sector in connection to reserve
assets. Paragraph 6.66 of the BPM6 provides the following guidance:“The functional concept of monetary authorities
is essential for defining reserve assets. Monetary
authorities encompass the central bank (which
subsumes other institutional units included in thecentral bank subsector, such as the currency board)and certain operations usually attributed to the central bank but sometimes carried out by other government institutions or commercial banks, such as
government-owned commercial banks. Such operations include the issuance of currency; maintenance and management of reserve assets, including
those resulting from transactions with the IMF; andoperation of exchange stabilization funds. In economies in which extensive reserve assets are held outside of the central bank, supplementary information
should be provided on the institutional sector ofholdings of those reserve assets.”
9.24 The reserve assets component of the IIP should be straightforward to compile, since data on thecentral bank’s accounts should be readily available
directly from the central bank. It should be borne inmind, however, that in instances where the monetary
authorities include several institutional units or wherecertain transactions of other units need to be taken
into account, then compiling the reserve assets component might be more complex.
9.25 The data should be easily accessible to thecompiling institution, but it will entail greater coordination to gather the data from various sources andaggregate the figures consistently.8

8
In order to cover the concept of monetary authorities, Table 9.4
includes both the central bank and government finance statistics
as possible data sources for reserve assets.

The International Investment Position

9.26 The central bank should also be able to provide
without difficulty, besides the official reserve assets, theinformation on its other external assets and its external liabilities (except liabilities in the form of notes andcoins). Such assets may include claims on nonresidents
in domestic currency and any other external assetsthat do not qualify as reserve assets (e.g., because they
are not readily available for balance of payments purposes). The compiler should allocate these foreign assets to the appropriate IIP components under portfolio
investment, financial derivatives, or other investment.

9.29 Although it is preferable that the central bankdirectly provide the required data to the IIP compiler,
the compiler can also use the Sectoral Balance Sheetfor the Central Bank, as presented in the MFSM-CG,
as a reference. Summary lines from the Standardized
Report Form 1SR for the Central Banks are shown in
Table 9.2.
9.30 Table A6.4 in Appendix 6 presents the reconciliation of positions of the central bank vis-à-vis
nonresidents with the relevant corresponding IIP
components.

9.27 External liabilities of monetary authorities
may be in the form of debt securities, financial derivatives, loans, deposits, or other liabilities and should berecorded in the appropriate components of the IIP.

General government

9.31 GFS covers the general government sector,
the public nonfinancial corporations’ sector, and the
public financial corporations’ sector. Details on the
GFS framework as well as on linkages to external
sector statistics are presented in Appendix 6, “Linkages of the International Accounts with the Government Finance Statistics.” The appendix also describes
the relationship between the balance of payments
and IIP statistics and GFS.

9.28 In practice, the foregoing list of financial instruments may be shorter if, for example, reserve
management policy or other provisions prohibit thecentral bank from investing in certain types of assets
or incurring certain types of liabilities. The data forthe central bank should be available on a timely basis,including for quarterly IIP compilation.

Table 9.2 Summary Lines from Standardized Report Form (SRF) for Central Bank
Assets (other than reserves)

Liabilities1

1.

Foreign currency

Currency in circulation2.

Deposits—nonresidents

Deposits—nonresidents

3.

Debt securities—nonresidents

Debt securities—nonresidents

4.

Loans—nonresidents

Loans—nonresidents

5.

Equity and investment fundshares—nonresidents

6.

Insurance, pension, andstandardized guarantee
schemes—nonresidents

7.

Financial derivatives and employee
stock options—nonresidents

Financial derivatives and employee
stock options—nonresidents

8.

Other accounts
receivable—nonresidents

Other accounts—
payable—nonresidents

9.

SDR allocations

Source: IMF staff.
1

133

The 1SR provides a maturity breakdown for foreign currency liabilities.

Comments
Usually nonresidents holdingsof domestic currency are notseparately identiﬁed in the central
banks balance sheet.

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Balance of Payments and International Investment Position Compilation Guide

Table 9.3 Summary Lines from Government Finance Statistics (GFS) for General Government1
AssetsLiabilities

Foreign

Foreign1.

Currency and deposits

Currency and deposits

2.

Securities other than shares

Securities other than shares

3.

Loans

Loans

4.

Shares and other equities

5.

Insurance technical reserves

Insurance technical reserves

6.

Financial derivatives

Financial derivatives

7.

Other accounts receivable

Other accounts payable

Comments

Liabilities for public corporations
not included in general
government in IIP

Source: IMF staff.
GFSM 2014, Appendix 4, Table C, Classiﬁcation of Flows and Stocks in Assets and Liabilities. In some economies GFS data in this table would

1

include assets in monetary gold and SDRs. These components should be included in the IIP under the concept of monetary authorities inreserve assets. SDR allocations are recorded in liabilities without a sector classiﬁcation.

9.32 Summary lines for government external assets and liabilities from the GFSM 2014 are shown in
Table 9.3.
9.33 Although many economies have started toreport selected financial assets for government financial statistics, few economies have full balance sheets.
Since external assets of the general government canbe substantial for some economies, the compiler may
need to collect this information directly from thegovernment. Methodological notes on the balance of
payments and IIP for such an economy should note if
there is a substantial lack of coverage for these assets.
9.34 Data on the external liabilities of the general
government can have a significant impact on surveillance issues. With regard to debt liabilities (in particular, for debt securities and loans), many economies
have a debt monitoring system in place to measurepublic external debt. This comprehensive data source
can be used to collect information for these components of the IIP. The collection of data from the external debt compiling agency is presented in Chapter 6
under “Public Sector External Debt.” Chapter 6 also
includes data sources for other debt liabilities, such as
trade credit and advances on imports.
9.35 The external debt statement relates closely
to the IIP. It is a subset of the liability componentof the IIP and, as such, can largely be derived fromthe IIP. Liability components of the IIP that are notconsidered part of external debt include equity andinvestment fund shares and financial derivatives andemployee stock options. Chapter 7 includes a discussion of external debt statistics, including the Quarterly External Debt Statistics (QEDS) database and
the Joint External Debt Hub (JEDH).
Balance of payments—Financial transactions

9.36 The IIP and the balance of payments areclosely interrelated; the integrated IIP statement presented in Table 7.1 of the BPM6 shows how changes
in the IIP result from financial account transactions
and other changes in financial assets and liabilities.
The balance of payments records both financial andnonfinancial transactions with nonresidents during
the period in which they occur. The reconciliation
statement illustrates the relationship, explaining thechange in IIP positions. It shows how changes thathave occurred during the period are due to financial transactions, exchange rate changes, other pricechanges, and other changes in volume. The financialtransactions that contributed to the change in positions are those transactions that are recorded in thefinancial account of the balance of payments.
9.37 The compiler may find it possible to use theinformation provided in the three preceding statistical datasets on existing domestic sources to estimate
positions, including on a quarterly basis, for deposittaking corporations, the central bank, and general
government sector. However, in other cases, including

The International Investment Position

for the nonfinancial private sector, information on
positions at the beginning and end of the period may
not be available, particularly on a quarterly basis.
To examine how the compiler can use the financialtransactions in the balance of payments to estimate
a quarterly IIP, an example is presented in “Deriving
Quarterly Positions from Quarterly Transactions.”
9.38 If the volatility of exchange rates, other pricechanges, and changes in volume during a given period is high and if the volume of transactions ishigh,9 it is important to estimate positions based on
more detailed information to assure adequate quality
estimates. There is thus clearly a need to undertake
position surveys from time to time (preferably annually), both to help ensure the quality of position data
and to help check on the reported transactions data.
Nonstatistical sources

9.39 The nonstatistical domestic sources to be discussed are financial statements of companies, approvalsof foreign investment, and the financial press. In eachcase the compiler should check that the definitions
used in these sources are consistent with the BPM6.
Financial statements of companies

9.40 Financial statement of companies can provide
useful information in estimating such IIP items as direct investment, portfolio investment, and other investment (loans, trade credit and advances, currency
and deposits, and other accounts receivable/payable).
The following paragraphs cover the use of financial
statement data in compiling positions on direct investment positions (assets and liabilities). This data
source is particularly useful if the compiler does not
yet carry out enterprise surveys.
9.41 The key to determining the usefulness of thisdata source is the level of consolidation of the financial
statements—whether they are consolidated or unconsolidated. The source of the financial statements—
publicly available or accessible to the compiler throughofficial channels—largely determines the level of consolidation available.
9
The effects on the accuracy of position estimates derived fromflow data (and of flow estimates derived from position data) are
analyzed and discussed in more detail in Effects of Volatile Asset
Prices on Balance of Payments and International Investment Position Data, Marco Committeri, IMF Working Paper No. 00/191.

135

9.42 The most useful financial statements for deriving direct investment are the books of the direct
investment enterprise (DIENT). When the DIENT isin the reporting economy, the process of estimating
direct investment from financial statements is straightforward. When the DIENT is not in the reporting
economy, using financial statements to estimate direct
investment is more complex. In this case, if the only
set of financial statements available is the consolidated
statement of the resident direct investor, the balance
sheet may not provide enough information to calculate
direct investment asset positions. However, the notes
to the financial statements may yield some useful information on equity ownership in nonresident DIENTs.
9.43 The financial statement can be a potential
source of information for the DIENT located abroadwhen the resident direct investor has just acquired an
existing company abroad. If the financial statements of
the acquired company are publicly available, or if theacquisition price is known, the compiler may be able
to estimate the initial value of direct investment assets.
9.44 The compiler may have access to the data
sources through official channels, and these sources
may provide the unconsolidated financial statementsof the resident direct investor. If this is the case, theasset side of the balance sheet may provide information on the investment in foreign affiliates (equity)and loans to foreign affiliates (debt instruments). The
liability side may provide information on loans froma foreign affiliate10 (debt instruments). The source canalso provide information on resident DIENTs such as
investment of direct/portfolio investors in equity, loans
from the direct investors (on liability side), and loans to
direct investors (assets side).
Publicly available ﬁnancial statements

9.45 Generally, publicly available sources exist
for publicly traded companies in an annual report,
available in print format or on the Internet. Annual
reports contain balance sheet items that can be used
to estimate direct investment in a company. Financial
statements that are publicly available are usuallyconsolidated.11
10

Reverse investment.
This means that intercompany transactions have been eliminated. A note describing this limitation needs to be included in
the methodology documentation.
11

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Balance of Payments and International Investment Position Compilation Guide

Table 9.4 Unconsolidated Balance Sheet
AssetsLiabilities

Loans to afﬁliated companies, which include:

Loans from afﬁliated companies, which include:

Loans to direct investor (reverse investment)

Loans from direct investor

Loans to direct investment enterprises

Loans from direct investment enterprises (reverse
investment)

Loans to fellows

Loans from fellows

Source: IMF staff.

9.46 The following example shows how the compiler can estimate direct investment equity liabilities
from this source. If the nonresident direct investor
owns 100 percent of the resident enterprise,12 the compiler may be able to estimate direct investment fromthe Shareholders’ Equity portion of the balance sheet,
which may include: (1) paid-up capital (excluding any
shares on issue that the company holds in itself andincluding share premium accounts); (2) all types ofreserves identified as equity in the company’s balance
sheet (including investment grants when accounting guidelines consider them company reserves);(3) cumulated reinvested earnings; and (4) holding
gains or losses included in own funds in the accounts,
whether as revaluation reserves or profits or losses.
The more frequent the revaluation of assets and liabilities, the closer the approximation to market values.13
Shareholders’ equity is generally included at the bottom of the liabilities section of balance sheets.
Financial statements available throughofﬁcial channels

9.47 Internal sources available within official agencies may also contain financial statement information.
Some compiling agencies collect—for their national
financial statistics—the financial statement information for foreign-owned companies. Depending on
the rules for data sharing that govern the compilingagency, it may be possible for the compiler to accessinformation on the shareholders’ equity of the foreignowned company from this source.
12
If the nonresident direct investor owns less than 100 percent—for example, x percent of the resident enterprise, then only
x percent of the value would be included in the direct investment
estimate.
13
When market value is not available, own funds at book value isan acceptable proxy for market value (BPM6, paragraph 7.16 (e)).

9.48 Data may also be available from other official
agencies outside the compiling agency. Once again,
access to this information would depend on data
sharing agreements between the institutions.
9.49 If unconsolidated financial statements areavailable, the compiler could possibly estimate debt
instruments in the form of intercompany debt. For
direct investment liabilities, loans from parent14 arefound in the liability section of the balance sheet, andfor direct investment assets, loans to parent are foundin the asset section.
9.50 Loans to/from fellow enterprises may be recorded separately in the financial statements, but
most likely they will be included indistinguishably
under loans to/from affiliated companies (if the resident company has any equity participation in thenonresident fellow and vice versa) or in loans to/from
unaffiliated companies (if the fellows do not have any
equity participation in each other). For unconsolidated balance sheets, the intercompany debt may beshown as in Table 9.4.
9.51 When using financial statements to estimate
direct investment, the compiler should note thatmost balance sheets reflect book value or historical cost. In principle, the BPM6 requires that all external assets and liabilities be measured at current
market prices. When actual market values are notavailable—for example, for untraded equity—anestimate is required. Alternative methods of approximating market value of shareholders’ equity
in a DIENT are described in paragraph 7.16 of the
BPM6. The described methods are not ranked according to preference; the compiler would need
14
The parent referred to in the financial statement would be thedirect investor.

The International Investment Position

to assess each of them according to the circumstances and the plausibility of results. However, theCoordinated Direct Investment Survey (CDIS) requests data on unlisted equities to be valued using
the “own funds at book value” (OFBV). OFBV values unlisted equity using financial accounting rules
in which are included: (1) a company’s cumulative
reinvested earnings and (2) accumulated depreciation on plant and equipment; most financial instruments held by the company are valued at market orfair values. Appendix 4 discusses the valuation of
direct investment in more detail.
9.52 Although financial statements may provide
an early source for estimating direct investment andother IIP items, clearly the compiler needs to develop
a more complete source, such as enterprise surveys.
Once a survey system is in place, the compiler is encouraged to request copies of the financial statementsof the DIENT from the reporters. These statements
can be used to verify figures reported on the survey
or to ascertain other information, such as realized or
unrealized capital gains and losses and write-offs.
9.53 As mentioned earlier, in addition to shareholders’ equity and intercompany debt, financial statements may also provide information on investments
in securities (portfolio investment) or indebtedness
not in the form of securities to third parties (otherinvestment); however, the additional information required to distinguish which of these assets/liabilities
are with nonresidents may not be available in standard financial statements. The compiler may wish to
consult the “Notes to the Financial Statements,” which
could contain supplementary information that could
be used as a data source or to verify IIP data—for example, a list of major acquisitions.

137

for external transactions. In this case, a good source of
information for IIP (and balance of payments) compilation is the administrative records of the agency incharge of such foreign exchange controls.
9.56 However, this kind of data often has significant shortcomings because approval procedures
are usually not set up with macroeconomic statistical requirements in mind. For example, it may be an
intended investment (the approved investment may
not actually take place), or significant time lags between approvals and actual investments may occur.
The implementation of the approved investment may
take place over several years. It would be necessary to
determine the duration of the project and the amount
expected to be spent each year.
9.57 Thus, the information on approvals can berather limited regarding the range of informationthat is needed for IIP purposes. For example, the approvals of direct investment in an economy might
capture information on new direct investment
relationships—the acquisition of equity capital—butmight not capture particular items such as intercompany debt positions, collected for the “debt instruments” component of direct investment. This source
is best used to identify the potential new investment,
and the compiler would need other sources such as financial statements and enterprise surveys to confirm
that the foreign investment occurred and to estimate
its value.
9.58 In some economies the agency that licenses
foreign direct investment may require the foreign
investors of the DIENTs to provide them with all
required financial information, including for statistical purposes, on an ongoing basis. This could be avaluable source of data.

9.54 The IIP components that could use thefinancial statements as a data source are identified inTable 9.5 by the acronym FS.

9.59 The IIP components that could use approvals/
licensing data as a data source are identified inTable 9.5 by the acronym AP.

Approvals/licensing of foreign investment

Financial press

9.55 As was mentioned in paragraph 9.5, the data
sources available in a specific economy will depend
partly on the regulatory framework for internationaltransactions. In some circumstances, international capital movements are restricted. That is, external borrowing
or investment is not allowed for specific institutional
units, or approval is required by an official body

9.60 The financial and economic press provides an
excellent timely source of information for identifying
large transactions that could have international implications, particularly for new investments or mergers
and acquisitions for direct investment. The financialpress may provide information on the names of theresident and nonresident companies, the economy

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Balance of Payments and International Investment Position Compilation Guide

with which the transaction occurred, and the size ofthe transaction. If the resident company involved isalready surveyed by a questionnaire, the information
could be validated against that questionnaire, and if
necessary the company could be contacted to discuss
the transaction. Companies that are not surveyed
need to be contacted for details of the transaction, including closing date, amounts involved, and methodsof financing. The company would then be added to
the list of companies surveyed. For some economies,
this timely data source can account for a significant
amount of the preliminary estimates of direct investment. However, caution should be exercised, because
information in the press on the timing and size of investment is often inaccurate.
9.61 The IIP components that could use the financial press as a data source are identified in Table 9.5 by
the acronym FP.

External Data Sources
9.62 The previous section described domestic data
sources that are commonly available for compilation purposes. This section describes the use of data
sources available from international organizations
and partner economies to close some gaps in the datacollection for the IIP. The data sources are international banking statistics (IBS), the Coordinated Portfolio Investment Survey (CPIS), CDIS, and partner
economy data. These datasets are described in Chapter 7 of the Guide.
International banking statistics

9.63 The IBS that are collected and disseminatedby the Bank for International Settlements (BIS) are
published in the BIS Quarterly Review and made available on the BIS website.
9.64 Some of these datasets—for example, locational data—can be relevant to the IIP compilation. The
locational banking statistics provide quarterly debtor/
creditor information on loans and deposits on banks
and nonbanks by economy using balance of payments
concepts. In some economies, the compiler uses thedata on loans and deposits in relation to nonbanks visà-vis individual countries (BIS Quarterly Review, International Banking Statistics, Table 7B, External Loans
and Deposits of Reporting Banks vis-à-vis the Nonbank Sector) to supplement other balance of payments
and IIP data sources. The data provide information

on nonbanks’15 claims and liabilities with nonresident
banks and serve to compile part of the other sectors
components of other investment assets and liabilities.
Specifically, the table shows amounts outstanding andestimated exchange-rate-adjusted changes of externalloans and deposits of reporting banks concerning thenonbank sector and individual economies. Also, thecompiler can use Table 8A from the BIS Quarterly Review, which shows simultaneously a bank’s location, its
nationality, the location of its counterparty, and type ofclaim, specified for banks and nonbanks.16
9.65 The most common BIS locational IIP data
used by the compiler are the outstanding amounts ofdeposits of nonbanks because reliable national data
sources are often nonexistent.17 The BIS data can beused to compile the position on assets of other sectors
in the form of deposits and the outstanding amountsof loans for their economy to compile the other sectors
liabilities in loans.18 Similarly, the compiler can use therelevant estimated exchange-rate-adjusted changes ofdeposits and loans (transactions) in the balance of payments. However, the BIS data do not provide a breakdown by short- and long-term maturity of the loans.
9.66 It needs to be emphasized that the information from the BIS statistics is partial regarding thecoverage of these IIP components, since it includes
only the positions of economies participating in the
BIS international banking statistics.19
9.67 Although the international banking statistics
also provide counterpart economy information onloans and deposits vis-à-vis banks, the compiler usually does not use these data, since national statistics
generally provide more comprehensive information
on such positions. The data may be used to crosscheck national sources.

15
Nonbanks include other sectors—other financial corporations,nonfinancial corporations, households, and NPISHs—as well as
the general government sector. If another data source is used tocompile data for the government sector, the compiler needs totake this into account to avoid double counting.
16
Starting with data for Q2 2012, a vis-à-vis economy dimension
was added in the nationality statistics (Table 8A) so as to see amore granular geography of banks’ assets and liabilities.
17
Enterprise surveys or household surveys may attempt to collectinformation on deposits abroad of nonbanks.
18
If economies maintain an external debt register, the externalloans of nonbanks could be included in the register. In this case,the BIS data could be used to verify the national data source.
19
As of March 2013, 44 countries, including major banking
centers, report these data to the BIS.

The International Investment Position

9.68 Tables 14A and 14B (BIS Quarterly Review,
Debt Security Statistics20) can provide some information on an economy’s liabilities related to issuinginternational securities by maturity and residence ofissuer. It should be mentioned that since this source
reports only issued securities (international securities issued abroad and domestic market issues (thelatter for economies that report domestic issues to theBIS)), data on holdings are not available. Therefore,
the compiler should be cautious when using thesedata for IIP (and balance of payments) purposes.
9.69 For quarterly IIP compilation, the statisticalrelease of the provisional quarterly BIS data would notprovide the compiler with quarterly IIP data in time
to meet standard quarterly timeliness requirements.
However, the BIS data could be used to revise estimated data for the previous quarter.
9.70 The IIP components that could use BIS data
as a data source are identified in Table 9.5 by theacronym BIS.

Other Statistics
9.71 Other data sources for the IIP are discussed in
Chapter 7—the CPIS, the CDIS, and partner economy
data. Data reported to the World Bank for the QEDS
database should be fully consistent with IIP data on
debt liabilities and usually are derived from the IIP.
However, if external debt statistics are compiled andreported to the World Bank not by the institution in
charge of balance of payments/IIP compilation, the
QEDS data can be used for cross-checking purposes.
Other Data Sources
Security-by-security data collection
system on tradable securities

9.72 For economies that use a security-by-security
data collection system to compile portfolio investment in the IIP, these data should be available with ahigh frequency and could be used for IIP compilation,
including for quarterly IIP. Typically, the information
is obtained from resident custodians and from resident end-investors. The resident custodians report
positions in securities with nonresidents for their own
account and on behalf of other residents.
9.73 The IIP components that could use a security-by-security data collection system as a data source are identified
20
International debt securities by economy of residence—
Table 14A, Money Market Instruments. Also, Table 14B, Bonds
and Notes.

139

in Table 9.4 by the acronym SBS. More details on securityby-security databases are presented in Chapter 10.
Registers of external loans

9.74 Some compilers use registers of externalloans to obtain data on loans received or extended
by the nonbank sector. These data, often collected
for exchange control purposes, allow monitoring ofboth loans to/from nonresidents and, in some cases,
nonmarketable securities issued to nonresidents. If
the exchange control is abolished, the administrative
documents and arrangements created for that purpose might be adaptable for statistical purposes. The
figures obtained from this source usually cover loans
both between related companies (parent companies
and affiliates) and between unrelated companies.
9.75 The IIP components that could use registers
of external loans as a data source are identified inTable 9.5 by the acronym RL.

Surveys9.76 It is evident that the data sources outlined so
far will not comprehensively cover the data requiredfor compiling IIP statistics. Most commonly, data gaps
will occur for external positions of the private nonbank
sectors (other financial corporations, nonfinancial
corporations, households, and NPISHs 21).
9.77 To close gaps in the collection of company data,
usually economies will develop surveys on companies’
external financial assets and liabilities. When designinga survey system—for enterprise surveys or portfolio
investment surveys—the compiler has to consider thevarious other data sources that he/she intends to use, toavoid duplication or omission in the overall compilation system. Chapter 3 discusses enterprises surveys.
9.78 The compiler may find it difficult to collectdata on households’ external assets and liabilities
through household surveys, since underreportingand nonresponse in such surveys are likely to be substantial (especially on the assets side). In most economies, the compiler will need to collect these data by
surveying financial intermediaries and custodians(e.g., for portfolio investment) or by using international data sources as outlined earlier.
9.79 The IIP components that could use enterprisesurveys as a data source are identified in Table 9.5 by
the acronym SUR.
21

Nonprofit institutions serving households.

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Balance of Payments and International Investment Position Compilation Guide

Summary Table of Possible Data Sources
9.80 The compiler can determine whether thedata sources already presented are consistent with
the IIP requirements for his/her economy. Even afteran economy has developed a more comprehensive
data collection system for compiling the IIP, the data
sources described here can still prove useful for cross-checking purposes. Table 9.5 summarizes the possible
data sources by the main IIP components.

Deriving Quarterly Positions
from Quarterly Transactions
9.81 This section examines how to derive quarterly
positions data from quarterly transactions data as pre-Table 9.5 Possible Data Sources for Compiling an IIP Statement (concluded)
Possible data sources
AssetsLiabilities

Equity and investment funds shares

SUR/FS/AP/FP/CDIS

SUR/FS/AP/FP/CDIS

Debt instruments

SUR/FS/FP/RL/CDIS

SUR/FS/FP/EDS/RL/CDIS

CPIS

CPIS

CB

n.a.

Deposit-taking corporations, except the central bank

DTC/SBS

DTC/SBS

General government

GFS/SBSn.a.

SBS/SUR/OFC

SBS/SUR/OFC

SBS/SUR

SBS/SUR

CPIS

CPIS

Direct investment

Portfolio investment
Equity and investment funds shares
Central Bank

Other sectors
Other ﬁnancial corporations
Nonﬁnancial corporations, households, and NPISHs
Debt securities

CB

CB/EDS

Deposit-taking corporations, except the central bank

Central Bank

DTC/SBS

DTC/SBS/EDS

General government

GFS/SBS

GFS/SBS/EDS

Other sectors
Other ﬁnancial corporations

SBS/SUR/OFC

SBS/SUR/EDS/OFC

Nonﬁnancial corporations, households, and NPISHs

SBS/SUR

SBS/SUR/EDS

Financial derivatives (other than reserves) and employee stock
options

SUR/DTC/CB/OFC

SUR/DTC/CB/OFC

SUR/DTC/CB/OFC

SUR/DTC/CB/OFC

Other investment
Other equity
Currency and deposits
Central BankCB

CB/EDS

Deposit-taking corporations, except the central bank

DTC

DTC/EDS

General government

GFS

GFS/EDS

SUR/BIS/OFC

SUR/EDS/OFC

SUR/BISn.a.

Central BankCB

CB/EDS

Deposit-taking corporations, except the central bank

DTC

DTC/EDS

General government

GFS

GFS/EDS

SUR/RL/OFC

SUR/EDS/RL/BIS/OFC

SUR/RL

SUR/EDS/RL/BIS

Other sectors
Other ﬁnancial corporations
Nonﬁnancial corporations, households, and NPISHs
Loans

Other sectors
Other ﬁnancial corporations
Nonﬁnancial corporations, households, and NPISHs

The International Investment Position

141

Table 9.5 Possible Data Sources for Compiling an IIP Statement (concluded)
Possible data sources
AssetsLiabilities

Insurance, pension, and standardized guarantee schemes
Central BankCB

CB/EDS

Deposit-taking corporations, except the central bank

DTC

DTC/EDS

General government

GFS

GFS/EDS

SUR/OFC

SUR/EDS/OFC

SUR

SUR/EDS

Other sectors
Other ﬁnancial corporations
Nonﬁnancial corporations, households, and NPISHs
Trade credit and advances
Central BankCB

CB/EDS

Deposit-taking corporations, except the central bank

DTC

DTC/EDS

General government

GFS

GFS/EDS

SUR/RL/OFC

SUR/EDS/RL/OFC

SUR/RL

SUR/EDS/RL

Other sectors
Other ﬁnancial corporations
Nonﬁnancial corporations, households, and NPISHs
Other accounts receivable/payable-otherCentral BankCB

CB/EDS

Deposit-taking corporations, except the central bank

DTC

DTC/EDS

General government

GFS

GFS/EDS

SUR/OFC

SUR/EDS/OFC

SUR

SUR/EDS

n.a.

CB/EDS

CB/GFS

n.a.

Other sectors
Other ﬁnancial corporations
Nonﬁnancial corporations, households, and NPISHs
Special drawing rights (allocations)
Reserve assets
Total assets/liabilities
n.a. = Not applicable.
NPISHs = Nonproﬁt institutions serving households
Source: BPM6, Appendix 9, IIP, pages 309-312
DTC Deposit-taking corporations, except the central bank

CPIS Coordinated Portfolio Investment Survey

CB Central Bank

CDIS Coordinated Direct Investment Survey

OFC Other ﬁnancial corporations

SUR Enterprise surveys

GFS Government Finance Statistics

AP Approvals/licensing of foreign Investment

BIS Bank for International Settlements

FP Financial press

EDS External debt statistics

FS Financial statements

SBS Security-by-security database

RL Register of external loans

Source: IMF staff.

sented in the IIP Guide.22 For economies that compile
annual IIP data, the same strategy could be used withannual position data and annual balance of payments
data.
9.82 For those cases where there are no quarterly
position data sources and where quarterly position
surveys are not feasible, the compiler may consider
deriving quarterly IIP position data from transactions
22
Available in six languages at http://www.imf.org/external/np/
sta/iip/2011/030111.htm.

data in the financial account of the balance of payments, assuming quarterly balance of payments transactions are available in appropriate detail.23 A detailed
discussion can be found in the EDSG, Chapter 12.

23

SDDS subscribers are required to disseminate quarterly balanceof payments data and quarterly IIP. For some components, balance of payments transactions may not be available on a quarterly
basis or there may be a lag that does not meet the timelinessneeds of quarterly IIP compilation. In this case, the guidance
provided in the part on carry forward would apply.

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Balance of Payments and International Investment Position Compilation Guide

9.83 However, the use of accumulated transactions to estimate positions is a weak basis for estimating IIP, because errors can be easily introduced
and, consequently, they tend to be retained in the estimates only until a survey of positions data can beundertaken.24
9.84 In principle, the value of a position at the endof a period is equal to the value of the position at the
beginning of the period plus the following:• Transactions• Other changes in volume• Exchange rate changes• Other price changes
9.85 The following Example 9.1 illustrates howtransactions data can be used to derive quarterly
position data. The example assumes that position data
are available on an annual basis; therefore position
data for the beginning of the period would be avail-able. If information on currency composition is available, other assumptions become easier to make—for
example, if information on the currency composition
is known, the impact of changes in exchange rates
can be calculated and other price changes can also be
calculated. Changes in stock or bond price indexes(which will include the impact of changes in economic
outlook and market interest rates) can be used to calculate other price changes. In the example, amounts inbold reflect source data available to the IIP compiler.
9.86 The results are an approximation of the actual
position partly because the calculations for converting transactions into end positions use the averageexchange rate during the period instead of the actual
exchange rate in effect at the time of each transaction.
When using average rates, the shorter the reference
period the better.
9.87 In the absence of data on the currency composition, the compiler could do the following:• Match the trade-weighted exchange rate to afinancial instrument-weighted exchange rate by
conducting a simple enquiry with some of themore important economic agents, in order tocalculate a correlation between the two exchange

24
For specific items, like financial derivatives, quarterly positions should not be derived from quarterly balance of payments
transactions. See the IIP Guide, Frequently Asked Questions #5(page 28) for further discussion.

Example 9.1 Estimation of quarterly position data1

Estimation of quarterly position data using transactions, exchange rate changes, and price changes
Direct investment asset—equity (traded)
Assumptions:
The currency composition of position and transaction data is available denominated in foreign currency(U.S. dollars) and reported in domestic currency.
The stock market price at end of period and average stock market price are available.
No other changes in volume.
Position at December 31, 2012, in domestic currency: 1,500
Transactions during 2013 in domestic currency: Q1 = 150, Q2 = 50, Q3 = −100, and Q4 = 200.
2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

Source data: Denominated in foreign currency (U.S. dollars) and reported in domestic currency(a) Opening position in domestic
currency

1,500

2,272

1,912

1,755

(b) Transactions in domestic currency

150.0

50.0

−100.0200.0(c) Average stock market prices during
the quarter

1.066

1.070

1.055

1.040

1.045

1.068

1.025

1.033

12.0

12.5

14.5

15.5

14.0

11.5

11.0

14.0

(d) Stock market price at end of quarter

1.100(e) Average exchange rate (units ofdomestic currency to U.S. dollars)(f) Exchange rate at end of quarter

10.0

The International Investment Position

143

Example 9.1 Estimation of quarterly position data1 (concluded )2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

Step 1: Revaluation of transactions and positions to U.S. dollars(g) Transactions in U.S. dollars = (b)/(e)

12.5

4.0

−6.9

12.9

(h) Opening positions in U.S. dollars= (a)/(f [for t−1])

150.0

162.3



159.5

Step 2: Revaluation of transactions and positions for effect of changes in prices(i) Estimated value of transactions (thatoccurred during the quarter) in terms of
their prices at end of quarter position in
U.S. dollars = (g)*[(d)/(c)]

12.3

4.0

−6.7

12.8

(j) Estimated value of opening positionin terms of price changes at end ofquarter position in U.S. dollars= (h)*(d [for t])/(d [for t−1])

142.5

165.8

159.6

160.8

159.4

172.4

1,755.0

2,413.1

Step 3: Calculation of closing positions in U.S. dollars(k) Closing positions in U.S. dollars= (h) + (i)

162.3

166.2

Step 4: Revaluation of closing positions to domestic currency(l) Closing positions in domestic currency= (k)*(f [for t])

2,271.6

1,911.8

Step 5: Calculation of price changes(m) Price changes reﬂecting revaluationof transactions in U.S. dollars= (i) – (g)

−0.2

−0.01

0.2

−0.1

(n) Price changes reﬂecting revaluationof transactions in domestic currency= (m)*(e)

−3.0

−0.1

2.8

−1.3

(o) Price changes reﬂecting revaluationof position in U.S. dollars = (j) − (h)

−7.5

3.6

−6.7

1.2

(p) Price changes reﬂecting revaluationof position in domestic currency = (o)*(e)

−90.0

44.6

−97.1

19.3

(q) Total price changes reﬂecting
revaluation of transactions and positionin domestic currency = (n) + (p)

−93.0

44.5

−94.2

18.0

37

440

Step 6: Calculation of exchange rates changes(r) Exchange rate changes in domestic
currency = (l) − (a) − (b) − (q)

715

−454

Step 7: Compilation of IIP (in domestic currency)
Opening
positionTransactions

Price changes

Exchange ratechanges

Closing
position

1,500

150

−93

715

2,272

2,272

50

45

−454

1,912

1,912

−100

-94

37

1,755

1,755

200

18

440

2,413

2013 Q1
Direct investment, assets, equity
2013 Q2
Direct investment, assets, equity
2013 Q3
Direct investment, assets, equity
2013 Q4
Direct investment, assets, equity

Note: Totals may not equal sum of components due to rounding.
1More examples are available in the IIP Guide.

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Balance of Payments and International Investment Position Compilation Guide

rates; the calibrated trade-weighted exchange ratewould then be applied to the respective financial
instrument. This enquiry could be reviewed every
year or so, if no currency composition is available
to the compiler. If it is not possible to calculate
a calibrated trade-weighted exchange rate, thecompiler could assume that all instruments denominated in foreign currency are in the same
currency. This “currency” could be the known
dominant currency in the economy’s financialtransactions, such as the U.S. dollar, the euro, theJapanese yen, or the pound sterling. However,this could lead to a biased estimate of exchangerate effects and consequently of positions.
• In the absence of data on the currency composition for every domestic sector or functional
category, the compiler might be able to use thecurrency composition of one sector, such as
banks, as a proxy for other sectors. This could bedone only if there is evidence that there is somesimilarity between the currency composition ofbanks and the other sectors, or if external positions of nonbanks are believed to be small. In
order to determine this, a comparison could bemade for a period when the currency composition for all sectors is available. This methodology should be used only until new information
is available as it could introduce errors.
9.88 When actual market values are not available—
for example, for untraded equity—information on bookvalue can be collected from companies, and then adjusted as necessary. As noted earlier, OFBV is an accepted proxy for market value. If information on OFBV
is not available to the compiler, then ratios based onsuitable price indicators, such as the ratio of market
capitalization25 to book value for listed companies inthe same economy with similar industrial activity could
be used as a proxy until other source data are available.
9.89 In terms of data quality, these equations canserve to cross-check or verify transactions or positions
data. For example, if the beginning and end position
data are available as well as the currency composition
and the relevant price index, then the transactions
data reported in the balance of payments can be crosschecked. Potential errors and omissions in the balanceof payments may be identified through this exercise.
25

See the BPM6, paragraph 7.16 (d).

Carry Forward
9.90 In the absence of quarterly transactions dataor any reliable quarterly position data estimate for any
individual item, the most recent position figure could
be carried forward (i.e., use the same position figure)
until other source data are available. For example, fortrade credit liabilities denominated in domestic currency, if transaction data are available only on an annual basis, the position data at the beginning of theperiod could be carried forward each quarter until theannual transactions data are available. This method
could be utilized for quarterly position estimates thatare relatively small. Quarterly statistics would haveto be revised when the annual data are introduced.
For any significant positions, the compiler should use
some methods (such as outreach to the largest companies or custodians) to determine the direction and therelative size of the change in positions, and to adjust
its carry forward estimate accordingly.

Other Changes in Financial Assets
and Liabilities Account
9.91 In the international accounts, the other changes
in financial assets and liabilities account shows changes
in financial positions that arise for reasons other thantransactions between residents and nonresidents.
These changes are also called other flows. There are
two broad categories in this account—other changes involume and revaluations (consisting of exchange ratechanges and other price changes).

Revaluations
9.92 Revaluations occur because of a change in themonetary value of a financial asset or liability due tochanges in the level and structure of its price. Revaluations may also be called holding gains or losses. Revaluation takes into account all price changes during theperiod, regardless of whether realized. Holding gains
and losses are realized when the asset is sold or liability
extinguished. Holding gains and losses on unsold assets
and unpaid liabilities are unrealized, but are recorded asrevaluations. Also, changes in technical reserves resulting from holding gains or losses are not transactions
and therefore are recorded in the revaluation account.
The example presented in “Deriving Quarterly Positions from Quarterly Transactions” includes techniques
for calculating exchange rate changes and other pricechanges. More examples can be found in the IIP Guide.

The International Investment Position

Debt reorganization

9.93 A debtor and creditor may change the termsof a debt agreement. The terms may be changed suchthat the value of the new claim differs from the valueof the old claim. In commercial situations, differencesin values between old and new claims are generally
treated as a valuation change. Information about theagreement may be available from the books of the
debtor or creditor. If the terms of the agreement are
publicly available, this could also be useful for understanding the nature of the agreement.
Financial derivatives and employee
stock options

9.94 The exchanges of claims and obligations at
the inception of a derivative contract are financialtransactions creating asset and liability positions that
normally have, at inception, zero value if the instrument is a forward-type contract and value equal to thetotal premium payable if the instrument is an option.
Changes in the value of derivatives due to change inthe underlying item are recorded as revaluation. The
compiler generally collects position data on financial
derivatives through a survey of companies involvedin the financial derivatives trading. Data sources forfinancial derivatives transactions and positions aredescribed in Chapter 10; for recording of forward
contracts in balance of payments and IIP, see Box 10.5in the same chapter.
Implications of different treatmentsof retained earnings

9.95 For direct investors’ equity in their DIENTs
and for investment fund shares, retained earnings
are imputed as being payable to the owners and reinvested as an increase in their equity. In cases of equity under reverse investment (equity investment of
DIENT in direct investor that constitutes less than 10
percent of total equity capital), portfolio investment,or other investment, no imputation of income being
payable to the owners and of consequent financial account transactions as result of reinvestment of earnings is recorded. However, the increase in the valueof reverse investment, portfolio investment, andother investment equity caused by the accumulationof retained earnings is reflected as revaluation. Data
sources for retained earnings for reverse investment
and portfolio investment could be the same as for

145

direct investment (described in Chapter 10) if they
provide also for the collection of data on portfolio
investment. Data sources for other investment equity
are limited (e.g., administrative records), and the values involved may not be significant.
Implications of trading of instruments thatare recorded at nominal values in positions

9.96 Nominal valuation is used for positions in
nonnegotiable instruments—namely, loans, deposits, and other accounts receivable/payable. However,when transactions in these instruments do occur,
they are valued at market prices, with transaction
prices often being less than the nominal values, because the market price takes account of the possibilityof default. To account for the inconsistency between
the market valuation of transactions and nominal
valuation of positions, the seller records other pricechanges during the period in which the sale occurs,
equal to the difference between the nominal and thetransaction value. The buyer records an opposite
amount as other price changes. Information on suchtransactions may be available from a debt database orregister maintained by authorities or from the booksof the creditor/debtor.
Implications of treatment of interest

9.97 Any indexation amounts not included in interest are classified as revaluation. Information may
be available from the books of the debtor/creditor.

Other Changes in the Volume of Financial
Assets and Liabilities
9.98 Other changes in the volume of financial assets and liabilities are any changes in the value of theseassets that are due neither to transactions nor to revaluation. Most of these changes are not common orreoccurring; therefore establishing data sources may
be challenging. However, if the value is significant, efforts should be made to establish a data source. The
four most common examples of other changes involume of financial assets and liabilities are listed inTable 9.6.
Cancellation and write-offs

9.99 This occurs when there is a reduction or cancellation of liabilities by other than normal repayment. For example, a creditor may recognize that a

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Balance of Payments and International Investment Position Compilation Guide

Table 9.6 Examples of Other Changes in theVolume of Financial Assets andLiabilities
1.

Cancellation and write-offs

2.

Reclassiﬁcationsa) Tradable loansb) Change in contractual termsc) Transactions in existing assetsd) Changes in functional categorye) Monetization and demonetizationof gold bullionf) Reclassiﬁcation of unallocated gold
accounts

3.

Financial assets and liabilities of persons andother companies changing residence

4.

Changes in insurance reserves, pension
entitlements, and provisions for standardized
guarantee schemes

Source: IMF staff.

financial claim can no longer be collected because ofbankruptcy or other factors and the creditor may remove the claim from its balance sheet. This recognition (by the creditor) should be accounted for as otherchanges in volume of assets. The corresponding liability should also be removed from the balance sheetof the debtor.26 With respect to direct investment, if
exploration of natural resources proves unsuccessful(e.g., dry oil wells) and results in the shutdown of thenotional DIENT, a negative adjustment for the remaining value of the company should be recorded asa write-off by the two economies involved.
9.100 Regarding the data sources, if a write-off islarge, it may appear in the financial statements of thecreditor (for example, a bank or a direct investor) or
the debtor. If an economy has a register of externalloans received or extended and a loan is written off,
this information could be available to the compiler.
Information may also be available through direct reporting of the companies involved.

Tradable loans

9.102 Loans that have become negotiable fromone holder to another are to be reclassified fromloans to debt securities under certain circumstances.27
Through reclassification, the nominal value of the oldloan is deducted and the market value of the new security is added. Therefore, the values of two reclassified
instruments may differ. If the amount is significant,the compiler may learn about this reclassificationfrom the direct reporting by companies or a securityby-security data collection system.
Change in contractual terms

9.103 The original terms of a contract may providethat the maturity and interest rate terms change as aresult of an event such as a default or decline in credit
rating. This would result in a reclassification.28 If the
instrument involved is a security, the change in maturity and interest rate may be recorded in a security-bysecurity database. If the instrument is a loan, the information may be available in a register of externalloans. Alternatively, the information may be available
through an enterprise survey that collects information
on a loan-by-loan basis.
Transactions in existing assets

9.104 Transactions in existing assets can result inchanges in the composition of assets and liabilities in
the IIP. When a financial instrument (such as a security) issued by a nonresident is sold by a resident in
one institutional sector (e.g., a depository corporation) to a resident in another institutional sector (e.g.,a nonfinancial corporation), the composition of assets by sector in the IIP changes by a reclassification.
In terms of data source, however, the information
available on transactions in claims constituting external assets may not permit identification of the two parties to the transaction. That is, the compiler may not
be able to ascertain whether a resident, who acquiredor relinquished a claim on a nonresident, conducted

Reclassiﬁcations

9.101 A reclassification entry is necessary when afinancial asset or liability changes its characteristics
or status without there having been a cross bordertransaction.
26

See the BPM6, paragraphs 9.8–9.12, for further details.

27
For such reclassification, there needs to be evidence of secondary market trading, including the existence of market makers,
and frequent quotations of the instrument, such as provided bybid-offer spreads (BPM6, paragraph 5.45).
28
In contrast, a change in the terms as a result of renegotiation by
the parties is a transaction, and thus is shown as a repayment of
the old instrument and issue of a new one in the financial account(BPM6, paragraph 9.15).

The International Investment Position

the transaction with another resident or with a nonresident, or whether a nonresident dealt with anothernonresident or with a resident. A security-by-security
database that provides information on the holder may
provide the compiler with necessary information.
Changes in functional category

9.105 As a result of a change in the relationship between the parties or change in the liquidity of assets, thefunctional category may be changed. For example, if therelationship between the parties changes from portfolio
to direct investment (or vice versa) because the investoracquired (sold) equity holdings and as a result qualifies
as a direct (portfolio) investor, the previous holdings
would be reclassified from portfolio (direct) investment
to direct (portfolio) investment. The compiler shouldbe able to use the information by investor reported
on enterprise surveys as a data source for this reclassification. In addition, the notes to financial statementsof companies may be a source to identify changes inequity participation in nonresident companies.
Monetization and demonetizationof gold bullion

9.106 Gold bullion can be a financial asset (monetary gold) or a good (nonmonetary gold), dependingon the holder and the motivation for holding. Monetization is the change in the classification of goldbullion from nonmonetary to monetary. Demonetization is change in the classification of gold bullion
from monetary to nonmonetary. For example, whena monetary authority purchases gold bullion from anonresident that is not a monetary authority or international financial organization, the transaction isrecorded in nonmonetary gold in the goods and services account. Monetization of the gold bullion occurs
immediately after the transaction and is shown in theother changes in assets and liabilities account of themonetary authority.29 The compiler should be able tocollect this information directly from the monetary
authorities.
Reclassiﬁcation of unallocated gold accounts

9.107 Unallocated gold accounts are classified as
currency and deposits unless they are held by the29
Other examples on monetization and demonetization of gold
can be found in the BPM6, paragraph 9.18.

147

monetary authorities as part of reserve assets. If a
monetary authority acquires an unallocated gold account to be classified as reserve assets, it is recorded
first as a transaction in other investment currency anddeposits. Then it is reclassified from other investment
currency and deposits to monetary gold (unallocatedgold accounts) as a change of classification in theother changes in the volume of assets and liabilities
account. The compiler should be able to collect thisinformation directly from the monetary authorities
and other depository corporations.
Financial assets and liabilities of persons
and other entities changing residence

9.108 When persons and other entities change
their economy of residence, their existing financial assets and liabilities are added to or removed
from the IIP through a reclassification and not by
imputing transactions in the balance of payments.
The treatment of change in residence applies to all
the financial assets and liabilities, not just thosethat are shifted to the new economy of residence.
For example, if a resident of economy A moves andbecomes resident of economy B and maintains hisbank account in economy A, this would be recordedin the IIP of economy A as an increase of liabilities to nonresidents (currency and deposits—otherdepository corporations) through a reclassification,
not a transaction. In addition, the person changing
residence may keep his real estate in economy A.
This would be recorded as an increase in direct
investment liability in economy A also throughreclassification.
9.109 If depository corporations in economy A
maintain information in their databases that show
economy of residence of the depositor, this could be
used as a data source to compile this information.
Also, if economy A maintains a register of real estate
owned by nonresidents and monitors the register forchanges in residence, the compiler may be able to access this as a data source. Information for such type ofreclassification may also be available through a household survey.
9.110 In the exceptional case when corporatechange of residence occurs (see BPM6, paragraph4.167), the change in the residence of the owner offinancial assets and liabilities is treated as a reclassification, in the same way as a change of residence

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Balance of Payments and International Investment Position Compilation Guideof individuals. This information may be available
through an enterprise survey.
Insurance reserves, pension entitlements, andprovisions for standardized guarantee schemes

9.111 Changes in model assumptions can give rise
to other changes in the volume of insurance reserves,
pension entitlements, and provisions for standardized
guarantee schemes. For an annuity, the relationshipbetween premiums and benefits is usually determinedwhen the contract is entered into, taking account ofmortality data available at that time. Any subsequentchanges will affect the liability of the annuity provider
towards the beneficiary. The consequent changes inprovisions would be recorded as other changes in volumes. Insurance companies could be a data source forthis item, if significant.

Other Changes in Financial Assets andLiabilities and Reconciliation Statement
9.112 Entries in the reconciliation statement forother changes are usually associated with changes
in the volume (as opposed to the revaluation) of
external assets and liabilities. These entries should
be subjected to further scrutiny, as they can reflect
debt write-off or activation of guarantees (or incorrectly, debt forgiveness, which should be recorded asa transaction).

9.113 External information can be used to validate
the quality of the reconciliation items in the reconciliation statement:• If the domestic currency is generally appreciating (depreciating) against other currencies, thenthe exchange rate changes will generally decrease(increase) the value of foreign currency assets
and liabilities.
• If domestic stock indexes are increasing (decreasing), reflecting broad-based increase in thevalue of stocks, then price changes will increase(decrease) the value of external equity liabilities,
and similarly for global stock indexes and thevalue of external equity assets.
• If domestic interest rates are increasing (decreasing), then the market price of tradable debt
security liabilities (to the extent that these aredominated by domestic issues in the domestic
currency) will decrease (increase) the value of
external liabilities.
• To the extent that domestic equities are issued
in the domestic currency, then the exchange rate
impact on these liabilities will be zero.
• By definition, the price changes on other investment debt instruments will be zero except in theunusual circumstances where these instruments
are traded at a value different from nominal value.

10

The Financial AccountIntroduction
10.1 The financial account records transactions
that involve financial assets and liabilities and thattake place between residents and nonresidents. This
chapter identifies the data sources that could be used
for compiling estimates of financial account transactions,1 and discusses compilation issues, as well as
the various techniques that could be employed whensource data are unavailable or deficient.2
10.2 The financial account is subdivided according
to functional and instrument categories. This chapter
is structured according to the five functional categories of investment in the international accounts: direct
investment, portfolio investment, financial derivatives(other than reserves) and employee stock options,other investment, and reserve assets. These functional
categories are built on financial instruments classifications, but with an additional dimension that takes into
account some aspects of the relationship between theparties and the motivation for investment.3

Direct Investment4
Concept and Coverage
10.3 Direct investment (DI) is a category of crossborder investment associated with a resident in one
economy having control or a significant degree of influence on the management of a company that is resident in another economy. In addition to funds, direct
investors may supply additional contributions suchas expertise, innovation, technology, management,
and marketing. As well as the equity that gives rise
to control or influence, DI also includes investment

1

See also Chapter 9 of the Guide.
This chapter discusses the derivation of transactions from positions. The Quarterly International Investment Position Statistics: Data
Sources and Compilation Techniques (IIP Guide) identifies techniques for deriving quarterly positions from quarterly transactions.
3
See the BPM6, Chapter 6, Table 6.1, for links between financial
assets classification and functional categories.
4
See Appendix 4.
2

associated with that relationship, including investment in indirectly influenced or controlled companies,
investment in fellow enterprises, debt, and reverse
investment. Appendix 4 of this Guide provides guidance on the compilation of DI statistics and discusses
the treatment of fellow enterprises, identification ofultimate controlling parents (UCP), and issues on statistical units. A model form for collecting data fromcompanies is provided in Appendix 8. Guidance on
production sharing arrangements (PSA) that have become an important channel for investment flows, particularly in extractive industries, is provided in Box 10.1.
10.4 In some cases companies operate as a seamless operation over more than one economic territory, typically for cross border activities such as
airlines, shipping lines, hydroelectric schemes onborder rivers, pipelines, bridges, tunnels, and undersea cables. If possible, separate branches should be
identified for each economy (see BPM6, paragraphs
4.26–4.33). If that is not possible because the operation is so seamless that separate accounts cannot be
developed, it is necessary to prorate the total operations of the company into the individual economic
territories. The factor used for prorating should bebased on available information that reflects the actual operations. Further guidance is given in paragraphs 8.68–8.70.
10.5 The same concept of DI is used in the OECD
Benchmark Definition of Foreign Direct Investment (BD4).

Motivation for Direct Investment
10.6 The benefits that direct investors expect toderive from having a voice in management are different from those derived by portfolio investors who
cannot exercise significant influence over the companies in which they invest. From the viewpoint of direct investors, direct investment enterprises (DIENT)
often represent units in multinational operations. The
overall profitability of these depends on advantages
gained by deploying resources available to each unit
in the group in ways that best enhance group synergy.

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Balance of Payments and International Investment Position Compilation Guide

Box 10.1 Production Sharing Arrangements and Direct Investment
Production sharing arrangements (PSA) are arrangements between a government (acting on behalf of the state as theowner of the mineral resources) and investors that govern exploration and production rights. These contracts are intended to provide a predictable legal and tax regime and are internationally recognized in law. While PSA models varyacross economies, they usually include the following elements: (1) the investor or operator pays royalties to the government; (2) the investors receive production revenues to cover expenses; (3) “proﬁt production” is split between the government, the operator, and investors on the basis of a negotiated formula that takes into account the characteristics ofthe project (usually a sliding scale is included to deal with the impact of changes in the world price of the commodity);and (4) the operator and/or investors pay taxes on their portion of proﬁts on production.1
In some economies, PSAs are not incorporated as legal companies in the host economy and use special accounting
principles, and the principal parties to the contract have limited statistical reporting obligations. Implementation of thearrangements may be overseen by a government agency that manages the government’s interests in the PSAs; but it,
for statistical purposes, may not be the operating company. Further, in some economies, PSA information is conﬁdential.
Provided ahead are broad guidelines on adapting the BPM6-based guidelines for determining the nature of cross bordertransactions and positions, in the context of PSAs.
As a starting point, the compiler should ﬁrst identify the operating company, and then establish the existence of a direct
investment relationship between the operating company and its foreign owner(s), assuming the requirements for direct
investment are met (production is expected to be undertaken on a signiﬁcant scale, and so forth). As noted earlier, thegovernment agency that manages the state’s interests in the PSAs (which may involve different consortiums across different locations) may not be the operating company. The compiler would then need to create an artiﬁcial production
unit for each PSA; this unit may be identiﬁed as a branch when a nonresident unit has substantial operations over asigniﬁcant period in the host territory, but no separate legal company is established for those operations. Each branch isa direct investment enterprise (DIENT).
In the case where the contracting parties to a PSA comprise a single foreign investor and the government, the former
is the direct investor. However, when there are a number of foreign investors (as part of a consortium), determining
the nature of the investment relationships is likely to be a challenge in the absence of full disclosure on the terms
and conditions of PSAs. PSAs may identify the rights of contacting parties with regard to participating interests thatare usually linked to shares in proﬁt production (or proﬁts). These participating interests, from a statistical viewpoint,
do not provide the criteria for determining a direct investment relationship. The investor that has clearly assigned
responsibilities for operating the production unit (the branch) should be considered as the direct investor for statistical purposes.
PSA contracts may also deﬁne arrangements with regard to the lease of resources, with the nonresident investors
making payment to the government for the acquisition of mineral rights (for exploration and extraction) over a ﬁnite
period. For statistical purposes, the foreign contractors (consortium) should be regarded as having acquired a lease thatamounts to a permission to use natural resources that are not recorded as outright ownership of these resources. Except
for the direct investor’s share, this acquisition is recorded as a debit entry in the capital account under acquisitions/disposals of nonproduced, nonﬁnancial assets. The direct investor’s share is recorded in the ﬁnancial account, under direct
investment, equity and investment fund shares. The foreign parties in the consortium (nonresident) in turn make thesemineral rights available to the operating company, and are paid a rent to be recorded as a credit entry in the recipient’s
primary income account (other primary income, rent).
However, cases may also arise where a government sells the resource, evidenced by the government ceding all rights
over it to another unit (such as an outright sale, or under a very long-term lease during which period the government
has ceded all rights to the resource and the resource is expected to be fully extracted from land). With limited exceptions (see BPM6, paragraph 4.5(e)), mineral resources can be owned only by resident units; and accordingly notional
resident units would need to be established, with the foreign parties becoming direct investors in a DIENT that is distinct
from the operating company. In this case, the payments made for the acquisition of the resources are recorded in theﬁnancial account, under direct investment, equity, and investment fund shares. Subsequent transactions between these
DIENTs and/or between any of the DIENTs and the government are resident-resident transactions, and are not includedin the balance of payments.
Regarding the ﬂows between the direct investor and the DIENT, identifying how the production sharing agreement isorganized is a starting point for identifying potential transactions. Resident parties to the contract are the government,
or agency acting on its behalf. They would obtain their share of the mineral revenue (or share of production), representing both their cost recovery and income on their investments. Royalties may also be paid to the government. These

The Financial Account151

Box 10.1 Production Sharing Arrangements and Direct Investment (concluded(continued))
are resident-resident transactions. The direct investor would receive payments that represent a recovery of its capital
investment (this would reduce direct investment liabilities in the reporting economy), and direct investment income,sometimes termed “cost oil” and “proﬁt oil” respectively in PSAs.
Additionally, the foreign consortium may also make ﬁnancial resources available to the operating company, and would
also be paid income corresponding to the requisite ﬁnancial instrument (e.g., loans, trade credit and advances, otheraccounts payable). The consortium may also provide services and operational leases to the operating company. Theseshould be considered as balance of payments transactions, and classiﬁed in line with the BPM6 guidelines for thesecomponents.
Given the challenges of data collection, the compiler could develop alternative solutions to estimating the balanceof payments transactions, including the construction of an income statement for the DIENT using available information such as export revenue, royalties and taxes paid to the government, and industry benchmarks for intermediate
consumption and proﬁt margins.2 Deriving external transactions and positions remain a challenge, not least because
comprehensive income statements and balance sheets for the operating companies generally do not exist. Further,
there is generally a short repayment cycle for trade credits and advances made to the operating company; these are
typically settled through transactions executed outside the domestic banking system, usually by the consortiums(which tend to perform the role of marketing agents) recouping outstanding debt obligations from the export
proceeds.
Source: IMF staff.
1This box aims to provide guidance on identifying direct investment transactions and positions in the context of typical PSAs, andis not intended to cover broader types of cross border public-private partnerships. For a discussion of public-private partnerships, see
Public Sector Debt Statistics: Guide for Compilers and Users (2011), paragraphs 4.119 through 4.126, and the Government Finance
Statistics Manual GFSM 2014, Appendix 4, Section C. Leases, licenses, permits, and other contracts are discussed in GFSM 2014,
Appendix 4, Section B.
2

An example of the statistical modeling of the PSA ﬁnancial mechanism is the work of the Central Bank of Russia. See Production

Sharing Agreements: Paper by the Central Bank of Russia Presented to the Twenty-Fourth Meeting of the IMF Committee on Balanceof Payments Statistics, Moscow, Russia (October 24–26, 2011) available at www.imf.org/external/pubs/ft/bop/2011/11-17.pdf.

For example, direct investors may be able to obtain
access to resources or markets that would otherwise
be unavailable to them. Direct investors may also
be able to increase company profitability and value
through management skills and other expertise.
Therefore, direct investors are in a position to derive
benefits in addition to the income that would, without their participation, accrue on invested capital. In
contrast, portfolio investors are primarily concerned
about return on capital and the likelihood of appreciation. Portfolio investors generally evaluate separately
the prospects of each independent unit in which theymight invest and often shift their capital with changes
in these prospects.

Deﬁning Direct Investment Relationships
10.7 A direct investor is a company resident in
one economy that has acquired, either directly or
indirectly, at least 10 percent of the voting power of
a company resident in another economy. The direct

investor may be an individual; an incorporated orunincorporated private or public company; an associated group of individuals or companies; a governmentor government agency; or another organization thatowns a DIENT in an economy other than the one inwhich the direct investor resides. A DIENT is a company resident in one economy subject to control or asignificant degree of influence by a direct investor. The
BPM6 identifies control and significant influence intwo dimensions: (1) immediate direct investment relationships and (2) indirect direct investment throughchains of control and significant influence. Immediate direct investment relationships arise when a direct
investor directly owns equity that entitles it to 10 percent or more of the voting power in the DIENT (foran incorporated company); or the equivalent (for anunincorporated company). DIENTs comprise unincorporated and incorporated companies that are morethan 50 percent owned, and therefore controlled, by
the direct investor (subsidiaries of the direct investor),

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Balance of Payments and International Investment Position Compilation Guide

and companies that are between 10 and 50 percent
owned, and therefore significantly influenced, by the
direct investor (associates).

panies provides voting power of 10 percent or more,then one of the companies is a direct investor in theother and they should not be considered fellows.

10.8 The direct investment relationship extends indirectly through chains of ownership to the DIENT’s
subsidiaries, subsidiaries and associates of subsidiaries, associates and subsidiaries of associates. Associates directly or indirectly owned by another associate
are excluded. It also includes DIENTs in different
economies that have a common direct investor but are
not in an immediate DI relationship with each other.
These are called fellow enterprises.

Selected Afﬁliated Financial Intermediaries
10.13 The positions of intercompany assets and liabilities between two selected types of affiliated financial intermediaries, including special purpose entities(SPE), principally engaged in financial intermediation, that are recorded under DI are limited to equity
and investment fund shares, including reinvestmentof earnings.5 For this purpose, financial intermediaries engaged in providing financial intermediation
services comprise those corporations and quasicorporations that are grouped in the following subsectors: (1) deposit-taking corporations (both central
bank and deposit-taking corporations other than thecentral bank); (2) investment funds; and (3) other financial intermediaries, except insurance corporations
and pension funds. Debt between these financial intermediaries is not classified as DI because it is notconsidered to be so strongly connected to the direct
investment relationship.

10.9 The Framework for Direct Investment Relationships (FDIR) is a generalized methodology for
identifying and determining the extent and type of
DI relationships. In other words, the FDIR allows thecompiler to determine the population of direct investors and DIENTs to be included in DI statistics forany company. For a compiling economy, the FDIR
identifies all companies related to a particular company whether they are immediate or indirect direct
investors, DIENTs, or both. For example, within amultinational group, it is possible that a DIENT itself owns 10 percent or more of the voting powerof another nonresident company, in which case the
DIENT is itself a direct investor in a further DIENT.
The question is therefore whether there is a DI relationship between the further company and the original company.
10.10 There is extensive discussion of the FDIR in
the BD4, Chapter 3 and Annex 4. There is also discussion in Chapter 6 of the BPM6.

Fellow Enterprises
10.11 Fellow enterprises are companies resident
in different economies, in a DI relationship with eachother (i.e., they have a common immediate or indirect
direct investor), but neither company is a direct investor in the other.
10.12 It is not unusual for there to be financial positions and transactions between fellow enterprises,
particularly where one of the fellows provides financial
services to the broader DI group. Positions between
fellows are DI positions (usually debt but noting theusual exclusion from DI for debt positions between
selected affiliated financial intermediaries; see BPM6,
paragraph 6.28). If an equity position between com-

10.14 International and regional financial institutions (such as the European Bank for Reconstruction
and Development) invest in companies in different
sectors of an economy. In cases where these institutions invest in financial intermediaries, the debt flows
between the two units are excluded from DI. DI debt
between international and regional financial institutions and companies not involved in financial intermediation is included in DI, assuming the criteria fordefining direct investment relationships is met.

Investment Funds
10.15 Collective (or pooled) investment funds
have grown in importance in global stock markets,and are promoted with a wide range of investment
aims targeting either specific geographic regions(e.g., emerging markets) or specified industry sectors(e.g., technology). These funds issue shares that are
termed investment fund shares if a corporate structure is used, or units if a trust structure is used. The
key features of these investments funds are discussed
in the BPM6, under money market funds (BPM6,
5
Both affiliated parties must be one of the selected types of financial corporations, but they need not be the same type.

The Financial Accountparagraph 4.73) and nonmoney market investment
funds (BPM6, paragraph 4.74). If these shares or units
are held by direct investors, the associated transactions and positions are recorded under DI equity.6
10.16 These funds may also operate through institutional units described as SPEs or special purpose
vehicles.7 SPEs are often resident in a territory otherthan the territory of their owner, may have few, if any,
employees, and may have little or no physical presence. The BPM6 notes that these entities are always
treated as separate institutional units if they are resident in a different territory to that of their owners(BPM6, paragraph 4.51).

Valuation of Direct Investment Positions
and Transactions8
10.17 The BPM6 recommends that market values beused to value DI financial flows, income transactions,and positions. This recommendation is consistent withvaluation principles recommended for recording otherentries in the balance of payments and the international
investment position (IIP). The recommendation on valuation of DI is made for two primary reasons. First, if
inconsistent valuation bases were used, it would be very
difficult to make comparisons between DI and other financial investment as shown in the balance of payments
and the IIP. Second, market valuation provides the mostmeaningful measure of the economic value of resources
available to, or transferred between, economies.
10.18 When using position data to derive DI transactions, the compiler should pay particular attention to
the fact that changes in position would reflect not onlytransactions but also revaluations (exchange rate andother price changes) and other changes in volume. An
example of deriving transactions using data on positions and other price changes is presented in Box 10.2.
10.19 More details on the treatment of statistical units (e.g., company and local enterprise group)and other units, such as notional units, companies
established abroad for fiscal purposes, and SPEs, arepresented in Appendix 4 of this Guide. The appendix
also describes possible approaches for valuing direct
investment positions.

Data Sources
10.20 The use of surveys of businesses for collecting data on foreign assets and liabilities is discussed
in Chapter 3. Direct investment-specific surveys provide the best opportunity for collecting data from
respondents, in line with the international statisticalstandards, as they allow for the concept of DI and thetreatment of particular transactions to be explained torespondents. These surveys also allow for the collection of other DI-related information that can be used
for analytical purposes and for quality control (seemodel form 18 in Appendix 8). However, specialized
DI surveys incur costs, and may require close interagency coordination and cooperation across a number of agencies, including the agency compiling theinternational accounts, the national statistics office,and investment promotion or regulatory agencies.
The main principles for organizing and conducting asurvey are presented in Chapter 2.

Box 10.2 Deriving Transactions Using Data on
Positions and Other Price Changes
The following illustrative example is based on securities issued in U.S. dollars, with opening and closing
positions as follows: opening position = US$1,200, andclosing position = US$1,700.
The market value of the security (per unit) is asfollows:
Opening position:
Closing position:
Average price

US$0.75
US$0.50
US$0.60

Step 1
Revalue the opening period position using the end
period market valuation:(1,200/0.75)  0.5 = 800
Step 2
Calculate the difference between end period position
and revalued opening period position:
1,700  800 = 900
Step 3
Revalue transactions at average transactions value:(900/0.5)  0.6 = 1080

6

The use of pooled assets for reserve assets management is discussed in the BPM6, Chapter 6.
7
See the BPM6, paragraphs 4.50–4.51, for the characteristics of SPEs.
8
See the BPM6, Chapter 3, Section E.

153

Other price changes are calculated as the difference
between the change in positions and the revalued
transactions, as follows: (1,700  1,200)  1080 = 580

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Balance of Payments and International Investment Position Compilation Guide

10.21 For economies with a liberalized financial
account, a key challenge in the collection of DI data is
the coverage of outward DI in business surveys. There
are difficulties in identifying direct investors and indeveloping an adequate population frame of resident
units investing abroad. Exploratory surveys are usually a starting point for developing a survey frame foroutward DI, although in some cases, the inward DI
survey targeting resident DIENTs is used as a starting point. However, resident units other than DIENTs
may have substantial DI abroad; these may include
both private and public companies, and government
agencies, including those that manage or administersovereign wealth funds. The compiler would need togather the information from a broad range of sources(including media reports, industry journals, commercial databases, partner economy databases, anddisclosures by listed companies), as a basis for developing an adequate population frame for conducting
surveys on outward DI. For economies that undertake
exploratory balance of payments surveys, this may be
a less significant issue.
10.22 Some economies use the international transactions reporting system (ITRS) as a source for information on DI flows.9 The advantages are that a large
amount of information on transactions is readily available from banking records, and its use avoids the expense of developing alternative collections. However,the ITRS measures only cash transactions. DI also involves noncash transactions, such as reinvested earnings,10 equity provided in the form of machinery andso forth, and intercompany debt and equity transactions that bypass resident banks. Generalized foreignexchange/banking report forms are also typically unsuitable for explaining the concept of DI, resulting
in problems in classification and limited scope of thecollected data. The ITRS may not take account of DI
transactions in domestic currency. When not used as a
primary source, the ITRS can provide sample frame information, allowing for the collection of data throughother sources, such as business surveys. For example,

9
In some central banks, the ITRS evolved as data reporting system that was previously built on an exchange control system; as
economies dismantled exchange control, the ITRS has become aless comprehensive source for balance of payments statistics.
10Chapter 11 of the BPM6 provides a numerical example of calculation of reinvested earnings of a direct investment enterprise(Box 11.5). See also Appendix 4.

an ITRS can provide indications of new or extinct
DIENTs, as well as the volume of foreign transactions.
Such information is useful for creating/updating business registers and determining sampling frames.
10.23 National agencies that provide approvals for
and/or regulate inward DI activities provide an information source that is readily available. However, theserviceability of such data for compiling the international accounts is usually limited. Approved investments may not materialize, so the compiler would
need to find a tracking method as a basis for determining actual investment inflows (including monitoring
financial press and industry journals). Approvals data
may also not cover nonequity transactions, such as
lending, and information on income and withdrawals of investment may not be available. The compiler
should also be aware of the industry coverage of thedata collected from any single investment promotion
agency, as in some economies the responsibility for
approving investments in key sectors (e.g., petroleum,telecommunications, and finance) may lie not withthe general investment promotion agency but withindustry-specific approval/regulatory agencies. For
example, central banks are usually a source of data on
DI in the banking sector. In this case, the compiler
should ensure that data from all relevant agencies
are collected. The approval process may also relate
to investments above thresholds, and would require
an estimation of DI transactions that fall below thethresholds. One approach is to conduct periodic surveys of DIENTs not captured in administrative-based
data sources.
10.24 As noted in the IIP Guide, data on debt instruments related to DI could be sourced from a register of external loans, used in some economies to track
private sector external debt. These registers are usually maintained by the debt management office or thecentral bank.
10.25 DI companies’ income and balance sheet
statements may also provide useful data for deriving/estimating DI transactions. Income statements
provide transactions data on revenue and expenses,
but may not provide a residency-based split (foreign/
domestic) to allow balance of payments transactions
to be readily identified. The information may be augmented with data from more detailed company annual reports, as well as the compiler’s knowledge ofThe Financial Accountthe company’s operations. However, for multinational
companies, data may be presented on a consolidated
basis, covering a group of companies located in different economies; this limits the utility of the datafor compiling the international accounts. The use ofindirect estimation methods may be required to apportion the data. For example, data on revenue or
employment by economy, if available, may be used inapportioning consolidated data.
10.26 A growing number of economies are compiling and disseminating international investment
statistics by counterpart economy. In 2010, the IMF
initiated the Coordinated Direct Investment Survey(CDIS), a worldwide statistical data collection effort
designed to improve the availability and quality ofdata on foreign direct investment, both overall and byimmediate counterpart economy. The first CDIS wasconducted as of end-year 2009, and it is being conducted annually thereafter. The concepts, coverage,
valuation, and classification of data collected in the
CDIS are consistent with the BPM6 and BD4.11
10.27 The OECD database on International Direct
Investment Statistics presents statistics on DI to andfrom OECD economies. Data are broken down bygeographical zone and industrial sector for DI flows
and positions.
10.28 In some cases, indirect estimation techniques are also employed when collection systems arenonexistent or deficient. The estimation techniquesdraw on a variety of source data, including imports
statistics, tax data, and building permits. The compiler
may use trade data on the imports of DIENTs to estimate the level of DI inflows, or may use the information to supplement information obtained from othersources, such as the ITRS.
10.29 In some economies, tax data on profits areused in tandem with related information and industryspecific assumptions, to create an income and balance
sheet profile of DIENTs, as a basis for estimating DI
transactions and positions. To address coverage issues related to threshold based–data collections, tax

11
See Chapter 7 for a discussion on adjustments to the CDIS dataneeded for compiling the balance of payments and IIP accounts.
Table 7.1 in Appendix 7 explains how DI data collected on the
directional principle basis are mapped to the assets/liabilities
presentation.

155

data may also be used to estimate the transactions ofsmall DIENTs, by assuming industry-specific ratios
on profitability.
10.30 DI flows related to construction activity may
also be estimated on the basis of building permits, but
the compiler needs to be cautious of the limitations ofapprovals data.
10.31 Financial information disclosed by direct investors, including information disclosed to fulfill theregulatory requirements of securities exchange commissions, are also useful for identifying flows, particularly for new investment projects.

Portfolio Investment
Concept and Coverage
10.32 Portfolio investment is defined as crossborder transactions and positions involving debt orequity securities, other than those included in DI orreserve assets (BPM6, paragraph 6.54). Equity securities are instruments that acknowledge a claim on theresidual value of a company. Debt securities are negotiable instruments serving as evidence of debt. They
include bills, bonds, negotiable certificates of deposits, commercial paper, debentures, asset-backed securities, and similar instruments normally traded in thefinancial markets.
10.33 “Collections on International Activity Associated with Securities” in Chapter 3 provides detailed
information on collection of data on international
activity with securities. It covers issues on identifying
security issuers and owners, and the transactor. The
chapter also describes in detail possible data sources
for collecting data on securities and how to overcome
possible problems.

Valuation of Portfolio Investment
Positions and Transactions12
10.34 Financial transactions in securities generally
fall into four categories: (1) issues, (2) redemptions,(3) purchases, and (4) sales. These transactions are generally recordable and can be collected using a form forinternational securities (see Appendix 8, model form
19, International Securities). For securities issued by

12
The valuation of positions of financial assets and liabilities isdiscussed the BPM6, Chapter 3.

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Balance of Payments and International Investment Position Compilation Guide

Box 10.3 General Methods for Estimating Fair Value of Portfolio Investment Debt
When market-price data are unavailable for portfolio investment debt instruments, there are two general methods for
estimating fair value (which is an approximation of the market value of such instruments):• Discounting future cash ﬂows to the present value using a market rate of interest• Using market prices of ﬁnancial assets and liabilities that are similar
The ﬁrst general method is to value ﬁnancial assets and liabilities by basing market value on the present, or timediscounted, value of future cash ﬂows. This is a well-established approach to valuation in both theory and practice.
It calculates the market value of a ﬁnancial asset or liability as the sum of the present values of all future cash ﬂows.
Market value is given by the following equation:n (Cash ﬂow)t
Discounted present value = ∑ ––––––––––––,
t=1(1 + i)twhere (Cash ﬂow)t denotes the cash ﬂow in a future period (t), n denotes the number of future periods for whichcash ﬂows are expected, and i denotes the interest rate that is applied to discount the future cash ﬂow in period t.
The method is relatively easy to apply in valuing any ﬁnancial asset or liability if the future cash ﬂows are known withcertainty or can be estimated, and if a market interest rate (or series of market interest rates) is observable.
Directly basing market value on the market price of a similar ﬁnancial instrument is a well-used technique whena market price is not directly observable. For example, the market price of a bond with ﬁve-year remaining maturity
might be given by the market price of a publicly traded ﬁve-year bond having comparable default risk. In other cases, it
may be appropriate to use the market price of a similar ﬁnancial instrument, but with some adjustment in the market
value to account for differences in liquidity and/or risk level between the instruments.
In some cases, the ﬁnancial asset or liability may possess some characteristics of each of several other ﬁnancial instruments, even though its characteristics are not generally similar to any one of these instruments. In such cases, information on the market prices and other characteristics (e.g., type of instrument, issuing sector, maturity, credit rating, etc.)of the traded instruments can be used in estimating the market value of the instrument.

residents and owned by nonresidents, the corresponding transactions impact the net incurrence of liabilities
side of the financial account; for securities issued bynonresidents and owned by residents, the corresponding transactions impact the net acquisitions of assets
side of the financial account. The following conventions apply to both Part A (Securities Issued in Newland) and Part B (Securities Issued Abroad) of form 19.
10.35 Positions in financial assets and liabilities should, in general, be valued as if they were acquired in market transactions on the balance sheet
date. Many financial assets are traded in markets
on a regular basis and therefore can be valued bydirectly using the price quotations from these markets.13 For assets and liabilities that are not traded infinancial markets or that are traded only infrequently,
it is necessary to estimate fair values that, in effect,13

If the financial markets are closed on the balance sheet date, themarket prices that should be used in the valuation are those thatprevailed on the closest preceding date when the markets were open.

approximate market prices. Two general methods for
estimating fair values of portfolio investment debt areused: (1) discounting future cash flows to the present
value using a market rate of interest; and (2) using
market prices of financial assets and liabilities thatare similar. These methods are discussed in Box 10.3.
Portfolio investment equity that is untraded may bevalued using the same methods that are used for valuing unlisted direct investment shares—see the BPM6,
paragraphs 7.16–7.17 and 7.29.
10.36 When debt securities, such as bonds (including deep-discount and zero-coupon bonds), bills, andsimilar short-term securities are issued at a discount (orat a premium), the difference between the issue priceand its face or redemption value at maturity is treated,on an accrual basis, as interest (negative interest) overthe life of the instrument. When issued at a discount,the interest costs that accrue each period are recorded
as being reinvested in the debt security, increasing theprincipal amount outstanding. This approach can be
described as the capitalization of interest; it is not a
holding gain for the security owner. When issued at

The Financial Accounta premium, the amount accruing each period reduces
the value of the debt security. Chapter 11 of the BPM6
presents numerical examples of calculation of interest accrual on zero-coupon bonds (Box 11.2) and onindex-linked bonds (Boxes 11.3 and 11.4). The corresponding entry to the interest accrued is an increase in
debt securities in the financial account.
10.37 When persons and other entities change
their economy of residence, their existing financial
assets are added to or removed from the IIP througha reclassification, not by imputing transactions in thebalance of payments. The change in residence does
not involve a transaction between two entities, but achange in the status of a single company or person.
The treatment of change in residency applies to all thefinancial assets and liabilities, not just those that areshifted to the new economy of residence. The reclassification in the IIP is done through the Other Changes
in Financial Assets and Liabilities Account, otherchanges in volume, under the applicable functional
and instrument category (see “Other Changes in Financial Assets and Liabilities Account” in Chapter 9).
10.38 For equity shares that are listed in organizedmarkets or are readily tradable, the value of outstanding positions should be based on observable market
prices. As noted, the value of total shareholder equity
not quoted on stock exchanges or not traded regularly
may be estimated using any of the methods listed anddescribed in the BPM6, paragraphs 7.16–7.19.

Data Sources
10.39 Data on portfolio investment draw mainly
from official sources and surveys, usually dependingon the degree of regulation and the scope of cross border activities. The main sources are as follows.
10.40 Monetary and financial statistics (MFS) provide position data on the financial assets and liabilitiesof depository corporations (central banks and otherdepository corporations (ODC)). However, as discussed in Appendix 6, “Linkages of the International
Accounts with Monetary and Financial Statistics,” there
are limitations in using monetary statistics to compile
IIP.14 Particularly, limitations are in the following:

14“Linkages of the International Accounts with Monetary and Financial Statistics” in Appendix 6 also discusses how to overcome
the limitations.

157• Valuation—For example, in MFS liabilities in theform of shares and other equity are measured atbook value while in the BPM6 shares assets andliabilities should be valued at market value.
• Coverage—For example, money market funds in
MFS are classified under other depository corporations while in the BPM6 they are included
under other financial corporations.
• Functional categories—For example, MFS do notuse functional categories to classify financial assets and liabilities, which makes it challenging
to compile direct investment position in IIP forother financial corporations based on the MFS.
• Maturity breakdown—For example, MFS contain a maturity breakdown only for central bankliabilities with nonresidents, but not for financial
assets of the central bank, or for assets and liabilities of other deposit-taking corporations andother financial corporations.
10.41 When using MFS position data to derivetransactions, the compiler must be aware of the recording basis of the source data, and should seek
to exclude changes in position explained by otherchanges in volume, and by revaluation (exchange ratechanges and other price changes) in order to compilea reliable estimate of transactions based on changes inposition (see Box 10.2).
10.42 Transactions may also be sourced from the
ITRS, but coverage should include the transactions
on ODCs’ own account as well as those conducted onbehalf of their clients.
10.43 Security-by security (SBS) databases havealso become increasingly widespread, and are used
in a number of economies as the basis for recording/estimating balance of payments and IIP entries. A SBS
database is a microdatabase that stores statistics at anindividual equity and/or debt security level; it is also
known as a securities reference database. This information is classified according to a range of attributes
or characteristics that may vary depending on the
purpose of the database. The main variables stored in
the SBS databases are: (1) the International Securities
Identification Number (ISIN), or any other unique andunequivocal identification number or key); (2) issuerrelated attributes, like name of the issuer, residence of
the issuer, institutional sector and subsector; (3) instrument related attributes, like issue date, type of158

Balance of Payments and International Investment Position Compilation Guide

security, redemption date, currency of denomination,issue price, redemption price, outstanding amount ormarket capitalization; (4) income-related attributes,
like coupon payments and dates; and (5) price-related
attributes, like price value and price date (see Diagram
A3.1 of the Handbook on Securities Statistics, Part 1).
10.44 The SBS reference database generally covers various categories of financial instruments, suchas debt securities, equity securities, investment fundshares or units, and financial derivatives. It can belinked to information on securities holdings to create a securities holdings database. For that purpose,holdings information provided by respondents on asecurity-by-security level is linked (e.g., through the
ISIN code) at the level of individual securities to thedata stored in the SBS reference database.15
10.45 On the holders’ side, in addition to information to establish the link with the reference SBS database, the database would have information on theholder’s residency and institutional sector/subsector
and on amount of securities held. In most cases, dataon holders are collected from custodians, as well as
centralized securities depositories, on an SBS basis.
10.46 In some economies, data on portfolio investment are collected through surveys. The surveys
target the holders of the securities (end-investor approach) and/or the custodians (custodian approach).
In choosing one approach, or a combination of thetwo, the compiler should seek to determine the bestcoverage while minimizing overlap. In this regard,
the compiler may wish to bear in mind the sector dimensions, not only for analytical purposes but also to
avoid double counting.16
10.47 Information on transactions conducted
through an economy’s stock exchange may also be collected. However, in some cases the data may be basedon the nationality of the transactors, and adjustments
may be necessary to ensure the BPM6-based residency criterion is observed. Securities issued in thedomestic market and purchased by nonresidents on
the secondary market may also present similar chal-15
In technical terms this does not necessarily mean two physicallydistinct databases, but rather components of a single database.
16
See Coordinated Portfolio Investment Survey Guide, 2nd edition(2002), Chapter 4, for a discussion of the methods for collecting
position data.

lenges, and adjustments to data collected from thestock exchange may be necessary to ensure the BPM6based residency criterion is observed. For securities
issued by the government—usually through its depository institution (central bank)—information on
the residency of the purchaser may be available fromthe central bank, or through custodians/agents acting
on behalf of the issuer.
10.48 For partner economy data, the IMF’s Coordinated Portfolio Investment Survey (CPIS) is a main
source (see Chapter 7). The CPIS Table 8 series on“Derived Portfolio Investment Liabilities by Economy
of Nonresident Holder” can be used as a data source
for this information. These derived data are based ondata reported by economies participating in the CPIS.
Therefore, in most cases, the derived data would be alower limit of the total portfolio liabilities of the compiling economy. If, for example, neighboring economies that do not participate in the CPIS are known tohold a significant amount of the compiling economy’s
portfolio investment liabilities, then the CPIS-derived
data would understate the total.
10.49 In general, it is usually not possible to connect a specific buyer to a specific seller of shares
traded on stock exchanges. Paragraph 4.154 of the
BPM6 states: “For balance of payments transactions,the partner attribution could be made on the basisof the parties to the transaction (namely, the buyer
and the seller, the so-called transactor approach), orfor assets owned, the residence of the issuer (the socalled debtor-creditor approach). In these cases, it isacceptable to adopt a convention for partner attribution of assets owned based on the residence of either
the counterparty to the transaction or the issuer. On
practical grounds, the information available does notalways permit identification of the two parties to thetransaction.”
10.50 Thus, when a specific buyer cannot be connected to a specific seller, the so-called debtor-creditor
approach is a practical approach for recording balanceof payments transactions in securities. Under this approach, when a resident purchases (or sells) a security
that was issued by a resident, it is regarded as a domestic transaction regardless of the residence of theactual seller (or buyer) of the security, because thelatter is unknown, and when a resident purchases (orsells) a security that was issued by a nonresident, it

The Financial Accountis regarded as an international transaction regardlessof the residence of the actual seller (or buyer) of the
security, again because the latter is unknown.
10.51 Further are presented some cases of recording of transactions in securities in balance of payments under debtor-creditor approach:• Resident investor sales shares to nonresidents thatwere listed on the stock exchange in the resident
economy: the resident involved in the transaction does not know whether another resident ora nonresident is buying the shares; however, byconvention, under the debtor-creditor approacha balance of payments transaction is reported by
the resident seller.

159• Nonresident investors purchase shares issued byresidents and listed on the stock exchange in thecompiling economy: Transactions in securities
should be recorded in the balance of payments
accounts because a nonresident purchased sharesissued by a resident. The brokerage company that
conducted the transaction on behalf of its nonresident customer would know that a nonresident customer was involved in the transaction.
• Uplifting of shares from an international exchange: When shares issued by a nonresident aresubsequently traded on the stock exchange in thecompiling economy, an international transaction
is recorded only when a resident purchases theshares.

Box 10.4 The Use of the Centralized Securities Database in the European System of Central Banksin Compiling Balance of Payments and IIP Statistics
BackgroundIn the past decade, the European System of Central Banks (ESCB) has set up the Centralized Securities Database(CSDB) to provide complete, consistent, validated, and up-to-date information on all securities relevant to the
ESCB’s statistical objectives. The CSDB contains information on over nine million debt securities, equities, andalso mutual fund shares/units issued or held by residents of the European Union (EU) member states or denominated in euro. This comprehensive reference database is fed with data from several commercial data providers,
ESCB national central banks (NCB), and other sources. The most reliable value for each attribute is selected, andgaps are ﬁlled with estimates (in particular for prices and income), using a set of automated rules and algorithms
and making use of expertise within the ESCB to enhance data quality.
From a statistical angle, the CSDB serves two purposes: to supply information for the direct compilation of
aggregates for the euro area (such as securities statistics), and to supply reference information on individual
securities and issuers, in particular to support the collection of holdings from reporting agents on a security-bysecurity (SBS) basis. Since 2008, the use of a SBS collection system for the compilation of portfolio investment inbalance of payments and IIP statistics is mandatory for euro area economies. In the past years, SBS reporting has
been also increasingly used (and has in some cases become legally required) for statistics on investment funds,ﬁnancial vehicle corporations, and monetary ﬁnancial institutions. A link of the CSDB with granular information
on holders of securities is providing aggregates by economy of residence, economic sector, and possibly speciﬁcbanking and/or insurance groups.
A mandatory data quality management framework has been developed by the ESCB Statistics Committee,1 which lays
down the responsibilities of the euro area NCBs and the European Central Bank (ECB). NCBs of the noneuro area EU
member states voluntarily participate in the operation of the CSDB and its data quality management.
Beneﬁts of Using the CSDBOne of the main advantages of the CSDB in the compilation of balance of payments and IIP statistics, when comparedto aggregate reporting, is that compilers, rather than respondents, are responsible for the statistical classiﬁcation of
securities in a standardized and harmonized way. This promotes accuracy and consistency of the data, and adherence
to international statistical standards. It avoids potential miscalculations, misclassiﬁcations, or the use of nongeneralized
aggregation procedures by the different reporting entities, with clear advantages in terms of quality and homogeneity.
The CSDB, in combination with information on holdings of securities, allows for the compilation of aggregatedstatistics at market-to-market value and potentially offers all the ingredients for the compilation of comprehensive
breakdowns in the portfolio investment category in balance of payments and IIP statistics, like type of instrument, issuer
sector, issuer economy, currency of issue, original and remaining maturities, and so forth. The CSDB is also useful for the
purposes of estimating revaluations and other changes in the volume of assets and liabilities by type of ﬁnancial instru-

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Box 10.4 The Use of the Centralized Securities Database in the European System of Central Banksin Compiling Balance of Payments and IIP Statistics (concluded )ment, as well as to derive transactions from high-frequency position data (when not collected directly). It also allows forthe derivation of investment income data on an accruals basis.
The CSDB provides a greater ﬂexibility to cater for new or additional output requirements (e.g., changes in geographical areas, in the instrument or maturity breakdown or a new split by currency) and to easily obtain consistenttime series. This is often possible without additional requests to the reporting entities, by means of amendments to theaggregation procedures managed by the compiler itself.
The SBS approach increases the quality of the data as it allows for better checking and greater accuracy in the calculationof position and/or ﬂow data. Numerous quality checks are performed at the level of the individual security, instead of at aggregate level. For example, it allows for comparisons of total outstanding issuances and holdings at individual security level,
reconciliation of ﬂows and positions for individual securities, and improved bilateral geographical data comparisons.
The availability of information at the level of individual securities eases the identiﬁcation of direct investment relationships between holders and issuers of speciﬁc (mainly equity) securities. This mitigates the risk of misclassiﬁcation
across balance of payments functional categories (i.e., between direct and portfolio investment) and/or double counting.
From the euro area perspective, the availability of CSDB data permits one to perform detailed checks in case of inconsistencies in contributions from euro area economies to the euro area balance of payments and IIP aggregates.
Costs and Challenges Associated with Using the CSDBThe setting-up costs of the CSDB were substantial, as are the maintenance costs. It implied relatively high costs in theimplementation phase, largely attributable to purchasing/developing the necessary hardware and software. Information
technology costs for database storage and processing of large volumes of data were also signiﬁcant as the CSDB data
are largely sourced from commercial database providers; the acquisition of this information is rather expensive on acontinuous basis.
A high degree of automation is necessary for the exchange of data and for the comprehensive checking and aggregation routines. As a consequence, the responsible staff has to be well skilled and trained on the system.
The SBS reporting, in comparison with aggregated reporting, implies a shift of the costs from reporting agents tocompilers, while the overall costs are expected to be lower. If reporters would have to aggregate the data according tostatistical classiﬁcations themselves, each one of them would have to keep track internally of SBS information and run
aggregation procedures, which would imply higher costs.
Moreover, the marginal costs of introducing new statistics have been reduced (reporting forms do not need to bechanged) and the consistency among various types of statistics has been improved.
Source: European Central Bank.
1The ESCB Statistics Committee is chaired by the ECB Statistics Directorate and composed of the ECB Statistics Directorate andheads of Statistics Departments of the ESCB NCBs.

Financial Derivatives (Other than
Reserves) and Employee
Stock Options

are linked. The steps for recording transactions in financial derivative entries in the international accounts
are outlined in the BPM6, paragraphs 8.34–8.40

Concept and Coverage
10.52 A financial derivative contract is a financial
instrument that is linked to another specific financial
instrument or indicator or commodity and throughwhich specific financial risks (such as interest raterisk, foreign exchange risk, equity and commodity
price risk, credit risks, and so on) can be traded intheir own right in financial markets. Transactions andpositions in financial derivatives are treated separatelyfrom the value of any underlying item to which they

10.53 Employee stock options (ESO) are options
to buy the equity of a company, offered to employees of the company as a form of remuneration. ESOs
carry the right, but not the obligation, to buy a certain
amount of shares in the company at a predetermined
price. An ESO is slightly different from a regularexchange-traded option because it is not generallytransferable (if a stock option granted to employees
can be traded on financial markets without restriction, it is classified as a financial derivative) and there

The Financial Accountis no put option.17 Furthermore, employees typicallymust wait a specified vesting period before being allowed to exercise the option.
10.54 Transactions in ESOs are included in theinternational accounts only if they are cross borderin nature; for example, in a few cases, the company
that issues the option is a resident of a different
economy from the employee. It is possible that multinational corporations may offer employees in one
economy options on shares of their parent company in another economy. In the BPM6, stock options provided to suppliers of goods and services tothe company are also included, in the scope of ESO
transactions, on the basis that although these are not
employees of the company, their nature and motivation are similar.
10.55 ESO cross border transactions may not besignificant in a number of economies. In cases where
underlying data collections do not capture the transactions data, the compiler should undertake exploratory
work to determine the magnitude of such transactions
as a basis for making decisions on the implementationof surveys or other collection methods.

Valuation of Financial Derivative
Positions and Transactions
10.56 The valuation of financial derivative positions and transactions depends on the type of the
instrument. The recording of these transactions andpositions at inception and at settlement is outlined in
the BPM6, paragraphs 8.34–8.40. The market valueof a forward financial derivatives contract is derived
from the difference between the agreed-upon contract price of an underlying item and the prevailingmarket price (or market price expected to prevail) ofthat item, times the notional amount, appropriately
discounted. The notional amount is the amount underlying a financial derivatives contract that is necessary for calculating payments or receipts on thecontract. This amount may or may not be exchanged.
In the specific case of a swap contract, the market
value is derived from the difference between the expected gross receipts and gross payments, appropriately discounted—that is, its net present value.

17
A put option gives the buyer the right to sell the underlying
asset at the strike price, on or before the expiration date.

161

10.57 The market value for a forward contract cantherefore be calculated using available information—market and contract prices for the underlying item,
time to maturity of the contract, the notional value,
and market interest rates. From the viewpoint of thecounterparties, the value of a forward contract may
become negative (liability) or positive (asset) and maychange both in magnitude and direction over time,depending on the movement in the market price forthe underlying item. An illustrative numerical example is provided in Box 10.5. Forward contracts settled
on a daily basis, such as those traded on organizedexchanges—and known as futures—have a market
value, but because of daily settlement it is likely to be
zero value at each end-period.
10.58 The price of an option depends on the potential price volatility of the price of the underlying item,the time to maturity, interest rates, and the difference
between the contract price and the market price of
the underlying item. For traded options, regardless ofwhether they are traded on an exchange, the valuation should be based on the observable price. At inception the market value of a nontraded option is theamount of the premium paid or received (in contrast
to a forward-type contract, which does not generally
require the recording of a transaction in a financial
derivative because risk exposures of equal value areusually being exchanged). Subsequently nontradedoptions can be valued with the use of mathematicalmodels, such as the Black-Scholes formula, that takeaccount of the aforementioned factors that determine
option prices. In the absence of a pricing model, theprice reported for accounting or regulatory purposes
might be used. Unlike forwards, options cannot
switch from negative to positive value, or vice versa,
but they remain an asset for the owner and a liability
for the writer of the option.

Valuation and Recording of ESO Positions
and Transactions
10.59 An ESO is an agreement made at a given
date (the “grant” date) under which an employee maypurchase a given number of shares of the employer’s
stock at a stated price (the “strike” price’) either at astated time (the “vested” date”) or within a period oftime (the “exercise” period) immediately following
the vesting date. The exercise date is the time at which
the option can be exercised.

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Balance of Payments and International Investment Position Compilation Guide

10.60 As noted in the 2008 SNA, accounting recommendations of the International Accounting Standards Board (IASB) are that the company derives afair value for the options at the grant date by taking
the strike price of the shares at that time multipliedby the number of options to be exercisable at vestingdate divided by the number of service years expected
to be provided until the vesting date. This fair value
is applied to the number of service years provided ineach year to derive the cost to the firm in the year. In
the 2008 SNA, if there is neither an observable market price nor an estimate made by the corporation inline with the preceding IASB recommendations, thevaluation of the options may be estimated using a position options pricing model (2008 SNA, paragraphs
17.386–17.387).
10.61 In recording ESOs in the international accounts, an estimate of the value should be made at
the grant date. In the financial account of the economy of the employer, a transaction (incurrence of aliability) is recorded as a contra-entry to compensation of employees (debit) in the current account. In
the financial account of the economy in which theemployee is resident, a transaction (acquisition ofassets) is recorded as a contra-entry to compensation of employees (credit) in the current account.
At this point, a financial asset/liability is also recorded in the IIP of the economy of the employee(household)/employer. In principle, any change inthe value of the ESOs between the grant date andthe vesting date should be treated as compensationof employees, while any change in the value between
vesting date and exercise date is treated as a holding
gain or loss.
10.62 When an ESO is exercised, positions underfinancial derivatives and employee stock options disappear to be replaced by the value of shares acquired.
This change in classification takes place via transactions in the financial account as follows. In the financial account of the economy of the employer, atransaction under portfolio investment, equity andinvestment fund shares (increase in incurrence ofa liability), is recorded as a contra-entry to a decrease in financial derivatives and ESOs liabilities. In
the financial account of the economy in which theemployee is resident, a transaction under portfolio
investment, equity and investment fund shares (increase in acquisition of assets), is recorded as a con-tra-entry to a decrease in financial derivatives and
ESOs assets.18
10.63 If an ESO is extinguished between the
grant and vesting dates without an agreed settlement between the parties, another change in volume
is recorded (a loss of an asset by the employee and areduction of liabilities by the employer) in the otherchanges in financial assets and liabilities account (seeBPM6, paragraph 9.12).

Data Sources
10.64 Financial derivative statistics compiled bya central bank may originate from three primarysources: (1) the central bank may for supervision and/or regulatory purposes, require banks to complete
statements on derivative transactions and positions
when trading with local and overseas counterparties;(2) a central bank’s department of foreign exchange
may collect information on banks engaging in foreignexchange operations; and (3) a central bank may collect flow and/or position data primarily for compilingthe international accounts. A common issue is thata central bank’s derivative statistics that are sourced
from prudential-based data collections may not fully
capture nonbank private sector’s activities, and thecompiler would need to develop enterprise surveys toenhance the collection of derivative statistics.
10.65 Regarding its own transactions in financial
derivatives, a central bank should distinguish financial derivatives that are included in reserve assets sothat the correct functional category classification canbe achieved.
10.66 In some economies, several institutions
may collaborate in the collection and compilation ofdata on derivative statistics; for example, the Treasury International Capital (TIC) Reporting System of
the United States Department of Treasury is used tocompile selected data on the United States financial
account, including on transactions in financial account derivatives. The Federal Reserve Bank of New
York, acting as the agent of the Treasury, collects andedits the data on the TIC’s Form D, which collects
quarterly data on holdings of and transactions in derivatives contracts with foreign residents by economy.
18

Changes in the value of an ESO may occur after the vestingdate as a result of changes in the market price of the underlying instrument (equity). Such changes are revaluations, and inpractice it may be feasible to recognize the revaluation only at theexercise date.

The Financial Account163

Box 10.5 Recording a Forward Contract in the International Accounts
In period t0, economy A signs an export contract to export goods for 1,200 two years later (t2). To avoid the exchange
rate risk, economy A engages in a forward contract with a nonresident in which it agrees to buy US$1,000 at t2 for€1,200—that is, at an exchange rate of €1.2 = US$1 (spot market rate at t0). At t1, the exchange rate is €1.1 = US$1,
and at t2, €1 = US$1. The contract will be settled on a net basis. The relevant interest rates are 6 percent for both currencies in each period.
In t0: No transactions are recorded in the balance of payments and the IIP. The value of the contract at inception is zero.
In the IIP, the position in ﬁnancial derivatives is zero.
In t1: There are no transactions in the balance of payments. The IIP entries are as follows:
International investment position (in U.S. dollars)Opening
positionTransactions

Valuationchange00

85.7

Other changes Closing position

Financial accountFinancial derivatives, liabilities

85.7

Explanation to entries in t1: At the end of t2, economy A will buy US$1,000 for €1,200. At the current exchange rateeconomy A would need to pay only €1,100 for US$1,000. The contract therefore has a negative value of €100 if settled
at t = 2. The current value is 100/1.06 = €94.3. In dollars, the current value of the contract is 94.3 /1.1 = US$85.7. The
negative current value is recorded in the IIP as an increase in liabilities due to a valuation change.
In t2: The balance of payments and IIP, entries are as follows:
Balance of payments (in U.S. dollars)
CreditDebit

Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Net

Current account
Goods

1,200

1,200

Financial accountCurrency and deposits, assets

1,000 [1,200−200]

1,000
200

Financial derivatives, liabilities

200

International investment position (in U.S. dollars)Opening
positionTransactions

Currency and deposits, assets1

0

1,000

Financial derivatives, liabilities

85.7

200

ValuationchangeOther changes Closing position

Financial account
1,000
114.3

0

1

Assuming an opening position of zero.

Explanation to entries in t2: At t = 2, economy A exports goods for €1,200. At the prevailing exchange rate this receipt
is equivalent to US$1,200, which is shown as an increase in currency and deposits, assets. Under the forward contract,economy A has agreed to exchange €1,200 for US$1,000. At the current exchange rate, the value of the €1,200 equals
US$1,200. The net value is therefore -US$200 (receive US$1,000; pay US$1,200). The net value of the contract does notneed to be discounted as the contract will be settled at the same instance. The settlement of the contract is recorded in
the balance of payments as a decrease of currency and deposits, assets (US$200), and an equivalent decrease of ﬁnancial
derivatives, liabilities. In the IIP, the opening position of ﬁnancial derivatives, liabilities of US$85.7 and the transaction(settlement of the contract at US$200) are offset by a valuation change of US$114.3 to bring the closing position to zero.

Transactions are based on net settlements (all transactions including the proceeds from the purchaseand sale of derivatives and all contractual flows).

10.67 As is the case for data on portfolio investment, the major data suppliers are local financial
intermediaries or agents such as deposit-taking cor-

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Balance of Payments and International Investment Position Compilation Guide

porations except the central bank, securities houses,
share registrars, nominees, custodians, trusts, andfund managers that often engage in external financial
investment activities. The data on financial derivatives
may be collected through the framework of the central bank’s MFS, and/or through surveys (see Appendix 7 for a model form for collecting data on financial
derivatives). However, it is not possible to derive reliable estimates of transactions from data on changes
in derivatives positions at market value due largely tovolatility in prices.
10.68 As in the case of ESOs, transactions in financial derivatives may not be significant in a number of
economies. In cases where underlying data collections
do not capture the transactions data, the compiler
should undertake exploratory work to determine themagnitude of such transactions as a basis for making
decisions on the implementation of surveys or othercollection methods.

Other Investment
Concept and Coverage
10.69 Other investment covers other equity; currency and deposits; loans; insurance, pension andstandardized guarantee schemes;19 trade credit andadvances; other accounts receivable/payable-other;and special drawing rights (SDRs). With the exceptionof loans and currency and deposits, these financial instruments have either been introduced or updated in
the BPM6. An overview of other investment components is presented ahead.
Data Sources and Compilation Issues
Other equity

10.70 Other equity is included in other investment,
when it is not direct investment or reserve assets. Other
equity (as defined in BPM6, paragraph 5.26) is not in
the form of securities, so it is not included in portfolio
investment. It can include equity in quasi-corporations,such as branches, trusts, limited liability and other partnerships, unincorporated funds, and notional units forownership of real estate and other natural resources. In
most cases, equity in quasi-corporations and notional

units for ownership of land is included in DI; however,
it is included in other investment (under other equity)
if the share of voting power is less than 10 percent. As
noted in the BPM6, paragraph 5.26, participation insome international organizations is not in the form of
securities and so it is classified as other equity. Ownership of currency union central banks is included inother equity.
10.71 Regarding the government sector, other equity cannot be a liability of general government units,
but they can be held by these units as assets. Information on participation in international organizations isgenerally available from government and central bankrecords. In the case of other sectors, the data may beavailable from business surveys. However, in cases ofnotional units for ownership of land, positions may
not be directly observable, and so the compiler could
use estimation methods similar to those used for DI(BPM6, paragraph 2.16).
Currency and deposits

10.72 Position data on the assets and liabilities of
the central bank, deposit-taking corporations (except the central bank), and other financial corporations are generally collected within the framework ofa economy’s MFS (see Appendix 6, “Linkages of theInternational Accounts with Monetary and Financial
Statistics”), while those of the general government
are collected within the framework of government
finance statistics (GFS). For resident nonfinancial
corporations, households, and NPISHs, data on currency and deposits (assets) may be collected throughsurveys. The BIS’ international banking statistics also
provides a source for data on the external deposits ofresident other financial corporations and nonfinancial corporations (see Chapter 7). A comprehensive
ITRS captures transactions in deposits (assets andliabilities).
10.73 Positions in deposits are recorded at nominal value.20 In cases where only position data are
available, transactions in deposits denominated in domestic currency can be readily derived (except in thecase of deposits sold at discount) from changes in
20

19
See Appendix 2 for a discussion of employment-related pension
schemes and social security.

Unallocated gold account assets not held as reserve assets, andall unallocated gold account liabilities, are classified as deposits.
For classification of gold accounts, see the BPM6, Chapter 5,paragraphs 5.76–5.77.

The Financial Accountpositions; these transactions would cover both funds
deposited and withdrawn, as well as any accrued interest that would have counterpart entries in the current account.
10.74 Transactions denominated in a foreign currency are converted to their value in the domestic currency at the rate prevailing when the transactions takeplace, and positions are converted at the rate prevailing on the balance sheet date. The midpoint between
the buying and selling rates should be used (at thetime of transaction (for transactions) or at the close ofbusiness on the reference date (for positions)).
10.75 MFS data are typically recorded in domestic
currency. For the purposes of compiling the international accounts, the compiler should seek to obtain theposition data in original currency so as to eliminate theimpact of exchange rate movements in deriving transactions. After the transactions are derived in the original
currency of denomination, they should then be converted to the currency used for compiling the balanceof payments, using the midpoint between the buying
and selling rates of the relevant currencies. While theuse of the daily average exchange rate for daily transactions usually provides a good approximation, this may
not be practicable for transactions derived from MFS; inthis case, the compiler should use the average rate for the
shortest period for which the position data are compiled.
Loans

10.76 For the international accounts, information on loans is generally available through the compilation system employed for external debt statistics(EDS). However, in some economies, the scope of the
EDS may be limited to the general government (orpublic sector), and data compilers may need to undertake additional steps to include the debt of othersectors. The range of data sources available is likely
to change with progressive liberalization of foreignexchange regulations from administrative and banking records towards survey collection methods.21 The
administrative and financial records of government
borrowing and repayments are usually the primary

21
The External Debt Statistics: Guide for Compilers and Users(2013) outlines the impact of the regulatory environment on thecollection techniques for external debt statistics. Chapter 11 andAppendix 8 also discuss the compilation of public sector andprivate sector debt, respectively.

165

source of transactions data on public sector loans.
Further, central banks in most economies undertake
administrative functions related to central government external debt management, and their payments
systems may be designed to cover external loan transactions made on behalf of the Ministry of Finance.
10.77 Compiling comprehensive data for the private sector presents a greater degree of difficulty thanfor the public sector. Problems can arise from the limitations inherent in the available information sources.
In all instances, the importance and relevance of thedata need to be weighed against the likely costs of collection, and, where appropriate, alternative sources
and methods used to produce data of an acceptable
degree of accuracy and reliability.
10.78 In circumstances where controls on foreign
borrowing are still in place, it is possible for the central bank to compile information on private sector
borrowing from information provided by borrowers
for regulatory purposes, such as when they seek approval for foreign borrowing. Also, commercial banks
might well be required to report on foreign transactions of their private sector clients. However, as liberalization of financial transactions proceeds, and suchinformation becomes less readily available, there is aneed to develop methods of collecting data on private
sector debt through other means. The main sources
are as follows:• Deposit-taking corporations are closely regulated
in nearly all economies—and so are usually identifiable to the statistical agency—and have toreport balance sheet data to central banks or regulatory agencies for both supervisory and monetary policy purposes. These reports can be amajor source of information on the outstanding
external debt of banks, and from which transactions can be derived.
• Similarly, other financial corporations data might
be compiled in some economies within theframework of monetary and financial statistics.
If this is the case, the compiler could use this data
source. Also, in some economies certain financial
intermediaries, such as investment funds, insurance corporations, and pension funds, reporttheir balance sheets to supervisory authorities.
Those reports could be accessible to statisticalauthorities as a data source, including for deriving transactions.

166

Balance of Payments and International Investment Position Compilation Guide• When no comprehensive exchange controls
exist, data on loans and other external debt ofother sectors are best obtained through periodic
surveys of those companies (including other financial corporations) that are involved in external transactions. In some instances, the so-called
registers of external loans are used to obtain dataon loans received or granted by the nonbank
sector.
• Loans made by some creditors might be available from external sources, such as debt owed tointernational financial organizations (e.g., international financial corporations), or position dataon nonbank liabilities to foreign banks that could
be cross-checked with the international banking
statistics from the BIS. Some compilers may use
the BIS data from nonresident banks on loans inrelation to resident nonbanks (nonbanks include
other sectors as well as the general government
sector—that is, nonbanks include public and private sector units) to supplement other sources.
10.79 Similar to the accrual of interest on debt securities, interest costs that have accrued and are not
yet payable on loans are included as part of the valueof the loan. That is, the accrual of interest costs not yet
payable continuously increases the principal amountoutstanding of the loans (and should be included inloans transactions in the financial account). Arrears
occur when principal and/or interest payments are
not made when due, such as on a loan. When arrears
occur, they should continue to be shown in the samedebt instrument until the liability is extinguished. The
nonpayment of principal and/or interest when due
leaves the debt liability position unchanged. Arrears
should continue to be reported from their creation—that is, when payments are not made—until they are
extinguished, such as when they are repaid, rescheduled, or forgiven by the creditor. A compiler would
also need additional information on arrears for recording exceptional financing transactions; these are
identified in Chapter 16, Table 16.3.
10.80 As discussed in the BPM6, paragraph 12.51,
loans with concessional interest rates could be seen as
providing a current transfer equal to the difference between the actual interest rate and the market interest
rate. Further, if such a transfer is recognized, it could
be reported as current international cooperation because the concessional lending is provided by official

creditors (e.g., foreign governments or internationalorganizations). The interest would then be adjusted
by the same amount. However, the compiler should beaware that the treatment of concessional lending is yet
to be fully evolved, and so it is recommended that the
information on concessional debt be provided as supplementary. Paragraph 12.51 of the BPM6 describes
which information should be shown as supplementary.
10.81 The BPM6 also clarifies the treatment of securities repurchase agreements and gold swaps. As indicated in the BPM6, paragraph 5.53, the supply andreceipt of funds under a securities repurchase agreement may be treated as a loan or deposit. It is generally
a loan, but is classified as a deposit if it involves liabilities of a deposit-taking corporation and is included innational measures of broad money (see Table 10.3).
If a securities repurchase agreement does not involvea supply of cash (i.e., there is an exchange of one security for another, or one party supplies a security
without collateral), there is no loan or deposit. Margin
calls in cash under a repo are classified as loans.
10.82 In international accounts, entries underloans are registered also in connection to financial
leases (BPM6, paragraphs 5.56–5.60). The economic
nature of the arrangement is that the lessor is providing a loan to allow the lessee to acquire the risk andrewards of ownership (economic ownership), but thelessor retains the legal title. Thereafter the leased asset
is shown on the balance sheet of the lessee and notof the lessor. Under statistical convention, the lessor
is shown as making a loan to the lessee with whom
the lessee acquires an asset; the loan is shown as an
asset of the lessor and a liability of the lessee. At the
inception of the lease, the value of the loan is equal
to the full value of the good. At the maturity of thelease, the loan liability arising from the residual valueof the goods leased is extinguished either when the
goods are returned or when a payment is made andlegal ownership changes hands. A numerical example
of a financial lease is presented in the BPM6, Appendix 6b, Box A6b.I.
10.83 Accounts receivable/payable, which aretreated as a separate category of financial assets/liabilities, and loans that have become debt securities
are excluded from loans.
10.84 Loan positions are recorded at nominal
value; deriving transactions from positions data is

The Financial Accounttherefore relatively straightforward for loans denominated in domestic currency, with the issue of addressing price changes not applicable. However, for loans(as well as for deposits and other accounts receivable/
payable) sold at discount, the transaction values recorded in the financial account may differ from thenominal value recorded in the IIP. Such differences
are recorded as valuation changes in the other changes
in financial assets and liabilities account.
Insurance, pension, and standardized
guarantees schemes

10.85 The key features of insurance, pension, andstandardized guarantee schemes are presented as a
topical summary in the BPM6, Appendix 6c. Compilation guidance on the treatment of these instrumentsin the international accounts is presented in Appendix 2 of the Guide. In analyzing the economic natureof these operations, it is important to rearrange theseprocesses to derive the service, investment income,transfer, and investment elements.
Trade credit and advances

10.86 Trade credit and advances consist of claims
or liabilities arising from the direct extension of credit
by suppliers for transactions in goods and services,
and advance payments by buyers for goods and services and for work in progress (or to be undertaken).
Long- and short-term trade credit and advances areshown separately. Trade-related loans provided by athird party, such as a bank, to an exporter or importerare not included in this category but under loans,earlier. Note that letters of credit are not included inloans because they are contingent liabilities. Progressive payments (or stage payments) on high-value capital goods—such as ships, heavy machinery, and otherstructures that may take years to complete—do notgive rise to trade credit and advances unless there is adifference in timing between the change in ownershipof these high-value goods and the payments. In some
economies, the value of trade credit and advances inbalance of payments can be significant on both assets
and liabilities sides. Therefore their estimation requires careful consideration.
10.87 Data on trade credits and advances may besourced from companies’ balance sheet data, business surveys, and/or external debt statistics. In somecases, compilers use a proxy method by comparing

167

customs-based information on goods with payments
made through the banking system (i.e., ITRS data).
For example, where information on both the dateof shipment and the date of payment are reportedby the importers, trade credit and advances are imputed taking into account the difference between
these dates, as illustrated in Chapter 4. In practice,
the adoption of such an approach should be done
at a microlevel, as a simple estimation based on the
difference between customs-based data on imports
and ITRS-based data on imports would not provide
an accurate estimate of trade credit and advances.
Further, when adopting this approach, the compiler
should monitor trends in the time series to ensure
reasonableness; for example, if the net acquisitionof these assets/net incurrence of liabilities is consistently increasing, this may call attention to gaps
in estimating the repayment of trade credit and advances. For banks, data on trade credit and advances
can be obtained from the MFS.
Other accounts receivable/payable-other10.88 The other category of other accounts receivable/payable includes accounts receivable/payable
other than those included in trade credit and advancesor other instruments (e.g., liabilities for dividends,
taxes, wages and salaries, social contributions, financial derivatives contracts that were not paid when due,etc.) (see BPM6, paragraph 5.73). Interest accrued
should be recorded with the financial asset or liability
on which it accrues, not as other accounts receivable/
payable, with the exception of securities lending andgold loan fees, which are treated as interest by convention. The treatment of securities lending and gold loan
fees is presented in Table 10.3.
10.89 Data on other accounts receivable/payable
other may be sourced from the MFS (for the financial
corporations sector), GFS (for general government),
companies’ balance sheet data, business surveys, andexternal debt statistics. Position data captured bythese sources are recorded at nominal value. As in thecase of currency and deposits, if only position data are
available, the transaction value for other accounts receivable/payable can be readily derived as a change inpositions for positions denominated in domestic currency (except when sold at discount).
10.90 In using companies’ balance sheet data,
the compiler should be aware of the composition of

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Balance of Payments and International Investment Position Compilation Guide

Table 10.1 Recording Increases in SDR Holdings and Allocations, and Associated Interest Accruals1
Balance of payments
Current account
Other investment income
Financial account
Other investment (liabilities)
SDR allocations

Transactions during the period
Accrued interest on total SDR holdings(credit)
Value of the new general andspecial allocations plus
accrued but unsettled interest on total
outstanding allocations (recorded
under net incurrence of liabilities)

Reserve assets

Value of the new general and special
allocations plus accrued but unsettledinterest on total outstanding holdings(recorded under net acquisition ofﬁnancial assets)

Special drawing rights (holdings)

IIP
Other investment (liabilities)

Accrued interest on total SDR
allocations (debit)

End of period positions
Value of (total) allocations including unsettled interest payable

SDR allocations
Reserve assets

Value of (total) holdings including unsettled interest receivable

Special drawing rights (holdings)
Source: IMF staff.
1

Guidance on how SDR allocations should be recorded in the balance of payments and IIP is also available at http://www.imf.org/exter

nal/np/exr/faq/pdf/sdrfaqsta.pdf.

accounts receivable/payable, as, for example, tradecredit and advances may be included and would need
to be removed and reallocated to its own financial
instrument.
10.91 As noted earlier, MFS data are typically recorded in national currency. For the purposes of compiling the international accounts, the complier shouldseek to obtain the position data in original currency
so as to eliminate the impact of exchange rate movements in deriving transactions. These guidelines also
apply to the use of companies’ balance sheet data.
Special drawing rights (SDRs)

10.92 Under the BPM6, the allocation of SDRs toparticipants in the IMF SDR Department is shownas the incurrence of a liability of the recipient under
SDRs in other investment, with a corresponding entry
under SDRs in reserve assets. A main change in thetreatment of SDRs under the BPM6 is the recognitionof the SDR allocation as a long-term debt liability.
22

When there are new allocations of SDRs, transactions
in both assets and liabilities should be recorded.22
The recording of SDR holdings and allocations,and associated interest accruals, is summarized inTable 10.1.

Reserve Assets
Description and classiﬁcation

10.93 Reserve assets are those external assets thatare readily available to and controlled by monetary
authorities for meeting balance of payments financing
needs, for intervention in exchange markets to affectthe currency exchange rate, and for other related purposes (such as maintaining confidence in the currency
and the economy, and serving as a basis for foreign exchange borrowing). The presentation of the standard
components in the BPM6 contains a subclassificationof reserve assets by instrument—monetary gold (goldbullion and unallocated gold accounts), special drawings rights, reserve position in the Fund, and other

The BPM5 recommended the allocation of SDRs to be registered as a valuation adjustment to the IIP.

The Financial Accountreserve assets (i.e., currency and deposits, securities,
financial derivatives, and other claims).
10.94 To qualify for classification as a reserve asset,
the asset must be:• A claim on a nonresident or in gold bullion of significant purity (BPM6, paragraphs 6.65 and 6.78)• Owned or under direct and effective control ofthe monetary authorities (BPM6, paragraph 6.67)• Readily available in the most unconditional form
(i.e., be liquid) (BPM6, paragraph 6.69)• Denominated and settled in convertible foreign currencies that are freely usable for settlements of international transactions (BPM6, paragraph 6.72)23• Of high quality (in general) (BPM6, paragraph 6.70).
10.95 In accordance with the residence concept,
reserve assets, other than gold bullion, must be claims
on nonresidents (BPM6, paragraph 6.65).24 The authorities’ foreign currency claims on residents, including claims on resident banks, are not reserve assets.
10.96 However, there may be cases where institutional units other than the monetary authorities (suchas domestic banks) hold legal title to external foreign
currency assets that are unencumbered, and such external assets can be considered reserve assets under
the following conditions:• The resident company can transact only in thoseclaims with nonresidents on the terms specified
by the monetary authorities or only with theirexpress approval.
• The authorities have access on demand to theseclaims on nonresidents to meet balance of payments financing needs and other related purposes.
• A prior law or an otherwise legally binding contractual arrangement confirms this agency roleof the resident company that is actual and definite in intent.

23
For a discussion on the terms usable currencies, freely usable
currencies, and convertible currencies, and their applicability
in the context of reserve assets, see International Reserves andForeign Currency Liquidity: Guidelines for a Data Template, Appendix 7, Frequently Asked Questions on the Characteristics ofReserve Assets.
24Gold bullion is an asset but it is not a claim, because no otherentity has a corresponding liability.

169

10.97 In the foregoing circumstances, it is not theauthorities’ claim on the resident bank that is included
in reserve assets, but instead it is the resident bank’s
claim on a nonresident that is regarded as a reserve
asset, because the latter claim is under the direct andeffective control of the monetary authorities.
10.98 The treatment of monetization and demonetization of gold bullion is discussed in the BPM6,
paragraph 9.18, and the reclassification of unallocatedgold accounts is discussed in paragraph 9.19. In thecase of a gold swap, gold is exchanged for cash and afirm commitment is made to repurchase the gold at
a future date. Although accounting practices for gold
swaps vary among economies, it is recommended
that a gold swap be treated, for statistical purposes,
the same way as a collateralized loan or repo. Thus,
the cash lender within the gold transaction should notinclude the gold in its IIP or in its reserve assets (seeTable 10.3).
10.99 When held as reserve assets, unallocatedgold accounts of monetary authorities represent
claims on nonresidents and are included in gold andnot under currency and deposits (assuming the gold
is available upon demand to the monetary authority and is of high quality). Allocated gold accountsof monetary authorities are included in gold bullion.
With gold deposits and gold swaps, the original ownerof the gold retains the risks and rewards of changes in
the price of the asset. Accordingly, for gold deposits
and gold swaps, there is considered to be no change of
economic ownership of the gold, so no transaction ingold is recorded.
10.100 The compiler should seek to obtain the complete instrument breakdown as shown in Table 10.2.
Data for each instrument, at least for transactions andpositions, should be classified by currency to allow forreliable estimates of exchange rate changes. Regarding
its own transactions in financial derivatives, a central
bank should distinguish financial derivatives that areincluded in reserve assets so that the correct functional category classification can be identified.
10.101 Reserve position in the IMF is a component of reserve assets and is the sum of (1) the “reserve
tranche”—that is, the foreign currency (includingSDRs) amounts that a member economy may draw
from the IMF at short notice; and (2) any indebtedness

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Balance of Payments and International Investment Position Compilation Guide

Table 10.2 Data Required on Reserve Assets
Transactions

Other changes in reserve assets due to:Opening
Other changes Exchange rate Other price Closing
position Increase Decreasein volumechangeschanges
position
Monetary gold
Gold bullion
Unallocated gold accounts
Special drawing rights
Reserve position in the IMF
Other reserve assets
Currency and deposits
Claims on monetary authorities
Claims on other entities
Securities
Debt securities
Short-termLong-term
Equity and investment fundsharesFinancial derivatives
Other claims
Memorandum:
Source: IMF staff.

of the IMF (under a loan agreement) in the General
Resources Account that is readily available to themember economy, including the reporting economy’s
lending to the IMF under the General Arrangements
to Borrow (GAB) and the New Arrangements to Borrow (NAB).25
10.102 For a more detailed discussion of the common compilation issues related to reserve assets,
see the International Reserves and Foreign Currency
Liquidity: Guidelines for a Data Template (IRFCL).
Issues, including the lending arrangements with the
IMF, are addressed in Appendix 7, Frequently Asked
Questions of the IRFCL. Appendix 3 of the IRFCL
summarizes the treatment of specific transactions
in reserves assets, including repurchase agreements(repos), reverse repos, securities lending, and gold
swaps.
25

See the BPM6, paragraphs 6.85 and 7.77–7.78, for more
information.

Data sources and methods

10.103 The records of monetary authorities
provide the most direct source of data on transactions, other flows, and positions on reserve assets.
These data are usually sourced from the relevant
department(s) of the central bank (accounting and/or
reserve management), and the compiler should collect the transactions and position data separately (asshown in Table 10.2), to obtain a reliable measure oftransactions in reserve assets.
10.104 Central banks are sometimes reluctant torelease details of reserve asset transactions and positions. Concerns of the central bank and requirementsof users of balance of payments data must be carefully
weighed by the compiler. In deference to the former,
it may—with skillful combining of data—be possible
to meet requirements of the conceptual framework
without publishing a detailed breakdown of reserve
asset transactions and positions.

Equity securities,debt
securities
Equity securities,debt
securities

Equity securities,debt
securities

Equity securities,debt
securities

Allocated gold accounts,
unallocated gold
accounts, gold bullion
Allocated gold accounts,
unallocated gold
accounts, gold bullion notheld as monetary gold
Allocated gold accounts,
unallocated gold
accounts, gold bullion

Securities lending without
cash collateral (securities areheld as direct or portfolio
investment)

Securities lending with cash
collateral (securities areheld as reserve assets)

Securities lending with cash
collateral (securities areheld as direct or portfolio
investment)

Gold loans without cash
collateral (gold is held as
reserve assets)Gold loans without cash
collateral (gold is not held
as monetary gold)

Gold loans with cash
collateral (gold is held as
reserve assets)

Instrument

Securities lending without
cash collateral (securities areheld as reserve assets)

Type of transaction/position(a) Other investment, loans (L);
and

—

—

(b) Other investment, currency
and deposits (A) or reserve
assets, currency anddeposits (A)2(a) Other investment, loans (L);and(b) Other investment, currency
and deposits (A) or reserve
assets, currency anddeposits (A)2(a) Other investment, loans (L);
and

—

—

Balance of payments

4

Reserve assets, equity/debt securities (A)1

Other investment
income, interest3

3

Reserve assets, monetary gold, goldbullion/unallocated gold accounts (A)1

For allocated/unallocated gold accounts:—

Reserve assets, monetary gold, goldbullion/unallocated gold accounts (A)1(a) Other investment, loans (L); and(b)Other investment, currency, anddeposits (A) or reserve assets, currency
and deposits (A)2

4

Other investment
income, interest

Other investment
income, interest

4

Direct / portfolio investment, equity/debt
securities (A)1
For cash received:3

For equity/ debt securities:(b) Other investment, currency anddeposits (A) or reserve assets, currency
and deposits (A)2(a) Other investment, loans (may be areserve-related liability) (L); andFor cash received:Recording oflending fees
Other investment
income, interest3

For equity/ debt securities:

Direct / portfolio investment, equity/debt
securities (A)1

Reserve assets, equities/debt securities (A)1

IIP

Table 10.3 Treatment of Securities Lending, Gold Loans, and Gold Swaps where the Resident Owns the Securities or Gold (continued )The Financial Account171

Instrument

Allocated gold accounts,
unallocated gold
accounts, gold bullion notheld as monetary gold

Allocated gold accounts,
unallocated gold
accounts, gold bullion

Allocated gold accounts,
unallocated gold accounts
gold bullion not held asmonetary gold

Type of transaction/position

Gold loans with cash
collateral (gold is not held
as monetary gold)

Gold swaps (gold is held as
reserve assets)Gold swaps (gold is not held
as monetary gold)(a) Other investment, loans (L);and(b) Other investment, currency
and deposits (A) or reserve
assets, currency anddeposits (A)2(a) Other investment, loans (L);and(b) Other investment, currency
and deposits (A) or reserve
assets currency, anddeposits (A)2(a) Other investment, loans (L),and—(b) Other investment, currency
and deposits (A) or reserve
assets currency, anddeposits (A)2

Balance of payments

Other investment, currency anddeposits (A)1

For unallocated gold accounts:—

For allocated gold accounts:(b) Other investment, currency anddeposits (A) or reserve assets, currency
and deposits (A)2(a) Other investment, loans (may be areserve-related liability) (L); andFor cash received:

Reserve assets, monetary gold, goldbullion/unallocated gold accounts (A)1

For allocated/unallocated gold accounts:(b) Other investment, currency anddeposits (A) or reserve assets, currency
and deposits (A)2(a) Other investment, loans (may be areserve-related liability) (L); andFor cash received:

Other investment, currency anddeposits (A)1

For unallocated gold accounts:—

For allocated gold accounts:(b) Other investment, currency anddeposits (A) or reserve assets, currency
and deposits (A)2(a) Other investment, loans (may be areserve-related liability) (L); andFor cash received:

IIP

Other investment
income, interest

Other investment
income, interest

4

Recording oflending fees

Table 10.3 Treatment of Securities Lending, Gold Loans, and Gold Swaps where the Resident Owns the Securities or Gold (continued )172
Balance of Payments and International Investment Position Compilation Guide

Instrument

If coupons or dividends are paid to the securities borrower, who then pays the securities lender (economic owners), a rerouting from the securities borrower to the securities lender of these

When securities and gold are lent with cash collateral, the arrangements are regarded as giving rise to a loan or deposit for the amount of cash provided as collateral (see BPM6, paragraph

Source: IMF staff.

criteria for recording in reserve assets and these data are available for publication, then the interest accrued should be classiﬁed as reserve assets income, interest.

7.59). The interest accrued on such loan or deposit should be treated applying the standard classiﬁcation which is other investment income, interest. However, if theaccrual of interest meets the4reserve assets.

payments is recorded (see BPM6, paragraph 11.69). The re-routed payments should be recorded in the same functional category(ies) as the underlying instruments, usually portfolio investment or

If the cash meets the criteria for classiﬁcation in reserve assets.

3

Recording oflending fees

Means that there is no change in economic ownership, and thus assets remain unaffected.

(b) Other investment, currency anddeposits (A) or reserve assets, currency
and deposits (A)2(a) Other investment, loans (L); andFor cash received:

IIP2(b) Other investment, currency
and deposits (A) or reserve
assets, currency anddeposits (A)2

Balance of payments

1

Note: “A“ means assets and “L“ means liabilities;

Type of transaction/position

Table 10.3 Treatment of Securities Lending, Gold Loans, and Gold Swaps where the Resident Owns the Securities or Gold (concluded(continued )The Financial Account
173

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Balance of Payments and International Investment Position Compilation Guide

Lending to the Fund10.105 The IMF maintains two standing multilateral borrowing arrangements—the expanded NAB
and the GAB. If the IMF considers that its forward
commitment capacity might fall short of its member
economies’ needs—for example, in the event of a major
financial crisis—it can activate these arrangements.

IMF—and Note Purchase Agreements (NPA)—anagreement under which an IMF member commits topurchasing a promissory note from the IMF on demand, up to an agreed limit.

10.106 The GAB is a long-standing credit arrangement under which 11 advanced economies standready to loan domestic currency to the IMF for the
purpose of forestalling or addressing situations that
could impair the international monetary system. The
NAB is a set of credit arrangements with selected
member economies that stand ready to lend to the
IMF. A contingent claim results from participation in
the NAB or GAB, equal to the undrawn amount ofcredit. As noted, the IMF may require a member who
participates in the NAB or in the GAB to lend to the
IMF at short notice. When funds are actually lent, themember obtains a claim on the IMF that qualifies asa reserve asset, and should be included in the reserve
position in the IMF (RPF).26

10.108 In order for a loan that is created under a
BLA with the IMF to meet the definition of a reserve
asset, the claim must be readily available to meet abalance of payments financing need. This condition
would be met if the IMF will repay the loan, or someone stands ready to purchase the original lender’sclaim on the IMF, within a very short period, throughthe existence of a liquid market, such as market makers, who stand ready to buy and sell at all times. In addition, all of the preceding transactions must involve(or be capable of involving) a freely usable currency(other than the member’s own currency). In thiscircumstance, the loan that is created under a BLA
should be recorded under RPF. However, if the loan
can be repaid over a protracted period (some loan
agreements might allow repayment up to one year), or
does not allow repayment in a reserve asset currency,
the loan does not qualify as a reserve asset.

10.107 In response to the financial crisis and following a call by the International Monetary and Financial Committee in April 2009, the IMF took anumber of actions aimed at substantially increasing its lending resources. Additional arrangements
under the umbrella of the General Resources Account include Bilateral Loan Agreements (BLA)—anagreement under which an IMF member commits tolending funds, usually in its domestic currency, up
to an agreed limit, to the IMF, upon demand by the10.109 Two classes of notes were designed under
the NPAs, Series A and Series B Notes. Series A notes
meet the liquidity criterion for classification as a reserve asset. Series B Notes are encashable as soon aspracticable within 12 months of recognition of a balance of payments need. Holders of these notes therefore are not assured that the notes will be encashedpromptly at the time of a balance of payments financing need, and so these notes do not meet the statisticaldefinition of official reserve assets.

26
For more information on NAB and GAB see http://www.imf.
org/external/np/exr/facts/gabnab.htm.

11

Goods

Introduction
11.1 The goods component of the balance of payments current account covers (with a few exceptions)moveable goods for which changes of ownership(between residents and nonresidents) occur. These
goods should be measured at market value on an
f.o.b.1 basis.
11.2 Ahead are presented the primary entries forthe compilation of goods in the balance of payments,
including various adjustments to source data that are
required to satisfy requirements of the BPM6. The
adjustments are covered in more detail in subsequent
tables. Also shown are the standard components required by the BPM6. Compilation of goods in balanceof payments is done by adjusting the data recorded
through the main data source with data from additional data sources to assure adequate coverage andclassification.
Recorded trade (international merchandise trade statistics (IMTS), international transactions reporting system (ITRS), enterprise surveys, other)
Adjustments:
For coverage
For classification
For valuation
For timing
Total goods (on a balance of payments basis)of which:
General merchandise
Net exports of goods under merchanting
Nonmonetary gold
1
F.o.b. value (free on board) covers the transaction value of thegoods and the value of services performed to deliver goods to theborder of the exporting economy. It does not cover the insurance and freight cost between the exporting and the importing
economies, or within the importing economy.

11.3 The next three sections in this chapter describe how goods items may be compiled by using
information from the IMTS, an ITRS, and enterprisesurveys. A discussion of commodity classifications
and the preparation of estimates in the absence of data
follows.

IMTS as a Primary Source
for Compilation of Goods
11.4 The IMTS is the subject of Chapter 5, which
discusses the nature, conceptual framework, classifications, and measurement of these statistics. Most
compilers use IMTS as the main source of data tocompile the goods account. However, IMTS covergoods entering (imports) or leaving (exports) the
economic territory of an economy, which differs insome respects from the balance of payments concept of change of ownership between residents andnonresidents. Consequently, the compiler should
be aware of the extent to which IMTS meet international statistical standards and the extent to which
IMTS comply with the requirements of the BPM6,
and thus make adjustments, as needed. The balance of
payments compiler should note any deficiencies andencourage IMTS compilers to make any appropriate
amendments to procedures. Alternatively, the balanceof payments compiler may make any necessary coverage, classification, timing, and valuation adjustments
to IMTS to align them more closely with balance of
payments requirements.
11.5 Tables 11.1 through 11.4 present adjustments
to IMTS that may be required. These adjustments
should not be regarded as an exhaustive list, and thecompiler should add any other items that may beconsidered important. Adjustments that have a material impact on the calculation of exports and imports
should be made. If the compiler is unsure of the potential significance of some adjustments, investigating

176

Balance of Payments and International Investment Position Compilation Guideand quantifying the possible magnitude is appropriate,particularly when a large adjustment may be in order.
If adjustments are not made as a result of these investigations, publication of the findings may provide a suitable alternative.
11.6 The identification of potential adjustments
should be undertaken in close consultation with
IMTS compilers, who may have much of the datanecessary to make the balance of payments adjustments. If such data are unavailable in IMTS,
these statistics may nonetheless provide a starting point for identification of companies to be approached. Many of the adjustments may be madeby approaching companies—typically on a selective
basis—through enterprise surveys or through supplementary ITRS inquiries. In some circumstances,it may be more appropriate to approach official
sources or partner economies. In making adjustments to IMTS, the balance of payments compiler
should ensure that any relevant offsetting entries
are identified and correctly treated in the balanceof payments.
11.7 IMTS includes within its scope electroniccommerce (e-commerce), covering those imports
and exports of goods whose transactions were madeusing electronic means (e.g., goods ordered andpaid for via the Internet). It is recognized that datacollection for such goods may be challenging (e.g.,when goods are shipped through parcel or courier
service; see also “Travel” in Chapter 12); however,the compiler is encouraged to develop over time
the necessary data collection and/or estimation
procedures.

Coverage Adjustments
11.8 The balance of payments compiler may makecoverage adjustments to IMTS by excluding from thebalance of payments goods that have not changed
ownership but have been recorded in IMTS. The compiler may also make adjustments to include in the balance of payments goods that have changed ownershipbut have not been recorded in IMTS. Adjustments
may be necessary to do the following:• Exclude goods that should, according to theguidelines for these statistics, be excluded fromthe balance of payments but are included in IMTS
(e.g., government goods consigned to armed
forces and diplomatic representatives abroad;transit trade; migrants’ personal effects, etc.)• Exclude goods sent abroad (or imported) forprocessing without a change of ownership andgoods returned after processing• Include goods that should, according to the guidelines for these statistics, be included in the balance of payments but that might not be includedin the IMTS (e.g., electricity, water, and gas; goods
procured in ports by carriers away from the territory of residence of the operator; etc.)• Include goods under financial lease that may be
included in IMTS but recorded separately• Include (or exclude) goods that are excluded (included) from (in) IMTS due to the use of special
trade system but for which adjustments should bemade in the balance of payments (e.g., goods entering the industrial and commercial free zones, inward processing zones, and customs warehouses)• Adjust for goods (other than goods lost or destroyed) that may have crossed only one nationalboundary (e.g., fish caught by resident ships ininternational waters and sold abroad directly;
goods used as inputs in the processing abroadthat are procured by the owner from other economies and delivered directly to the processing
economy, as well as the processed goods solddirectly to other economies from the processing
economy)• Adjust for goods that were lost or destroyed
after they crossed the national boundary of theexporter’s economy but before they crossed thefrontier of the importer’s economy• Record the change in stocks of goods associatedwith merchanting transactions• Overcome general undercoverage problems suchas smuggled goods and informal, cross border
trade.
Each of these categories is explained in Table 11.1.

Classiﬁcation Adjustments
11.9 Classification adjustments are required whencertain transactions not appropriate for goods itemsin the balance of payments are classified as goods in
IMTS. Generally, the most basic classification adjustment is the correction for services—insurance andfreight transport services—that are included in theimport price of the goods. This adjustment and otherclassification adjustments that may be appropriate to
IMTS are explained in Table 11.2.

GoodsValuation Adjustments
11.10 Different valuation issues may have an impact on the compilation of goods. These issues include
the following:• Replacement, when actual values become available, of estimated values for certain exports• Replacement of transfer prices with market prices• Use of transaction values instead of customs values• Correction for any biases in conversion rates
These adjustments are outlined in Table 11.3.

Timing Adjustments
11.11 As Chapter 5 states, the timing basis of IMTS
may be the general trade system or the special tradesystem. The general trade system is preferable forinternational accounts statistics because it captures

177

transactions involving goods for the whole economy
and is more consistent with the coverage of the corresponding financing entries; however, neither thegeneral nor the special trade system will necessarily
coincide with the principle of change of ownershipused in the balance of payments. As a result, various
timing adjustments of the type set out in Table 11.4
are to be made to IMTS by the balance of paymentscompiler. For certain goods, such as large items oftransport equipment and bulk goods sold on consignment, the cost of obtaining data necessary for timing
adjustments is relatively inexpensive,2 and these adjustments can have a significant impact on the qualityof the balance of payments.
2

Customs data providing the time these items cross the bordercould be easily compared with the payments data obtained either
for business surveys or from the ITRS.

Table 11.1 Use of International Merchandise Trade Statistics (IMTS) for Compilation of Goods:
Adjustment for Coverage
Description

Source and method of compilation

Possible deductions from IMTS
Government goods consigned to armed
forces and diplomatic representatives
abroadGoods for temporary admission
Transit trade
Migrants’ personal effects
Goods for processing (without a changeof ownership)

If included in IMTS, these items should be removed by the balance of
payments compiler. These items should be readily identiﬁable, except for
migrants personal transfers that may not be identiﬁed from effects imported/
exported by individuals undertaking short-term trips. The balance of paymentscompiler should request their additional speciﬁcation in IMTS or should makeadjustments using other data sources such as survey of travelers.
Goods for processing without a change of ownership should be excluded by thebalance of payments compiler. It is, nevertheless, recommended that the valuesof goods sent abroad/received from abroad for processing (raw materials) andgoods returned to the economy of origin after the completion of processing(ﬁnished products) be identiﬁed as supplementary items in services accountin economies where they are signiﬁcant. As recommended by the IMTS 2010,
paragraph 1.21, economies are encouraged to explicitly identify in their trade
statistics these categories of goods, preferably by special coding. However, it isrecognized that such identiﬁcation may not be all-inclusive or the information
may not be internationally comparable due to differences in nationaldeﬁnitions or procedures followed.

Possible additions to IMTS
Nonmonetary gold
Trade on government account Military
goodsElectricity and water
Postal items
llegal and smuggled goods (that areotherwise legal)
Informal, cross border trade

These goods should be included in the balance of payments, goods
accountgeneral merchandise, except for the nonmonetary gold, which should
be included under the nonmonetary gold component. If excluded from the
IMTS, these goods should be added by the balance of payments compiler.
Data on some of these items may have to be collected in enterprise surveys or
through a supplement to an ITRS.
These goods are usually not captured by IMTS; however, if captured, they are
excluded from IMTS but recorded separately (IMTS2010, paragraph 1.59). The
BPM6 includes these goods under general merchandise.
These goods are carried across the border legally but are unregistered by thecustoms ofﬁce.

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Table 11.1 Use of International Merchandise Trade Statistics (IMTS) for Compilation of Goods:
Adjustment for Coverage (concluded)
Description
Goods for repair

Goods under ﬁnancial lease

Source and method of compilation
The values of goods for repair are excluded from the balance of payments.
These goods will probably be excluded from IMTS but may be recorded
separately. IMTS may therefore provide a source of information for balance of
payments adjustments insofar as these goods are subsequently sent abroad,however there is no change of ownership and thus need to be excluded
from goods in balance of payments. However, the balance of paymentscompiler may have to use enterprise surveys or an ITRS to obtain informationon the values of repairs that are included in maintenance and repair services.
These items should be included as goods in the balance of payments. IMTS may
therefore provide a source of information for balance of payments adjustments.
However, the balance of payments compiler may have to use enterprise surveys
or a supplementary inquiry to an ITRS to obtain the full range of information
required, particularly with regard to the treatment of lease payments.

Goods not crossing both borders
Mobile equipment used in international
waters or airspace; goods delivered tooffshore installations; fuel, provisions,stores, ballast, and dunnage
Goods lost or destroyed after having
crossed one national boundary

Changes in stocks of goods that nevercross the border of the owners economy

Goods related to processing abroad
without a change of ownership

Other coverage adjustments, suchas general coverage deﬁciency ordeﬁciencies from the use of the special
trade system

Theoretically, these goods should be included in IMTS. However, in practice,many of these goods will be excluded from IMTS, and the balance of paymentscompiler will have to use other sources, such as enterprise surveys (possibly as partof enterprise surveys of transport companies) or a supplementary ITRS collection
to obtain the necessary information for balance of payments adjustments.
Goods that change ownership before being lost or destroyed should berecorded as imports by the acquiring economy. Goods that do not change
ownership before being lost or destroyed should be deducted from theproducing economys exports. The information for balance of payments
adjustments could, at least in signiﬁcant cases, be obtained by approachingexporters, importers, or insurance companies through enterprise surveys.
These changes in stocks (which arise from merchanting) should be included ingoods (negative exports when acquired by the merchant, and positive exports
when resold). These acquisitions and sales will probably not be included in
the IMTS. In balance of payments, net export of goods under merchanting isreported; however, it is recommended to report also the gross value of goods
acquired and sold under merchanting as supplementary information. Possible
sources of data are enterprise surveys or an ITRS supplement.
Goods used as inputs in the processing abroad that are procured by the ownerfrom other economies and delivered directly to the processing economy should
be included in the imports of general merchandise of the owner economy.
Similarly, the processed goods sold directly to other economies from theprocessing economy should be included in the exports of general merchandiseof the owner economy.
The most effective way of collecting the information for these adjustments isthe enterprise survey.
Other coverage adjustments might be necessary if IMTS suffers from some
general coverage deﬁciency. Such deﬁciencies are sometimes identiﬁed frompartner economy analysis, and partner economy data could be used as the basis
for appropriate balance of payments adjustments. The Canada/United Statesreconciliation is an example of this type of adjustment.
In the case of the use of the special trade system,1 the imports and exportsof goods in IMTS should be adjusted for: (1) the ﬂows of goods that are notcovered by the special trade system (i.e., goods entering/leaving the commercial
and industrial free zones, premises of inward processing, and customs
warehouses insofar as ownership of these goods has changed) and (2) theﬂows of goods that are covered by the special trade system but should not be
included in balance of payments (i.e., goods entering/leaving the free circulation
zone from/to zones mentioned in (1), insofar these are transactions between
residents). Possible sources of data for adjustments are enterprise surveys.

Source: IMF staff.
1

See description of general and special trade systems in Chapter 5.

Goods179

Table 11.2 Use of International Merchandise Trade Statistics (IMTS) for Compilation of Goods:
Adjustment for Classiﬁcation
Description

Source and method of compilation

Financial items: monetary gold, securities,bank notes, coin in circulation

These items should be excluded from IMTS by the IMTS compiler. If not,these items should be excluded from goods by the balance of paymentscompiler and included in the ﬁnancial account. If included in IMTS, these
items should be readily identiﬁable.

Conversion of imports from c.i.f. to f.o.b.
valuation

Several methods may be used to make this adjustment, which reclassiﬁes
elements of IMTS goods data to services and secondary income. The service
transactions should be included in the balance of payments’ transportation(freight) and insurance services (only the estimated value of services should
be recorded under insurance services) components, and the transfer element
should be included in secondary income (net nonlife insurance premiums),
to the extent that transport and insurance services have been provided bynonresidents.

IMTS goods forming part of balance of
payments services transactions: customized
and noncustomized media

The values of customized and noncustomized media provided with aperiodic license fee (computer software provided on disks, audiovisualmedia, and so forth) should be excluded from goods in the balance of
payments. The full values of these products, including their material content,
should be included in appropriate services items. Only noncustomized media
provided on physical media with right to perpetual use is included in goods.

Goods imported for projects bynonresident construction company

These goods are recorded as imports by the IMTS. However, the goods
imported for construction projects by nonresident companies (whereconstruction projects are not sufﬁciently substantial to constitute a
branch of the company) are excluded from trade in goods in the balanceof payments and included as part of the value of construction services.
If included in IMTS, these goods might not be readily identiﬁable. Thebalance of payments compiler should make adjustments in both goods andconstruction services. The possible source of data for adjustments is thesurvey of construction companies conducting the construction or the surveyof company ﬁnancing the construction.

Source: IMF staff.

Table 11.3 Use of International Merchandise Trade Statistics (IMTS) for Compilation of Goods:
Adjustment for Valuation
Description

Source and method of compilation

Replacement of estimates with actual
valuesThe values of certain exports may not be known at the time of export (e.g.,
aid goods); therefore, the values may have to be estimated. The IMTS compiler
should make the necessary adjustments when actual data become available. If
not, the balance of payments compiler should make the necessary adjustments
by approaching exporters through enterprise surveys or by using an ITRS. In theabsence of a market price for the aid goods, the donors estimate of the value ofthe goods will often be quite different from that of the recipient. The suggested
rule of thumb is to use the value assigned by the donor as a basis for valuation.

Replacement of transfer prices withmarket prices

Mainly for practical reasons, the BPM6 recommends that the balance of
payments compiler make this type of adjustment only in unusual circumstances
and that corresponding changes be made to the distributed income or
ﬁnancial transactions of the direct investors/direct investment enterprises
affected. The replacement of transfer prices might be made by the IMTS
compiler in IMTS; if not, a special approach in enterprise surveys or an ITRS
may be necessary. If the IMTS compiler does make adjustments, the balanceof payments compiler should be made aware of these so that the necessary
adjustments to other balance of payments items can be made. The issue oftransfer pricing is discussed further at the end of this chapter.

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Table 11.3 Use of International Merchandise Trade Statistics (IMTS) for Compilation of Goods:
Adjustment for Valuation (concluded)
Description

Source and method of compilation

Replacement of customs values used in
IMTS with transactions values

In some circumstances, the value for duty recorded by customs ofﬁcials may
differ from the actual transaction price. It is in particular the case of contracts
establishing a quotation period often months after the goods have changed
hands. In these cases, an adjustment should be made in the balance of
payments to reﬂect the transaction price. In line with the market valuation
principle, the transaction price is considered the best proxy to use, regardlessof whether this price is known at the time of change of ownership (seeBPM6, paragraph 3.73). The required information could come from customs
records, if both valuations are recorded, from a sample investigation ofimport entries, or from an ITRS, if it allows the identiﬁcation of the payments
under such contracts.

Corrections for inappropriate exchange
rates used in IMTS

The impact of inappropriate exchange rates could be assessed by sampling
import and export entries. The results of such investigations could be used toadjust balance of payments statistics.

Source: IMF staff.

Table 11.4 Use of International Merchandise Trade Statistics (IMTS) for Compilation of Goods:
Adjustment for Timing
Description

Source and method of compilation

Replacing IMTS with data from thebooks of companies

Adjustments may be made when it is known that the period in which a change
in economic ownership occurs does not coincide with the period in which thetransaction is recorded in IMTS. Such adjustments are typically made only whensigniﬁcant amounts, such as for large items of transport equipment or otherhigh-value capital goods or the supply of certain types of goods (electricity, oil,etc.), are involved. Enterprise surveys or a supplementary approach through an
ITRS can be used to obtain the information necessary for these adjustments.
In the case of the high-value capital goods, the enterprise surveys should be
used to determine the time of ownership change, which could be a progressivechange based on stage payments or in full on delivery.

Consignment trade adjustments andadjustments for goods sold from stocks

Goods shipped abroad on consignment should be deducted from exports
recorded in IMTS and replaced with the actual sales of goods from stocks held
abroad by residents. Similarly, goods shipped to the compiling economy onconsignment should be deducted from imports recorded in IMTS and replacedwith actual sales from stocks held in the compiling economy by nonresidents.
Such adjustments are typically made only when the amounts involved are
signiﬁcant. Enterprise surveys or an ITRS can be used to obtain the informationnecessary for these adjustments.

Adjustments to correct IMTS recordedon the basis of processing dates

In economies where IMTS are based on the date on which customs entries areprocessed rather than on a general or special trade basis, adjustments may bemade (or, at least, supplementary data published) to show the impact of notusing the preferred methodological basis. Such adjustments may be made byanalyzing changes in customs processing rates, including the stockpile of entries
that remains unprocessed.When a special trade system is used, adjustments
should be made to the balance of payments to include the goods at the moment
when they enter/leave the industrial and commercial free zones, premises forinward processing, or customs warehouses.1

Source: IMF staff.
For more details on special trade systems see Chapter 5 of this Guide.

1

GoodsITRS as a Primary Source forCompilation of Goods
11.12 Some economies use an ITRS as the primarysource for compilation of goods in the balance of payments. In most cases, goods are recorded in an ITRS
when payments for the goods are made. As describedin Chapter 4, there are a number of adjustments that acompiler should make to record transactions involving

181

goods that may also be made under the headings ofcoverage, classification, timing, and valuation adjustments. These adjustments are set out in Table 11.5.

Enterprise Surveys as Primary Sources
for Compilation of Goods
11.13 “Collections on Goods and Services Statistics” in Chapter 3 discusses the use of an enterprise

Table 11.5 Use of International Transactions Reporting System (ITRS) for Compilation of Goods
Adjustments
Coverage adjustments
Exports and imports ﬁnanced by loans; goods
covered by foreign aid programs; goods transferred
between companies in a direct investment
relationship for noncash consideration; durable
goods and valuables by travelers; and other goods
not recorded in ITRSClassiﬁcation adjustments
Exports converted to f.o.b. valuation (exports may
be valued in an ITRS on a variety of bases)

Source and method of adjustments
The balance of payments compiler needs to identify such goods
and make the necessary adjustments (see Collections on Goods
and Services Statistics in Chapter 3). The data for adjustments
could come from ofﬁcial sources (e.g., for foreign aid), partner
economies, enterprise surveys, or as a supplement to the ITRS
itself. Durable goods (such as cars and electrical goods) andvaluables (such as jewelry) purchased by travelers are included ingeneral merchandise. The compiler should avoid double counting
as they could be included in ITRS in travel.
The data for this adjustment could be extracted from the ITRS if
reporters are asked to provide a dissection of the value of exports.
Alternatively, data on freight and insurance premiums could
be obtained from resident transport operators and insurancecompanies in respect of payments made by exporters to these
institutions. These data, as well as data on payments by exporters
to nonresident transport operators, which should be identiﬁable
from the ITRS, should then be deducted from the value of exports
recorded in the ITRS to estimate the value of exports f.o.b. However,in some cases ITRS data do not include transport and insurance costs
to the exporting border. The compiler should assess the ITRS data on
payments for export of goods by consulting the exporters regarding
the common practice of payments for such transactions.
The ﬁrst part of this adjustment can be added to the freight andinsurance services credits items in the balance of payments.
The treatment of freight transport is described in paragraphs
12.35–12.37.

Imports converted to f.o.b. valuation (imports may
be valued in an ITRS on a variety of bases)

The data for this adjustment could be extracted from the ITRS if
reporters are asked to provide a dissection of the cost of imports.
Alternatively, estimates of total international freight and insurance
on imports could be independently estimated (see Table 12.2).
Freight on imports earned by resident transport operators andinsurance premiums paid to resident insurance companies—which
could be derived from enterprise surveys—and freight and insurance
payments made directly by importers to nonresidents—which could
be obtained from the ITRS—should be deducted from the total
value of international freight and insurance to derive an estimate of
the value of freight and insurance included in amounts paid by theimporter to the nonresident exporter. This estimate should then be
deducted from the value of imports recorded by the ITRS to arriveat an estimate of imports f.o.b.
The earnings of nonresident carriers and insurance companies
can be included in the freight and insurance debits items in thebalance of payments.

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Balance of Payments and International Investment Position Compilation Guide

Table 11.5 Use of International Transactions Reporting System (ITRS) for Compilation of Goods(concluded)
Adjustments
Valuation adjustments
Replacement of transfer prices with market prices

Timing adjustments
Trade credit

Source and method of adjustments
The BPM6 recommends that the compiler should make this typeof adjustment in certain circumstances, with corresponding
changes to the distributed income or ﬁnancial transactions of thedirect investors/enterprises affected. The replacement of transfer
prices could be made by a special approach in enterprise surveys
or the ITRS. The issue of transfer pricing is discussed further in“Treatment of Transfer Pricing” in this chapter.
The ITRS may collect as supplementary information data on dateof change of ownership of goods (or some similar basis suchas date of shipment), which could be used as a basis for theseadjustments. The value of goods that change ownership in adifferent period to the period in which payment is made should be
deducted from reported trade for the period in which payment ismade and added to reported trade for the period in which changeof ownership occurred. Offsetting adjustments should be made to
the trade credit items in the ﬁnancial account. The disadvantage
with this approach is that the adjustments can be maderetrospectively only in cases of trade credit and advances otherthan prepayments. An alternative approach would be to conduct
an enterprise survey of signiﬁcant exporters and importers tomeasure trade credit and advances, and use this information toadjust reported trade from an ITRS.

Source: IMF staff.

survey to measure merchandise trade in the absenceof IMTS or an ITRS. The material describes a model
form that a compiler may use to collect across-theboard data on goods exported and imported.
11.14 The Guide does not recommend one collection system over others. However, the compiler who
use enterprise surveys (in lieu of IMTS or an ITRS) as
the data source for goods items in the balance of payments must be particularly careful that adequate coverage is maintained—particularly in economies thatare growing significantly, undergoing liberalizationof trading relations, or are transitioning to a marketbased economy.

Subclassiﬁcation of Commodities
11.15 As listed in the BPM6, standard componentsof the balance of payments contain a limited subclassification of goods. Nevertheless, the balance of payments compiler could disseminate these data at a moredetailed breakdown. Some goods are more durable
than others. Some goods may be sold quickly; others
may be stored to await stronger demand. Exports andimports of foods follow patterns of production anddemand that differ greatly from those of investment
goods. It is also important that the balance of payments compiler disseminate the data using a subclassification that is nationally appropriate.

Estimation in the Absence of Data
Across-the-Board Estimation
11.16 While prepared to estimate many balance of
payments items, some compilers prefer having customs data available before estimating goods trade.
Therefore, the timing of balance of payments publications is often predicated on the availability of data from
IMTS, an ITRS, or enterprise surveys (whichever isthe main source) on goods transactions. However, thecompiler may have to estimate goods when basic data
do not exist, are untimely, or reflect poor coverage.
11.17 One approach to estimation consists ofgathering available data, using known relationships
between national accounts aggregates, and estimating the balance of payments goods item as a residual.
For example, in an economy with a simple economic
structure, it may be possible for the compiler to collectGoodsdata on exports from a few major exporters and dataon services from a few large companies and the official sector. These data may then be used with othernational accounts aggregates3 to derive imports ofgoods and services as a residual.
11.18 Another approach uses—especially for
major agricultural and mineral products—supply anduse framework of commodity flows.4 Because, for a
specific period, the closing position of a commodity
equals the opening position plus production and imports less consumption and exports, any component
can be derived as a residual from the others. For example, if a compiler knows the volumes of production, consumption, and changes in position and if
there are no imports, export volumes may be derived
as residuals. Price data may then be applied to theseestimates to derive current values of exports.
11.19 Although IMTS may provide preliminary
broad aggregate data for more recent periods, somedata required to complete balance of payments accounts may be missing. The balance of paymentscompiler may, with relative ease, be able to estimate
missing components by taking into account the relationship between those components and various aggregates for past periods. For example, there may be
a reliable relationship between exports of a particular
agricultural commodity and the size of the harvest. If
the latter is known, this relationship could be used,in the absence of data, to estimate exports. Anothermethod of estimation would consist of assuming that
trade in missing components has increased (or decreased) at the same rate as measured trade; the rateof increase (or decrease) would then be applied to theestimate for the previous period to obtain an estimateof the missing component for the current period.
11.20 Preliminary data may be subject to known
biases, and the balance of payments compiler may adjust for these biases to reduce the size of subsequent
revisions to data. In evaluating preliminary results
3
Based on the formula for compiling the gross domestic productby expenditure: GDP = Final consumption + Capital formation +External trade balance (exports-imports).
4
Within the context of compiling the goods and services accountin the national accounts, an unknown component could be derived residually from the equation: Domestic production +Imports (goods and services) + Taxes = Intermediate
consumption + Final consumption + Capital formation + Exports(goods and services).

183

from IMTS, the compiler may find some anomalies.
Less than complete data validation procedures may
have been applied to preliminary IMTS, and the balance of payments compiler may have data from othersources that cast some doubt on the validity of certain
components of IMTS.5 In these circumstances, thebalance of payments compiler may have to obtain
more reliable data from exporters and importers oreven to estimate certain components.

Other Estimations Required
11.21 The compiler may have to adjust imports
valued on a c.i.f. basis to an f.o.b. basis. Methods fordoing so are discussed in “Transport” in Chapter 12.
The compiler may make other adjustments to overcome coverage, timing, and valuation errors resulting
from periodic examinations of trade data. For example, the compiler could, by using the supply and use
framework for selected commodities or periodic estimates obtained from customs officials, make adjustments for smuggling (undercoverage).
11.22 In making the c.i.f./f.o.b. adjustment, thecompiler should keep the following considerations inmind:(1) The economy of origin of the imports—If thecustoms points of two territories are the contiguous, the c.i.f. and f.o.b. valuations are thesame, so no adjustment is necessary.
(2) The distance that the good has to travel—The
longer the distance, generally the greater thefreight cost and usually the greater the insurance charge. Not all imports would have thesame c.i.f./f.o.b. adjustment.
(3) The changing composition of goods overtime—As the composition of imported goods
changes, the weights attached to each commodity will need to be adjusted as the freightand insurance charges will differ depending on
the commodity.

5
To prepare preliminary IMTS, some validation procedures (suchas comparing day-to-day consistency of reporting, querying
returns that look unusually large, checking on nonresponse, etc.)
should be undertaken. However, more detailed checking of value/quantity relationships, which usually reveals errors in the reporting of physical quantities rather than values, is sometimes skipped
at the preliminary estimation stage.

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11.23 The compiler could make additional estimations to improve the coverage of trade data. For this,customs officials may be involved in estimating undercoverage by examining the customs procedures.
For example, if the baggage of 1 in 20 persons (selected at random) arriving in an economy is examined, and y value of goods is discovered undeclaredby these persons, an estimate of undercoverage could
be derived as 20 times the value of y. It would be moredifficult (but still possible) to estimate undercoverage
if selection procedures were based upon nonrandom
factors.

Treatment of Transfer Pricing
11.24 Between companies in a direct investment
relationship, transactions may occur wherein values
shown in the books of transactors are significantly distorted from market values. A company may sell goods
to a related company for prices unrelated to the cost of
production or the acquisition cost of the goods. Sucha sale might be made, for example, to transfer profits
from one economy to another for tax reasons or because the economy of the direct investment enterprise(DIENT) imposes restrictions on the repatriation ofincome. In other instances, transfer prices may be
used as a means by which a direct investor makes afinancial investment in a DIENT.
11.25 The BPM6 recommends that the compiler
make an adjustment to transaction prices in the balance of payments when actual transaction prices oftransfers of real resources between companies in a
direct investment relationship differ from values that
could have been expected if the companies had been
independent. However, the BPM6 cautions that suchadjustments should be made only in the unusual circumstance when significant distortions are encountered and information to make a reliable adjustment
is available (see BPM6, paragraph 3.77).
11.26 When adjustments are made to one side ofa balance of payments transaction, offsetting adjustments must be made to preserve equality between
credit and debit entries. For adjustments arising fromthe use of nonmarket transfer prices, adjustments
should be made to goods or services trade, direct investment income, and financial account transactions.
11.27 The following example illustrates these adjustments. In a certain economy, a DIENT produces

copper. If this copper is sold to unrelated companies,
the DIENT could expect, on the basis of the production cost of the copper, to earn 50 units per ton. However, as the government of the economy has imposed
restrictions on repatriation of income to nonresidents, the DIENT sells to its direct investor 1,000 tonsof copper at only 10 units per ton. In this case, nonmarket transfer pricing is used to repatriate income.
11.28 Table 11.6 shows examples of transfer pricing adjustments in the balance of payments.

Merchanting
11.29 Merchanting transactions—that is, thepurchase of goods by a resident (of the compiling
economy) from a nonresident combined with thesubsequent resale of the same goods to another nonresident without the goods being present in the compiling economy—should be recorded in the balanceof payments as transactions in goods. This is a change
from the BPM5, where merchanting was to be recorded as a service. The change in treatment is in linewith the change of ownership rule that underpins thebalance of payments conceptual framework. If there
is a change in the physical form of the goods during
the period they are owned by the merchant, as a result of manufacturing services, then the transaction
should be classified as general merchandise, and not
as merchanting.
11.30 For the economy of the merchant, goods
acquired under merchanting should be recorded as anegative credit in the balance of payments in the period the merchant acquires the goods, and when they
are sold they should be recorded in that period as
goods sold under merchanting as a positive credit. In
most instances, the difference between the acquisitionand sale (shown as “net exports of goods under merchanting”) covers merchants’ margins, holding gains
and losses, and changes in inventories of goods undermerchanting. As a result of losses or increases in inventories, net exports of goods under merchanting may be
negative in some cases. Where the merchant is an organizer of a global manufacturing process, the selling
price may cover elements such as providing planning,
management, patents and other know-how, marketing, and financing. Particularly for high-technology
goods, these nonphysical contributions may be large
in relation to the value of the materials and assembly.

Increase goods exports bydifference in prices;add difference inprices to ﬁnancial
account—direct
investment—net acquisition ofﬁnancial assets—equity

Direct investor to
directinvestment
enterprise

Source: IMF staff.

Increase goods imports bydifference in prices;add difference inprices to direct investment
income—dividends—credits

Economy of direct investor

Increase goods imports bydifference in prices;add difference inprices to ﬁnancial account—direct investment—net
incurrence of liabilities—equity

Increase goods exports bydifference in prices;add difference inprices to direct investment
income—dividends—debits

Economy of direct investment
enterprise

The transaction price is less than market value

Direct investment
enterprise to direct
investor

Direction of ﬂow
of goods

Table 11.6 Adjustments to Balance of Payments in Cases of Transfer Pricing

Decrease goods exports bydifference in prices;add difference in prices to direct
investment income—dividends—credits

Decrease goods imports bydifference in prices;add difference inprices to ﬁnancial account—direct investment—net acquisitionof ﬁnancial assets—equity

Economy of direct investor

Decrease goods imports bydifference in prices; adddifference in prices to direct
investment income—dividends—debits

Decrease goods exports bydifference in prices;add difference inprices to ﬁnancial account—direct investment—net incurrenceof liabilities—equity

Economy of direct investment
enterprise

The transaction price is greater than market value

Goods
185

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11.31 The economy that sold the goods to theeconomy of the merchant and the economy that purchased the goods from the economy of the merchantrecord their merchandise trade in the usual way—that
is, as exports and imports of general merchandise, respectively, and not as merchanting transactions.
11.32 By the very nature of merchanting, the goods
involved do not cross the customs boundary of theeconomy of residence of the merchant. Therefore, thedata need to be collected directly from the companies involved in merchanting. It may be possible toidentify such companies through a business registerthat may be maintained by the collecting body or thecentral statistical office (if different). Model form 5
in Appendix 8 includes data required for recording
merchanting transactions in the balance of payments.
Data should be collected on a gross basis, by commodity, and by partner economy, wherever possible.

Nonmonetary Gold11.33 Nonmonetary gold covers all gold other thanmonetary gold (gold bullion to which the monetary
authorities have title and is held as reserve assets).

Excluded are jewelry, watches, and so forth that contain gold, which are included under general merchandise. Merchanting of nonmonetary gold is also
included under the nonmonetary gold item (BPM6,
paragraph 10.49).
11.34 IMTS is a source of data for nonmonetary
gold. It adopts the same definition of monetary andnonmonetary gold provided in the BPM6. It is recognized, however, that in practice it might be difficult for the IMTS compiler to differentiate between
monetary and nonmonetary gold. IMTS and balanceof payments compilers should consult each other andthe monetary authorities to ensure appropriate andconsistent treatment. Moreover, it must be noted that
IMTS records movements of gold and not necessarilychange of ownership.
11.35 The data from IMTS must be complemented
by data on transactions in nonmonetary gold between residents and nonresidents that involve nophysical movement of gold. This could be obtained,
for example, from a special survey of gold traders orgold holders. ITRS may also be used to validate theinformation.

12Services

Introduction
12.1 Rapid technological advances in the past few
decades in transport, telecommunication, computer,and information services, including the development of the Internet and electronic commerce, andinnovations in creation and packaging of financial
instruments, combined with an increased trend towards globalization, have resulted in significant crossborder exchanges at more distant locations and access of business companies to wider markets. Better
communication and transport have also facilitatedthe movement of people for the purposes of tourism,
migration, employment, and trade. These phenomena
have resulted in an explosive development of service
industries and an unprecedented growth in the volume of international trade in services, including in
the context of international investment. Currently,
services constitute about one-fifth of worldwide tradein balance of payments terms.
12.2 The chapter covers general aspects of datacollection and compilation for all services categories,
including separate discussions on services with more
complex transactions and multiple data sources that
require a specific treatment. It also captures the emergence of new data sources (e.g., electronic commerce)
and adaptations in the application of statistical methodologies to changing circumstances.

(2) separate descriptions on some of the more complex transactions recorded in these items—namely,
construction, treatment of intellectual property, foreign exchange services (part of financial services),
operating leasing (part of other business services),and government goods and services n.i.e. Detailed
descriptions of compilation of cross border insurance
and pension services and financial intermediation services indirectly measured (FISIM) are provided in theseparate, dedicated Appendices 2 and 3, respectively.

Manufacturing Services on PhysicalInputs Owned by Others
12.5 The BPM6 stipulates that the manufacturing fee received by companies for the manufacturing
activity undertaken on goods owned by other companies be classified as a service. The manufacturingservices represent the value of the contract between
the owner of the goods and the manufacturer. However, gross values of goods associated with manufacturing services should be identified as supplementary
items in economies where they are significant. Recording of gross values of such goods is described in
Chapter 10 of the BPM6.
12.6 The services provided by the manufacturer
may also be referred to as contract manufacturing,toll manufacturing, or toll services. These terms reflect an arrangement where some of the manufacturing activity is undertaken by one company on behalfof another. Thus, the goods being manufactured are
not owned by the manufacturing company; rather, themanufacturing company is engaged in the provisionof a service for a manufacturing (contract) fee.

12.3 The structure of the chapter follows the orderof the main standard services components but takes
into consideration the relative importance of various
services in the international trade. The next three sections cover manufacturing services on physical inputs
owned by others, transport, and travel, respectively;
all other types of services are grouped under otherservices and are described in “Other Services.” Thelast section is dedicated to e-commerce.

12.7 In contrast, the International Merchandise Trade
Statistics: Concepts and Definitions 2010 (IMTS 2010)
recommends as follows:

12.4 “Other Services” presents (1) a general description of data sources and methods that could be
used to compile the items included in this category and. . . that in all cases goods for processing, as well as
goods resulting from the processing (compensating products in customs terminology) are to be

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included in the merchandise exports and importsof the countries at their full (gross) value.1
12.8 Recognizing the needs of balance of payments
statistics, where manufacturing services on physical inputs owned by others should be recorded, the
IMTS 2010 encourages economies to undertake thefollowing:. . . explicitly identify (preferably by special coding) in their trade statistics goods for processing
as well as goods resulting from such processing
where no change of ownership takes place. However, it is recognized that such identification may
not be all-inclusive and the obtained information
may not be internationally comparable as (a) merchandise trade statistics compilers may not haveadequate sources of data (especially in cases when
the appropriate customs procedures are not used)and (b) national definitions of such procedures
may differ significantly.
12.9 However, customs declarations currently usedby most economies do not facilitate the recording of the
manufacturing services, and there may be differences
between the actual value of manufacturing services andvalue obtained from customs declarations as difference
between the value of the goods before processing andthe value of the goods after processing. Therefore, evenif economies were to follow the encouraged guidelines
of international merchandise trade statistics (IMTS) on
recording goods for processing, the resulting data may
not be adequate for estimating manufacturing services.
It should be noted that manufacturing services on
physical inputs owned by others records only the manufacturing services and not the difference in the valueof the goods before and after processing. In this regard,using data from IMTS may not be a viable option.
12.10 Based on these recommendations, it would
be very difficult to estimate the manufacturing services using only customs-based merchandise trade
statistics. The information provided by customs declarations could be, nevertheless, useful in combination with other methods, or alternatively as input in adata model (by major type of manufacturing) used in
combination with regular benchmark surveys to validate the model outcomes.

1

12.11 The BPM6 recommends that the movementof goods under the processing arrangements to be
identified as supplementary items for both the ownerand the provider of manufacturing services—that is,they should be recorded as follows:
Goods for processing in the reporting economy
Goods returned (CR), Goods received (DR)Goods for processing abroad
Goods sent (CR), Goods returned (DR)12.12 In this manner, they can be compared withthe results of the enterprise survey and maintain alink with the IMTS data. In addition, continuing torecord these data in the IMTS is necessary so that they
can be excluded from the total of transaction in goods
to exclude double counting.
12.13 It is possible that some goods will be manufactured in one economy, then be sent to anothereconomy for further manufacturing, and then either
be returned to the owning economy, returned to theeconomy where the initial manufacturing was undertaken (either for further manufacturing or for finalsale), or sent to a third economy (for further manufacturing or for final sale). Indeed, it is possible thatthe goods never enter the economy of the residenceof the owner as all the manufacturing is entirely done
abroad. Until final sale, the goods should be recorded
as being owned by the original party throughout andthe various fees recorded under manufacturing services on physical inputs owned by others between the
manufacturing economy and the economy where theowner is resident.
12.14 The difference between the value of thegoods before processing and the value of the goods
after processing may differ from the value of manufacturing services for various reasons, including thefollowing:• Sale of goods after processing in the economyof the manufacturer or to a third economy; insuch cases, the value of the processed goods thatare returned to the owner is diminished by thevalue of goods sold to the economy of the manufacturer or to a third economy, the latter being
separately recorded as exports by the owner ofthe goods• Incorrect assessment of the values of goods sent
and returned; since there is no sale or purchase of

IMTS 2010, paragraph 1.20.

Services

the goods, the values recorded by customs at thetime of import and reexport are notional values,
whose balance probably does not differ by theamount of the processing fee received (resulting
in balance of payments errors and omissions).
Also, these values may be assessed differently by
the customs authorities of the economy of thesender and the customs of the economy of thereceiver• Recording of the goods before and after processing across different periods• Inclusion of holding gains or losses; holding
gains or losses accrue to the owner of the goods.
However, it is likely that the changes in the valueof the goods while in the possession of the manufacturing company could be included in thevalue of the goods and hence be mistaken forpart of the manufacturing services. For example,
if the price of oil changes substantially after the
manufacturer takes possession of the consignment, then the value of oil after manufacturing
would include the price increase, the manufacturing services, and the value of other inputs• Scrapping of the goods while in the possession of
the manufacturer; these goods may be includedin the value of goods sent but excluded in thevalue of goods returned• Inclusion of manufacturer’s overheads in thevalue of the goods after processing;2 the manufacturing services should include overhead costs
only to the extent they relate to the processing of
the goods• Value of brand names in goods after processing;for example, a shoe manufacturer’s logo adds
value to the goods after processing. However, thisvalue should not be included in the manufacturing services• Inclusion of the value of materials sourced fromthe economy of the manufacturer; materials procured by the processor as inputs in the production process and that may be sourced from theeconomy of the manufacturer (or sourced fromthird economies and then transported directly to2Overhead costs include expenses related to the operation of abusiness. Most commonly, overhead costs include accounting
fees, advertising, depreciation, insurance, interest, legal fees, rent,
repairs, supplies, taxes, telephone bills, travel, and utilities costs.

189

the economy of the manufacturer) are includedin the overall cost of production. It may be that
only a portion of their value is reflected in the
manufacturing services, the rest being inputs inother processing activities including on its own.
12.15 In collecting data on manufacturing services,
the compiler also needs to be careful to differentiate manufacturing undertaken on own account frommanufacturing undertaken on goods owned by others. In the former case, the processor may purchasesupplies of goods and raw materials from one or more
foreign suppliers (recorded in general merchandise)and undertake assembly and processing of the goods,
and the final product is sold on the account of the
manufacturer. In this case, the manufacturer would
have taken ownership of the goods and therefore is
not engaged in contractual work.
12.16 In many cases, the companies engaging in
manufacturing services may be identifiable by the
special taxation arrangements that may be in place
for their benefits. These arrangements normally entail
the provision of special tax and duty concessions on
their production and purchases, or outright duty exemptions. Thus, raw materials and other inputs may
be imported duty-free and the company may operate under a lower corporate tax structure than othersimilar companies in the economy. Because of thepreferential tax rates offered to these companies, theimportation and production process may be closely
monitored by the customs and tax authorities so thatthey cannot freely engage in commerce (by sellingsome of their inputs or outputs) with other companies
that do not qualify for concessions. Thus, these companies may operate only in special locations that may
be referred as export processing zones or free zones.
The factory undertaking the manufacturing may
sometimes be referred to as a bonded factory, implying that the goods are held in bond by the customs authorities. For example, in Mexico, these factories arereferred to as maquiladora, named after the system
under which these companies were established in the
1960s. However, the compiler should note that many
companies may be engaged in manufacturing services
without necessarily being in such special locations.
12.17 The compiler should note that there may becases where the companies operating in special locations and receiving such concessions may actually

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own the goods being manufactured. They may purchase inputs domestically and from the rest of theworld, manufacture goods, and sell these manufactures to one client overseas. This output would not
qualify as manufacturing services.
12.18 There may be cases of technology transfer3
between a direct investor in economy A and an affiliate in economy B without which the affiliate would
not be able to undertake production. The production
process may involve the use of raw materials and other
inputs obtained from the direct investor or from othersources acquired by the affiliate. The direct investor
may then be responsible for marketing the goods after
production. The mere existence of a direct investment
relationship and the affiliate’s reliance on the technology of the direct investor do not imply the provisionof manufacturing services. The affiliate may be able toacquire goods on own account and may be contracted
to sell/transfer the final output only to the direct investor. In that case, the manufacturing activity would
be recorded on the books of the affiliate as manufacturing on own account.
12.19 The compiler should also make the distinction between the goods associated with manufacturing activities and those under merchanting. For
merchanting, the gross values of the goods acquired
and sold are included in goods (as negative and positive exports, respectively). In the case of goods associated with manufacturing services, there is no changeof ownership, unless the parties later agree otherwise,in which case the sales of the finished products would
be recorded under general merchandise (the manufacturing fee would be paid as agreed in the initial
contract). Furthermore, there may be cases where
the goods under a merchant’s ownership may be subjected to certain manufacturing services that changed
the condition of these goods, in which case the purchases and sales should be recorded under generalmerchandise instead of merchanting.

Collecting Data on Manufacturing Services
12.20 Data on manufacturing services on physicalinputs owned by others can be collected through an
3
Technology transfer includes patenting, licenses, know-how,
technical assistance and the provision of research and development services. See OECD, Measuring Globalization: OECD Handbook on Economic Globalization Indicators, 2005.

enterprise survey, IMTS, and an international transactions reporting system (ITRS). Administrative sources
also can provide useful information (see model form 7).
12.21 Enterprise surveys generally represent themost efficient method to collect information on manufacturing services. The compiling agency may conduct dedicated surveys to collect data on the valueof the manufacturing services as well as the value ofthe goods sent and received for processing. The latter would be useful to adjust the goods account tomeasure merchandise trade on a change of ownership basis. As noted previously, companies engaged
in manufacturing services may operate under special
customs and tax regulations; therefore, when collecting the information, the compiler should exert care to
identify the concessions given to companies operating in special locations and properly record externaltransactions.
12.22 Customs declarations currently used bymost economies for IMTS do not facilitate the recording of the manufacturing services. A possible solution
is for economies to amend their customs declaration
forms to require that traders report the value of the
manufacturing services on the goods being traded.
However, this is a possible long-term solution as there
are various factors that will have to be considered
before this option is pursued. Customs declaration
forms may be designed according to legal specifications that underpin trading arrangements, and it may
be difficult to adjust these forms solely for statistical
purposes.
12.23 An ITRS may provide some information on
the value of the manufacturing services. However, thecompiler should ensure that this amount does not include payments for other goods and services. Thus,
the ITRS may need to be adjusted to collect specificinformation on the manufacturing services and to
exclude all other transactions payments between the
manufacturing company and the company owning
the goods.
12.24 The manufacturer may be required to provide statements to the tax authorities on its income
and expenses as part of the close monitoring that
may be in place due to its receipt of tax concessions.
Such statements may be available from the customs
authorities or the tax authorities. These agencies may
also be able to identify the value of the manufacturingServices

services from the relevant tax on provision of suchservices.
12.25 The gross value of goods for processing, bothof the goods sent for processing (raw materials) andgoods returned to the economy of origin after thecompletion of processing (finished products), should
be identified as supplementary items in economies
where they are significant. These values could be identified in IMTS, in enterprise surveys, or in a supplementary inquiry in an ITRS.

Transport
12.26 Transport includes passenger, freight, andother transport services provided by residents of one
economy to residents of another economy. The BPM6
recommends that transport be classified by mode oftransport (namely, sea, air, and other, which includes
rail, road, inland waterway, pipeline, space transport,
and electricity transmission). It also recommends
that these categories be classified further by what is
carried (namely, passenger or freight), and by otherauxiliary services related to the transportation of thementioned categories. Transport also includes postal
and courier services.

Ownership and Operationof Transport Equipment
12.27 To properly record transport services in thebalance of payments, it is necessary to distinguish between the owner of mobile equipment4 and the operator of the equipment. The owner is generally thecompany that has legal title to the equipment. The
company that controls the operation and movementof the equipment is regarded as the operator. The
operator is usually responsible for supplying a crew,
maintaining equipment in proper working order, anddeciding when, and to which location, the equipment
will be moved.
12.28 The owner and the operator may be the sameor different companies. As separate companies, they
may be residents of different economies. In somecases, a chain of leasing arrangements may separate
the owner from the operator of the equipment. As in a4
In this case, and provided the equipment is rented without thecrew, the compiler should record operating lease payments, which
are made by the operator to the owner, under other businessservices—operating leasing services.

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financial lease, the lessee of mobile equipment is considered the economic owner for balance of payments
purposes, because a change of ownership is presumed.
If a parent company transfers mobile equipment toa branch located abroad, the branch is—for balanceof payments purposes—considered the owner if theequipment is recorded in the books of the branch.
Ships registered under flags of convenience should
be attributed to the legal owners; however, the flagsof convenience used by companies do not determine
the residence of the owner or operator. The residenceof the company that operates the ships is determinedaccording to general criteria as defined in the BPM6,
paragraphs 4.131–4.135, and it may not necessarily be
the same as the company that owns the ships, such aswhere the ship operator has an operating lease fromthe ship owner, who is resident in another economy.5

Transport Arrangements
12.29 Owners and operators may enter into a
number of leasing or chartering arrangements. Various terms are used to describe these arrangements,
but a broad description should suffice for purposesof the Guide. For balance of payments purposes, only
leases with crew are included under transport; operational leases (without crew) and financial leases areclassified elsewhere (see also section ahead on operating leasing).
12.30 There are bare boat or bare bottom charter
arrangements whereby an owner leases a vessel to an
operator, who is responsible for equipping the vessel
and supplying the crew.
12.31 These leases usually cover long periods but
may also cover short periods. For all lease types, thecompiler should make sure the leases are leases withcrew and not operating (without crew) or financial
leases, before including them under transport. If, forexample, a vessel is legally owned by a bank or othertype of financial institution, the compiler should, forbalance of payments purposes, usually regard the vessel as being economically owned by the lessee (financial lease).
12.32 There are time charter arrangements whereby
a vessel is leased to an operator who provides a crew.

5

Most commonly encountered are ships, aircraft, drilling platforms, and railway rolling stock.

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Balance of Payments and International Investment Position Compilation Guide

The bare boat or bare bottom charter is a form of time
charter. A time charterer may also lease a vessel froma bare boat charterer. For balance of payments purposes, the time charterer should be regarded as theoperator, although if there are several time charters
involved, the charterer supplying a crew is regarded
as the operator.
12.33 In addition, there are voyage charters. For
example, an exporter or an importer may hire, for asingle voyage, a vessel to ship a bulk commodity suchas wheat or minerals. The voyage charterer has no
responsibility for operation of the vessel and is not,therefore, considered the operator. A variation of voyage charter, space charter, or slot charter consists ofan arrangement in which space on the vessel, rather
than the whole vessel, is hired. Payments for voyage,
space, and slot charters should be recorded as freightunder transport.
12.34 In the case of the aircraft industry, there are
two main leasing types:• Wet leasing (covers provision of an aircraft, complete crew, maintenance, and insurance for which
payment is by hours operated), which is normally used for short-term leasing (for balance of
payments purposes recorded under transport)• Dry leasing (covers provision of an aircraft without insurance, crew, ground staff, supporting
equipment, maintenance, etc.), which is moreusual for the longer-term leases and is recorded,
for balance of payments purposes, under operating leasing services—other business services.
The aircraft industry also uses combinations of
wet and dry when, for example, the aircraft is
wet-leased to establish new services and then, as
the airlines flight or cabin crews become trained,
they are switched to a dry lease.

Freight Services
12.35 Freight relates to the movement of goods,
and the compiler should distinguish among freight on
imports, freight on exports, and other freight. Other
freight relates to the carriage of goods where there is
no change of ownership. The freight costs incurred by
the exporter and importer are defined in the BPM6,
paragraph 10.78. To meet the BPM6 specifications
and conventions, the compiler needs to make the following estimates:• For credits—(1) total earnings on exports by resident carriers for transportation of goods outside
the economy border and (2) total earnings onimports by resident carriers for transportation of
goods within the exporting economy border• For debits—(1) total earnings on exports bynonresident carriers for transportation of goods
within the economy border and (2) total earnings
on imports by nonresident carriers for transportation of goods outside the exporting economy
border
12.36 The definitions of these estimates are the result of the valuation of imports and exports at f.o.b.
The delivery terms of the contract between the exporter and the importer may not be on the f.o.b. basis,but ultimately the importer pays for the goods andall transportation (and insurance) costs whatever thedelivery terms, either directly to a resident or nonresident carrier or to the exporter, who then makes thearrangements (again either with a resident or nonresident carrier). Some imputations are implied—for example, if an exporter arranges for a nonresident carrier
to transport imported goods to the final destination in
the compiling economy, a transportation debit is imputed. Examples of the treatment of freight services
are presented in Box 10.3 of the BPM6. The Guide provides guidance on the estimation of freight services forexports and imports in Tables 12.1 and 12.2 in termsof resident carriers earnings on exports (credits) andnonresident carriers earnings on imports (debits).
Broad adjustments to the estimates to take accountof transportation costs within the exporting economy
border can be made by consultations with a small
number of large resident freight carriers. Conceptually,a corresponding counterpart adjustment to currency
and deposits should be made in the financial account.
12.37 The service charge for freight may be recorded separately or included in the c.i.f. value ofgoods, depending on the delivery terms specified in
the contract. If recorded separately, this represents
the actual market transaction, and it is very useful forusers and analysts when comparing against the freightdata derived from the c.i.f. to f.o.b. adjustment (formore details on the valuation of freight transport services on a transactional basis, see Manual on Statistics
of International Trade in Services 2010 (MSITS 2010),
paragraphs 3.107–3.110).

Services

Passenger Transport Services
12.38 With regard to transport of persons, the compiler must distinguish between international services(included in passenger services) and domestic services (included in travel).6 The service is deemed to beprovided by the company that is actually running theflight or the boat ride (the operating carrier) and notby the company that initially sells the ticket and cashes
the income (the plating carrier in interlining7) or thosethat sell the ticket (the marketing carriers in the caseof code sharing agreements8). Nevertheless, the income generated for the marketing carriers as well as
the corresponding expenses for the operating carrieror the plating carrier may also be balance of payments
transactions (included in transport services—other; inExtended Balance of Payments Services (EBOPS) classification they are classified under other supporting
and auxiliary transport services).
Pipeline, Electricity, and Space Transport
12.39 Pipeline transport and electricity cables
have many features in common. Fixed infrastructureis used for providing transport services rather thanmobile equipment. The cables and pipeline may run
through international waters as well as within economies. The usual criteria are applied to identifying theresidence of the service provider where cables andpipeline run within an economy. The operator may
have no physical presence in the host economy, creating difficulties in using a survey to collect data on theactivity, in which case revenue authorities may be able
to provide data on the value of the services provided.
6
Passenger services provided within an economy are treated astravel services when provided by operators who are residents ofthat economy for nonresidents and as passenger services (part oftransport services) when provided by nonresident operators forresidents.
7
Interlining (also known as “interline ticketing”) is a voluntarycommercial agreement between individual airlines to handle passengers traveling on itineraries that require multiple airlines. Carriers that participate in airline alliances almost always have interline
agreements with each other. However, direct competitors can also
benefit from interline agreements. When a ticket is issued for aninterline itinerary, one of the carriers marketing flights in that itinerary will be selected by the ticketing agent as the “plating carrier.”
8
Code sharing agreements usually refer to numbering a flightwith the airline’s code even though the flight is operated byanother airline. They must have interline agreements with allother carriers in the itinerary to allow a single ticket to be issued.
Contrary to interlining, the code share relationships can affectwhether an interline ticket (or e-ticket) can be issued.

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12.40 Space transport is essentially concerned withdelivery of satellites into orbit. Change of ownershipof a satellite can be regarded as having taken placewhen it is delivered to the buyer. The f.o.b. value ofthe satellite is its value at the border of the exporting economy. If the satellite is launched from theeconomy of manufacture, the cost of transporting thesatellite to the launching site should be included in
the f.o.b. valuation. The cost of launching the rocket
should be treated as freight services. If the satellite
is launched in a third economy, the freight charges
would include costs (including the cost of the launchrocket) incurred between the f.o.b. valuation andthe satellite reaching orbit in space. If the satellite islaunched from the owner’s economy, there would be
no international freight component for delivering thesatellite into orbit because the service provided would
be a resident-to-resident transaction. If the rocket issold to the resident by a nonresident, the cost of therocket should be shown as an import of goods. Detailsof costs involved should be readily available from theprincipals, who should be easy to identify.

Other Transport Services
12.41 Other transport services include supporting and auxiliary transport services that are not directly provided for the movement of goods or people,
some of which are also provided by transport operators (see also MSITS 2010, paragraphs 3.104–3.105).
The operators of mobile equipment visiting ports will,
for example, incur various port charges and acquire
goods and services, such as fuel (bunkers), provisions
and catering services (all included in goods), andloading and unloading services9 (included in transport services—other). In addition, if an agent looks
after an operator’ affairs while the vessel is in port,
the operator will be charged for the agent’s services(included in transport services—other). Other port
expenses may also be incurred by operators and by
owners; these should be identified and recorded in thebalance of payments as appropriate. While in port, thecrew may purchase goods and services for their own
use; these expenditures should be identified and included in travel under business travel.

9
Loading and unloading expenses should include any demurrage
expenses.

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12.42 In addition to expenses incurred in port,other expenses, such as commissions paid to selling
agents for sales of passenger fares and freight services(other transport), may be incurred by nonresident
operators.

deduct those services (if any) provided by resident
transport operators. It may also be necessary tomeasure total international freight in order to adjust
imports of goods that have been measured on a c.i.f.
basis to the preferred f.o.b. basis.

12.43 Table 12.1 sets out items in transport services
and outlines data sources and methods that could be
used to compile them. Data on mode of transportshould be readily attainable from any of the sources.
The sources and methods summarized in the table aresubsequently explained in more detail.

12.45 While insurance premiums10 on international freight are not part of transport, there is a close
relationship between these premiums and the freight
services themselves. Because of this relationship, it isoften convenient to estimate these two items at thesame time.

Freight and Insurance on Imports
12.44 The balance of payments compiler shouldmeasure international freight services provided bynonresident transport operators on imports of thecompiling economy as these services are part of
freight debit items. However, when it is not possible
to measure these services directly, the compiler may
measure total international freight on imports and12.46 The compiler may use several methods toestimate freight and insurance premiums on imports,
and these are set out in Table 12.2. Many of thesemethods require detailed collection and/or assembly
10
The compiler should make sure that the insurance premiums
are broken down into service charge (insurance services) andnet premiums (secondary income), as explained in Appendix 2,“Insurance Transactions and Positions.”

Table 12.1 Methods for Estimating Transport1 (concluded)1
Description
Sea, air, and other transport
Passenger

Source and method of compilation
Services Provided by Resident Transport Operators (credit)
Data could be collected—through an enterprise survey or an ITRS—fromresident operators. Fares earned from nonresident passengers on domestictransport should be excluded and included in travel. Alternatively, a data
model based upon the number of nonresident passengers carried by resident
operators, passengers economies of origin and destination, and average farerates could be used.
Services Provided by Nonresident Transport Operators (debit)
Data could be collected—through an enterprise survey or an ITRS—frombranches of nonresident operators or ticket selling agents. Ideally, data should
be collected on earnings, rather than a ticket sales basis. Gross data should berecorded—that is, before the deduction of commissions. Alternatively, a data
model on numbers of resident passengers carried by nonresident operators andclassiﬁed by destination and data on average fares could be used.

Freight
Freight on exports and imports ofthe compiling economy

Export Freight Services Provided by Residents (credit)
Data could be collected, through an enterprise survey or an ITRS, from resident
operators. If an ITRS is used, freight paid on exports by exporters to resident
operators should be measured and added to freight on exports. Alternatively, adata model could be used.
Import Freight Services Provided by Nonresidents (debit)
This item could be collected through an ITRS if it provides a breakdown ofimport costs and if the amounts paid to resident operators by nonresident
exporters are deducted. Alternatively, freight on imports could be measured byapproaching, via an enterprise survey, branch ofﬁces and agents for nonresident
operators. Another way to derive this item is to estimate total freight on
imports (see Table 12.2 for various methods) and to deduct from this estimate
the income earned by resident transport operators from freight on imports. The
latter item could be collected through an enterprise survey.

Services195

1

Table 12.1 Methods for Estimating Transport (concluded)1
Description

Source and method of compilation

Other
Other earnings by transport
operators—for example, salvage

Services Provided by Resident Transport Operators (credit)
Data could be collected—through an enterprise survey or an ITRS—fromresident operators.
Services Provided by Nonresident Transport Operators (debit)
Data could be collected through an enterprise survey or an ITRS, either byapproaching branch ofﬁces and agents for nonresident operators or byapproaching resident users of the services.

Services provided to transport
operators—for example, agent
fees and commissions; loading,unloading, and demurrage charges;
and port charges

Services Provided to Resident Transport Operators (debit)
Data could be collected from the operators through an enterprise survey or
through an ITRS. Alternatively, a data model could be used.
Services Provided to Nonresident Transport Operators (credit)
Data could be collected from the branch ofﬁces or agents of the nonresident
transport operators, from the resident companies providing the services, orfrom ofﬁcial sources (such as port authorities). Rules should be clearly deﬁned
so that there is no omission or duplication in reporting. Alternatively, a data
model2 based on related information could be used. Even if the owner is
not the operator (the unit determining the residency in the case of services
delivered from a base), in a port of call, the owner may have expenditures thatshould be included in this item.

Postal and courier services

Data could be collected from the companies that provide postal and courier
services through an enterprise survey or an ITRS. Recording of these services onimports and exports of merchandise follows the same principles as for otherfreight services (gross basis, f.o.b. valuation).

Source: IMF staff.
1

The table provides the general description of sources and methods. The applicability depends on the economy’s circumstances.

2

A data model may not be suitable in the case of code sharing, where each bilateral contract is unique and refers to a speciﬁc segment andwhere the international market of passenger air transport is changing rapidly.

of data, and it may not be possible to undertake thework required on a regular or timely basis. Therefore,
until data become available, the compiler may have toestimate freight and insurance premiums on importsby: (1) calculating ratios of freight and insurance premiums to total imports (or to groups of commodities
imported) from a detailed analysis and (2) extrapolating ratios for more recent periods. Factors such aschanges in freight and insurance rates, capacity, typeof transport, and the commodity composition of imports should be taken into account.
Alternative bases for collecting
passenger fares

12.47 To measure passenger fares, which will
typically be the largest component of passenger services, the compiler has two broad options: to collectinformation on the basis of overall travel revenue
value or to collect information on the basis of ticket
sales. Regardless of the basis used, the data provider
should report revenue or sales before the deductionof commissions.

12.48 It is common for an airline ticket sold by one
airline (the validating or plating carrier11) to be usedby a passenger on a number of airlines when segmentsof the journey are traveled on airlines other than theairline issuing the ticket. This practice is called interlining. If there is no interlining between the companies
involved, then separate tickets have to be issued. It isalso common for airlines to operate certain segments
under a code share agreement. A code share flight is acommercial flight that is operated by one airline (theoperating carrier), but marketed by others (the marketing carriers). Therefore, for balance of payments purposes, the compiler should—when possible—obtaindata on revenue earned by an airline from residents ofother economies rather than data on sales by an airline
to residents of other economies and clarify payments
11
The plating carrier collects the entire fare from the customer
and is responsible for distributing the proceeds to other carriersin that itinerary only as those carriers carry the passenger. Only
the plating carrier is responsible for paying commission to theissuing agency, and only based on the fare associated with theportion of the itinerary flown by the plating carrier.

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Balance of Payments and International Investment Position Compilation Guide

Table 12.2 Methods for Estimating Freight and Insurance on Imports
Option 1. Extract data from IMTS
Some IMTS record both the f.o.b. and c.i.f. values of imports (see model form 3.2); therefore, the values of freight costs
and insurance premiums can be directly taken from IMTS. (However, some method is needed to identify freight costs
and insurance premiums separately.) When both valuations are not reported as a matter of course, it may be possible toanalyze the supporting import documentation supplied to customs to obtain freight costs and insurance premiums. Suchanalysis could be achieved by means of a properly designed sample survey of the customs records. In some economies,
import documentation may also provide the name or registration of the vessel carrying the imported goods. The
compiler could match this information against lists of vessels operated by residents; if no match is found, it could beassumed that the freight service was provided by a nonresident operator.
Option 2. Collect, from importers, data on freight and insurance premiums paid on imports
Data could be collected from importers through enterprise surveys or an ITRS. In an ITRS, the basic breakdown of freightand insurance costs could be collected on a supplementary basis, or the ITRS could be used as a basis for identifying
certain importers that could be approached on a sample or selective basis. Alternatively, enterprise surveys could be used
to obtain across-the-board measures or selective data on commodities, modes of transport, and/or operators.
Option 3. Collect freight data from branch ofﬁces or agents of nonresident operators
Through enterprise surveys, data could be collected from branch ofﬁces or agents of foreign transport operators on thevalue of freight and the value and volume of imports. These data could be categorized by type of cargo (containerized,bulk, etc.) or commodity carrier, the economy from which the goods were consigned, and the mode of transport.
Unfortunately, agents for nonresident operators may not always have these data in respect of their principals. Therefore,
although enterprise surveys represent a partial approach in some cases, they could be useful to identify freight for
selected commodities and/or modes of transport.
Option 4. Analyze trade ﬂows, freight, and insurance rates
Tables on the value (c.i.f. or f.o.b.) and volume of imports broken down by commodity, mode of transport, and economy
from which the goods were consigned could be derived from IMTS. Freight and insurance premium rates could then be
applied to these to derive freight costs and insurance premiums. Freight and insurance premium rates could come fromseveral sources, including trade journals, any of the sources described elsewhere in this table, partner economy data
for the major commodities imported, as available, or surveys of industry prices. (These surveys could range from highlysophisticated surveys to small selective surveys, including periodic surveys of major players.) In this option, some cells ofdata may be very accurate, but other cells may be less accurate. This is a good example of a data model approach.
Option 5. Use an arbitrary ratio approach
Some compilers may consider it unnecessary to measure freight and insurance accurately and may therefore apply
somewhat arbitrary ratios to determine the value of freight and insurance on imports. For example, they may assume
that freight is x percent of the value of imports and insurance premiums are y percent. To the extent that these ratios
are inaccurate, there will be a misclassiﬁcation of current account debits between imports and freight and insurance.
This method of ratio estimation should be avoided. Most analysts would ﬁnd accurate data on transport costs to be anadvantage. By undertaking even a small survey of selected importers, more reliable estimates could be generated.
Option 6. Extrapolate from residents’ experiences
Data on freight and insurance premium rates could be collected, through enterprise surveys or an ITRS, from resident
transport operators and insurance companies. These data could be broken down by commodity, mode of transport,
economy of origin, and so forth and used in conjunction with option 4, for example, to derive the amounts earned bynonresidents.
Source: IMF staff.

among airlines caused by interlining and code sharing.
It may be possible to collect such data as airlines keep
records on revenue generated by economy of sale.
12.49 The compiler must make a simple, but notaltogether unreasonable, assumption that tickets soldin a particular economy are sold to residents of that
economy and adjustments made to estimates as necessary, by using surveys of travelers. In the case ofinterlining and code sharing agreements, the compiler should consider adjusting the data based on the
distribution of proceeds among the airlines underServicessuch agreements. However, as not all airlines earning
revenue from residents of a particular economy will
have offices in that economy, it may be difficult for thecompiler to obtain complete coverage of passenger
fare revenue earned by nonresident operators fromresidents of the home economy. In such situations, thecompiler should seek alternative sources to complement the information.
12.50 An alternative means of measuring passenger
fare revenue earned by nonresident operators is to collect information on the total value of tickets sold in thecompiling economy and deduct from this total value theearnings of resident carriers. An estimate of ticket sales
may also be derived from a household budget survey orother surveys of individuals. It may be possible to approach airlines with offices in the compiling economy
and travel agents who place business directly abroadwith nonresident carriers to obtain data on total ticket
sales—but this measure should be used with caution.
Many tickets are purchased and not used; therefore, allowance should be made for refunds as well as for thetime lag between ticket purchase and its use. Additionally, the compiler must be aware that in most economies,
rapid changes are underway, including the increasinguse of Internet (e-commerce) to purchase tickets (see“Other Services”). In some cases, passenger fares may
be a component of package tour payments, and thecompiler may, in consultation with travel industry representatives, have to separate passenger transport (to be
included under transport) from other components ofthe value of the package (to be included in travel).

197

imports are not to be included in balance of payments because freight of transported goods outside
the exporting economy border is deemed to be paidby the importing economy. Therefore, a correction
should be made to ITRS data so that freight credits
are not recorded. As mentioned in paragraph 12.36,
a corresponding counterentry should be registeredconceptually under currency and deposits in the financial account.
12.52 It may also be necessary to approach resident
transport operators for information on transactions
that go beyond the scope of balance of payments.
For example, freight undertaken by residents on imports could be deducted from total freight on imports
to estimate the services provided by nonresidents(freight imports) (see also MSITS 2010, paragraphs
3.107–3.110).

Transport activities of resident transport
operators (exports)

12.53 When actual data on balance of payments
transactions are unavailable, data models utilizing related information could be established. For example,
data on passenger fare earnings of resident operators
could be estimated by multiplying appropriate fares
by numbers of nonresident passengers carried byresident carriers and classified by economy of origin/destination combinations. After a total earnings figure
is determined, balance of payments expenses, such ascommissions on ticket sales and port charges associated with these earnings, could then be determined byapplying ratios of expenses to earnings or values pernumber of operations (e.g., takeoffs equal to numberof flights). Such ratios could be determined in consultation with industry representatives or by an analysis
of historical data.

12.51 Proper measurement of these transactions
typically requires a direct approach to operators.
Such an approach would be similar to the approachthat is outlined in Chapter 2 on enterprise surveys.
Information on balance of payments transactionsof resident transport operators will often be available, through enterprise surveys or an ITRS, fromthe operators themselves. An ITRS would measuretransactions made by these companies through thebanking system. In addition, these companies arelikely to have numerous balance of payments transactions that bypass an ITRS or are recorded on a net
basis. Also, payments by nonresidents to resident
operators for transport of the compiling economy’s

12.54 Until data from operators or data models become available, it may be necessary for the compiler
to extrapolate the relevant transport series. The extrapolation could be accomplished by establishing thehistorical relationship between transport series andother aggregates (e.g., passenger fares to nonresident
arrivals or freight services to imports). Similar methods could be used to project the transport services. For
best results, volumes and prices should be projected
separately. Extrapolations and projections should take
into account factors affecting the demand for services,known as changes in capacity and changes in prices.
This might be particularly relevant for quarterly estimates or anticipated estimations.

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Balance of Payments and International Investment Position Compilation Guide

Transport services associated with nonresident
operators (imports)

panies for which they act. If this is not the case, alternative strategies should be investigated.

12.55 Balance of payments transactions of nonresident transport operators with the compiling economy
are typically more difficult to measure than those of resident operators. Nevertheless, by using a well-designed
ITRS, an enterprise survey of agents and branches ofnonresident operators, certain official sources, data
models, or a combination of these sources, it should
be possible to compile reliable estimates for relevant
components in the balance of payments.

12.57 An alternative method for estimating import freight services provided by nonresidents is toestimate total freight on imports (as previously described) and to deduct from the estimate freight services provided by resident transport operators. The
latter could be collected through a supplement to an
ITRS or through enterprise surveys. This may be themost effective way to measure freight on imports.

12.56 Data on freight services on imports that areprovided by nonresident transport operators could
be obtained from agents and branches of nonresident
operators or from importers themselves. Enterprisesurveys or an ITRS could be used for either approach.
However, if an ITRS is used, it would be necessary toestimate the value of international freight services included in amounts paid by importers to nonresident
exporters. Such amounts, which may be available
from importers, should be added to freight debits actually measured in an ITRS.12 Data on payments madeby nonresidents to resident operators for transport ofimports should be deducted from freight on imports
rather than recorded as freight credits. Also, it would
be important to identify in the ITRS, or through a supplement to the ITRS, any payments made in domestic currency by importers to nonresident transport
operators.13 If, on the other hand, enterprise surveys
of agents and branches of nonresident operators areused, the compiler should be satisfied that coverage isadequate and that branches and agents are fully awareof relevant balance of payments transactions of com-

12
Alternatively, these amounts could be calculated by estimating
total freight on imports (see Table 12.2) from which one deducts
import freight fees earned by residents (an item that could bederived from enterprise surveys) and importer payments tononresident transport operators (an item that could be obtained
from an ITRS).
13
Nonresident transport operators often maintain domestic currency accounts with resident banks. Payments for services provided to residents may be paid into these accounts, and payments
for services acquired from residents may be made from theseaccounts. Any withdrawals from these accounts by nonresident
operators therefore reflect net, not gross, balance of payments
transactions. Consequently, it is necessary to measure the flows
through these accounts in order to derive correct balance of payments entries.

12.58 In some economies, customs records provide information, such as name and Lloyd’s number,on vessels carrying the economy’s imports. From thisinformation, it should be possible to identify vessels
operated by nonresidents.14 If customs data can also
be used to measure freight on imports—for example,
by taking the difference between imports c.i.f. and imports f.o.b. and deducting an estimate for insurance
premiums—these data could be matched with information on the vessel to determine freight services
provided by vessels operated by nonresidents.
12.59 Data on passenger fares could be collectedby approaching branch offices and ticket selling
agents of nonresident operators. Alternatively, total
ticket revenue earned from the transport of residents by nonresident operators could be estimatedby: (1) multiplying, by average fares, the numberof resident passengers (classified by destination of
travel and mode of transport) who are leaving andentering the compiling economy, and (2) deducting
earnings by resident operators. Data on the numberof passengers may come from migration statistics
or from other statistics, such as reports by airports
or airline operators, on arrivals and departures.15
Data on average fares could, with allowances madefor different fare structures, be obtained from travel
agents or airline companies.
12.60 Other earnings for services provided bynonresident operators could be measured by using an
ITRS, an enterprise survey of resident users of these
14
Vessels operated by residents could be identified from information provided by resident operators; all other vessels could beassumed to be operated by nonresidents.
15
When migration statistics are used, allowance should be madefor the possibility of a more complete accounting for arrivals thanfor departures.

Services

services, or an enterprise survey of local agents ofnonresident transport operators.
12.61 Data on services provided to nonresident
transport operators could be collected through an ITRS,
through a survey of resident providers of these services
or of local agents of nonresident transport operators, or
through official sources (such as port records).
12.62 Alternatively, for some or all of the services,a data model could be developed. The compiler could
establish a set of cost ratios, such as of agent fees,loading and unloading services, or various taxes andcharges to freight on imports and/or exports. Suchanalyses should be performed on the basis of commodity and mode of transport. Historical data could
be used to establish ratios, or local agents and branch
offices of nonresident transport operators could beapproached on a selective basis. Next, shares of freighton imports and exports carried by nonresident operators should be established. Information for imports
should be available from the relevant balance of payments item. For exports, information may be available
from IMTS, or an estimate could be made on the basisof discussions with, or a collection from, a representative group of importers and exporters.
12.63 After nonresident shares of freight on exports
and imports are established, relevant ratios would beapplied to these shares for the purpose of estimating
values of services provided to nonresident operators.
12.64 Alternatively, for some services (such as port
charges) provided to nonresidents, the value could beobtained by: (1) estimating the value of total services
provided to all operators and (2) deducting from thisestimate the value of services provided to resident
operators (data on the latter could be collected fromresident operators).
12.65 Some of the methods previously outlined
will require collection and/or assembly of detailed
data, and it may not be possible to undertake the workrequired on a frequent or timely basis. Therefore, until
data become available, the compiler may have to extrapolate certain transport services.
12.66 Passenger fares and related statistical data
series could be extrapolated by using ratios that reflect
the historical relationship between passenger fares (inconstant prices) and arrivals and departures. Results

199

should be inflated by using a price index for passenger
fares. Other transport services could be extrapolated
by using ratios of services to various volume aggregates (such as import and/or export volumes) and adjusting for price changes.

TravelDescription and Classiﬁcation
12.67 Travel covers expenditure by residents of one
economy that are traveling in another.16 These expenditures should be classified as business and personal
travel because, in the national accounts, frequently(but not always) the former represents an intermediate expenditure of business and the latter represents
final consumption expenditure of households.17 In addition, an alternative breakdown of travel by productgroup (goods, local transport services, accommodation services, food-serving services, other) may be
identified by the compiler. This breakdown allows for
closer links with other macroeconomic statistics, inparticular the supply and use tables in the national accounts (see BPM6, paragraph 10.95).
Data Sources and Methods
12.68 Four broad approaches could be used tomeasure travel expenditure, and these are summarized in Table 12.3. These approaches could be used
individually or combined. The first approach is basedon the instruments used to pay for travel, and themost common instruments considered are credit
and debit cards. Another approach measures thetotal value of the expenditure including the types ofgoods and services acquired by residents traveling toeconomies other than their own, as well as flows oftraveling residents as recorded at the borders. A third
approach uses partner economy data, and the fourth
approach uses a data model, which may combine all
the aforementioned.
12.69 Some economies use an ITRS as the main
data source to measure travel. However, in some economies, the individual transaction threshold set for an

16

For a complete description of balance of payments travel items,
see Chapter 10 of the BPM6.
17
More strictly, in the case of business travel, the related goods
and services are considered to be consumed for the benefit of theemployer of the traveler rather than that of the traveler.

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Balance of Payments and International Investment Position Compilation Guide

Table 12.3 Estimating the Travel Component
Type of approach

CreditDebit

Instruments
used to measure
expendituresby individuals
traveling outside
their economy ofresidenceEnterprise surveys or an ITRS could be used tomeasure expenditures of nonresidents travelingin the compiling economy and using principally
credit and debit cards, although travelers
checks, foreign currency notes and coins, andbank accounts held with domestic banks could
also be used if relevant.

An ITRS could be used to measure
expenditures of residents traveling abroad andusing principally credit and debit cards, andinformation on prepaid tours and packages,
although travelers checks, foreign currency
notes and coins, and bank accounts held withdomestic banks could also be used if relevant.

Estimates may be required for travel ﬁnanced
by domestic currency acquired abroad by
nonresidents traveling in the compiling
economy or from income earned bynonresidents in the host economy. (Information
could possibly be obtained from surveys of
travelers.) Supplementary estimates may also be
required for travel goods and services provided
to speciﬁc categories, such as students andmedical patients that would cover educationand health-related expenditures, including
goods and services in kind, such as scholarships
and other aid provided to nonresident students.
(Information could possibly be obtained fromsurveys of students or educational institutions orfrom ofﬁcial records.)

Estimates may be required for travel ﬁnanced
from accounts held abroad or earnings acquired
abroad by residents and travel services provided
to speciﬁc categories, such as students andmedical patients that would cover educationand health-related expenditures, including
goods and services in kind, such as scholarships
and other aid provided to students. Suchestimates could be obtained from surveys of
travelers. Alternatively, in surveys of returned
residents, the recourse to the instruments used
for expenditure might be useful to minimize
memory recall effects. Partner economy data
may also be used, in particular, for economies
specialized in certain types of services, suchas health- or education-related services.
(Information could possibly be obtained
through representative ofﬁces, consulates, etc.)

Expenditure bytypes of goods
and services
acquired byresidents
traveling abroad

This approach is typically used in surveys of
nonresidents traveling in reporting economy.
These are mostly applied at the border, but
might also be used at collective accommodationor tourism attractions.
Alternatively, surveys of tourism companies
such as hotels, domestic airlines, restaurants,
etc. could be used if these companies canidentify nonresident expenditure. Those could
be reconciled with surveys of travelers using asimilar type of approach for reconciling sources,
as that used in the Tourism Satellite Account.

This approach would typically be restricted
to surveys of returned residents, either at theborder as they return, or within a household
survey.

Partner economy
data

A partner economys travel debits in respectof the compiling economy could be used tocontrast and check the compiling economys
travel credits visàvis the partner economy.

A partner economys travel credits in respectof the compiling economy could be used tocontrast and check the compiling economys
travel debits visàvis the partner economy. This
is in particular useful in the case of students
or medical patients traveling to partner
economies that are specialized in certain
types of services, such as health- or educationrelated services. (Information could possibly
be obtained through representative ofﬁces,
consulates, etc.)

Data model

Most data models involve assigning a per capita
estimate of expenditures to estimates of thenumber of nonresident short-term travelingindividualstypically obtained from migration
statistics.

Most data models involve assigning a percapita estimate of expenditures to estimatesof the numbers of residents travelingabroadtypically obtained from migration
statistics.

Source: IMF staff.

Services201

ITRS may be too high to properly cover travel-related
expenses.18 Moreover, some travel components suchas personal expenses of short-term workers abroad
are not captured by an ITRS. Persons traveling abroad
now rely less on resident banks for services transactions such as the purchase of traveler’s checks or foreign currency notes. Instead there is an increasinguse of credit and debit cards. In addition, there is anincreasing use of prepaid package tours19 that are paid
for in the economy of the traveler using domestic currency. Generally, these modalities of payment can beeasily captured through the ITRS; however, complementary information (e.g., surveys covering travel
agents) may be needed to properly identify and allocate the amounts by service type. On the contrary,
payment in cash (domestic or foreign currency) carried by travelers is more difficult to capture. Given
the insufficiencies already noted, economies using
the ITRS should ensure supplementary data sources
or models are employed to measure the travel item.

ments of transactions by nonresidents using traveler’s
checks and credit and debit cards could be easily derived from an ITRS. A short investigation could be
previously undertaken to determine the pattern inusing these modalities of settlement by nonresidents
visiting the compiling economy. Very often, nonresidents use credit cards for major transactions, such as
hotel or acquisition of expensive gifts, while cash iswithdrawn from an automatic teller machine forsettlement of smaller expenses. Also, nationals living
abroad may return more or less regularly for vacation or around certain holidays. During their stays,
they may use preponderantly debit cards to withdraw
cash for their current expenses and also for gifts torelatives (personal transfers). If a pattern of spending
and visiting peaks during the year is identified among
the population of visiting nationals, reliable estimates
may be produced for the travel component related todebit/credit card settlements after the part related topersonal transfers has been removed.

12.70 Another problem with the reliance on a strict
ITRS is that it is difficult to determine the breakdown
between business and personal travel. Additionally, an
ITRS needs to be supplemented by other sources toobtain such data as expenditure financed from income
earned in the host economy, expenditure by others onbehalf of the individual traveling abroad, and travel
goods and services provided in kind or on own account.

12.72 Surveys may be used to collect informationfrom tourism businesses that provide services to nonresident individuals. These surveys may have to besupplemented by other sources to obtain such data as
expenditure by short-term nonresident workers, visitors and other short-term individuals traveling abroad
to relatives and friends that do not use services of organized tourism businesses, students, and medical patients as they might behave more as residents in termsof their expenditure patterns. Furthermore, in some
economies, certain groups of individuals abroad (suchas students and medical patients) may be significant.
As the expenditure of these individuals may be substantially different from the expenditure of others, it
may be necessary to conduct separate surveys targetingthese special categories. As an alternative to surveying
tourism businesses, the compiler may use household
surveys to measure the expenditures of travelers.

12.71 In respect of traveler’s checks and credit anddebit cards, the compiler should ensure that data arereported on a gross basis—that is, before the deduction of commissions on traveler’s check sales or commission on transactions. Collection rules should bedesigned to ensure that there is no overlap or duplication of the information captured. When compilingdata on the export of travel services, data on settle18
For example, in the case of EU27, in 2011, frontier surveys
and credit card data are the main sources for compiling thetravel item. Settlement data also play an important role in a few
European Union (EU) member states (in particular, these data areimportant in eastern and central European member states, and in
hybrid data collection systems). However, a survey undertaken in
March–April 2011 of EU member state balance of payments compilers indicated that settlements data are being replaced by direct
reporting systems due to increases in the reporting thresholdpertaining to settlements data.
19
Passenger fares (transport services) may be a component of
package tour payments, in which case the compiler will have tofind a way to properly distribute them between the two service
components.

12.73 An expansion of tourism statistics to include
other short-term individuals traveling abroad that are
not visitors20 is discussed in Chapter 3. When surveys
20

Tourism Satellite Account: Recommended Methodological Framework 2008 defines the “visitor” as “a traveler taking a trip to amain destination outside his/her usual environment for less thana year and for any main purpose (business, leisure or other personal purpose) other than to be employed by a resident company
in the country or place visited.” The “visitor” category covers bothovernight visitors (tourists) and same-day visitors (excursionists).

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Balance of Payments and International Investment Position Compilation Guideof travelers are used as primary sources of information, information could be collected directly on actual
goods and services acquired by individuals abroad. Indirectly, the information on travel-related expenses incurred by individuals abroad may be obtained throughthe instruments used for payment. The former approach is recommended when travel debits are measured by surveying residents upon their return fromtravel abroad, or when travel credits are measured bysurveying nonresidents as they depart from the compiling economy. Surveys of returning residents are
preferred as they are likely to retain appropriate financial records of their trips or are able to provide reasonable estimates. Border surveys are increasingly usedin many economies, in particular where tourism is an
important activity. The range of data collected by such
surveys varies according to the design and frequency.
Generally, such surveys collect information structured
according to the primary purpose of travel (business,health care, education, leisure, other) and categories
of expenses. More details could be added for tourism
purposes—that is, to define the structure of individuals traveling abroad by categories (overnight visitor orsame-day visitor) and their respective expenses.
12.74 Partner economy data (mirror statistics)
could serve as a supplementary source data whencompiling an economy’s travel credits or debits. It is
assumed that at least one of the two partner economies
actually collects “primary” travel data. Very often, statistics on visitor and other short-term individuals traveling abroad numbers by economy of origin and theiraverage expenses compiled by neighboring economies
or economies of frequent destination could be taken
into account. However, the methods of compilingthese statistics may vary from economy to economy
and could range from border surveys to household
surveys. Asymmetries in partner economy data may
occur not only because of different methodology but
also because of other factors such as the sample sizeof surveys, recording intervals, or estimations models. Given these considerations, the mirror statistics
should preferably be used as a supplementary source.
12.75 A data model to measure travel could beconstructed using various data, primarily the numberof visitor and other short-term individuals travelingabroad and estimates of per capita expenditure. Dataon number of visitors and other short-term individuals
traveling abroad are typically available from tourism
statistics. Alternatively, various transport operators,
such as airline and bus companies, may be able to provide partial information on the number of persons
carried inbound and outbound, and from these data
estimates could be derived on the number of nonresidents (visitors and other short-term individuals traveling abroad, to estimate travel credits) and the numberof residents. However, it should be noted that thesedata are not always accurate as the transport operator
may not always collect information on the residence ofthe customer. Furthermore, when collected, the information may relate to the nationality of the customer
and not the residence. Estimates of per capita expenditure could be obtained from occasional surveys of
persons who travel. If necessary, separate data models
may be designed to measure education and/or medical
services based on information from relevant institutions or special surveys (e.g., survey of students).
12.76 Tourism statistics provide a potential alternative data source, which might be used to partly estimate
travel, in particular some of its components. Moreover,data sources used for compiling the tourism satellite
account (2008 SNA), for example, are also likely to be
relevant for balance of payments statistics. However,in order to enable the use of tourism statistics, the differences in terms of the coverage between balance of
payments definitions, on the one hand, and tourism statistics as used in the International Recommendations for
Tourism Statistics 2008 (IRTS 2008) (as well as in Tourism Satellite Account: Recommended Methodological
Framework 2008), on the other, need to be understood.
12.77 IRTS 2008 uses the concept of “usual environment” as an additional criterion to residence. The
concept is designed to exclude from tourism statistics
persons who travel regularly between their place ofresidence and place of work (e.g., border or seasonal
workers), who study (individuals studying abroad formore than one year), or who visit other places as partof their regular life routine, although these places may
be in different economic territories.
12.78 There are also some additional differences interms of the coverage of expenditure between travel(BPM6) and tourism (IRTS 2008) expenditure. Someof the main differences in the BPM6 are as follows:Services• Travel includes imputed values of products (suchas accommodation21) that may be provided free ofcharge. It includes the acquisitions of goods andservices by border, seasonal, and other short-term
workers (i.e., persons in an employer-employee
relationship22 with a unit resident in the visited
economy). It also includes acquisitions by students
and medical patients (as well as their accompanying dependents) away from their economy of residence for a period of one year or more. Tourism
expenditure, as defined, excludes these items.23• Travel excludes purchases of valuables and consumer durables above a customs threshold byresidents traveling abroad (see also Chapter 5
on IMTS). Tourism expenditure, as defined,
includes all such purchases irrespective of thethreshold. Travel also excludes expenditure on
international passenger transport (included
under passenger transport); tourism expenditure
includes such expenses in the case of visitor andother short-term individuals traveling abroad.
12.79 The BPM6, as does the Manual on Statistics
of International Trade in Services 2010 (MSITS 2010),
excludes migrants from its definition of individuals traveling abroad, and tourism statistics similarly
exclude migrants from its definition of visitors. Regarding refugees, following an identified intention tostay in their place of refuge for one year or more, they
are identified as migrants in the BPM6 (paragraph4.128) and in the MSITS 2010 (Annex V, paragraph16), whereas tourism statistics exclude refugees in allcases, as they are considered to be within their usualenvironment.
12.80 To highlight the link between balance of
payments and tourism statistics, the BPM6 andMSITS 2010 include a supplementary item, tourismrelated services in travel and passenger transport.
This supplementary item includes travel expendituresand international transport of visitors—both overnight visitors (tourists) and same-day visitors (ex-21
For example, the imputation for time-sharing arrangements (seeBPM6, paragraph 10.100).
22
The employer-employee relationship is discussed in more details
in Chapter 13.
23
Although the imputed values are excluded from the concept of
tourism expenditure, they are included in the tourism consumption concept.

203

cursionists). It consequently excludes acquisition of
goods and services by the following business-travel
categories: border, seasonal, and other short-term
workers (including crews of ships, aircrafts, oil rigs,
etc. stopping off or laying over)—that is, those in an
employer-employee relationship with a unit resident
in the economy visited, as well as passenger transport
payable by border, seasonal, and other short-term
workers.24
12.81 If statistics compiled on services are to be
used for compiling the tourism satellite account, orvice versa, adjustments will be needed for these differences in coverage. However, it is important to notethat the data sources used for compiling the tourism
satellite account are also likely to be relevant for balance of payments statistics.
12.82 When data from these sources are not available in time to compile series of travel data for themost recent periods, extrapolation methods may be
used. Data models of the type described previously
are often used in extrapolations (and interpolations).
The extrapolations are derived by adjusting the baseperiod estimates for price changes and exchange ratechanges. However, these extrapolations do not takeaccount of changes in expenditure patterns over timeor changes in the market composition of visitors andother short-term individuals traveling abroad—that
is, their economy of origin. The expenditure patternsof visitors and other short-term individuals travelingabroad in any given period would vary substantiallybased on their economy of origin.

Other Services
12.83 Other services include construction; insurance; financial services; charges for the use of intellectual property n.i.e.; telecommunication, computerand information services; other business services; personal, cultural, and recreational services; and government goods and services n.i.e. provided by residents
of one economy to residents of another economy. The

24
The BPM6 and MSITS 2010 also recommend an alternative
presentation of travel, by product, according to the following
categories: goods; local transport services; accommodation services;
food-serving services; and other services. A further breakdown of“travel, other services” into health services and education services isalso suggested.

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Balance of Payments and International Investment Position Compilation Guide

complete list recommended by the BPM6 is set out inTable 12.4 of this chapter.25
12.84 Data sources and methods that could be
used to compile items in other services are describedahead. In addition, a discussion follows on some of
the more complex transactions recorded in these
items—namely, construction, treatment of intellectual
property, foreign exchange services (part of financial
services), operating leasing (part of other businessservices), and government goods and services n.i.e.
Detailed descriptions of compilation of FISIM andinsurance and pension services are provided in Appendices 2 and 3, respectively.

Data Sources and Methods
12.85 Table 12.4 summarizes data sources andmethods that could be used to compile items in otherservices. Depending on the system design, an ITRS
can provide a comprehensive source of many balanceof payments transactions in services and is used insome economies as the main data source. However,in some cases, the individual transaction threshold set for an ITRS may be too high to adequately
cover expenses related to many services. Moreover,the ITRS may have difficulties in ensuring a proper
coverage or classification by service type at the levelof detail required. If an ITRS is used, supplementary
information may often be needed, such as enterprisesurveys and other (official) sources. Whatever approach is adopted, collections should be designed inaccordance with identified information needs.
12.86 In an ITRS, some inherent problems require
attention if the compiler is to measure transactions inother services accurately. Many international transactions in services do not necessarily involve cash payments and merely give rise to entries in intercompany
accounts. Such situations may occur, for example,
when transactions in other services take place between companies in a direct investment relationship.
The compiler should ensure that transactions settled
through these accounts are reported in the system andthat the gross entries giving rise to these transactions
are recorded. Reporters may record certain transac-

25
A full description of each of these items is provided in Chapter 10 of the BPM6, and a more detailed description is provided
in the MSITS 2010. The latter may prove useful for compilers
willing to compile more detailed services statistics.

tions on a net basis—that is, after certain costs, suchas finance charges and commissions, have been deducted. On other occasions, data may be commingled.
For example, data from an ITRS may commingle theamount paid for a security and financial service. Clear
rules are required to ensure that reporters supply dataaccording to balance of payments requirements—that
is, services (and other transactions) need to be separately identified, and provided on a gross basis. Classification of transactions may be a problem as persons
completing an ITRS form may be overburdenedby the level of detail requested in the form. A welldesigned ITRS should address these issues.
12.87 A specialized type of ITRS relevant to measuring expenditures of nonresident government entities and international institutions located in thecompiling economy (government goods and services
n.i.e.) is a survey of banks to report on the value oftransactions passing through accounts of foreign governments and international institutions.
12.88 An enterprise survey can be selective (e.g.,concentrating on important players or a sample ofa particular industry, such as insurance) or broadly
based (e.g., covering all companies that may provide
or use international services). Also, it is important tonote that a large share of companies engaged in international trade in services can be found among
companies undertaking other international businessactivities. Chapter 3 discusses the enterprise survey
covering transactions in other services. To overcome
problems inherent in the enterprise survey, the compiler should set an objective of obtaining complete
coverage of the different types of services, and develop a clear set of reporting rules to avoid omission
or duplication of data. Good survey design, which is
discussed in Chapter 2, is thus essential.
12.89 Official sector data (essentially government
accounting records) could be used to measure expenses of diplomats and other representatives abroad,defense expenditures abroad, and expenditures forother services abroad.
12.90 For measuring the expenditures of nonresident government entities and international institutions located in the compiling economy, partner
economy data obtained from balance of paymentscompilers in partner economies or surveys of foreignembassies and international institutions could beServices

205

Table 12.4 Compilation of Items in Other Services (concluded )Description

Source and method of compilation

Maintenance and repair
services n.i.e.

An enterprise survey or an ITRS could be used to compile this item. Special attention
should be made to distinguish these services from the repair and maintenancerecorded under the construction activity or those related to computers included
under computer services. See relevant survey model forms in Appendix 8.

Construction

An ITRS or enterprise survey could be used to compile this item. If an ITRS is used,particular care should be taken to measure transactions involving bank accountsof construction companies in the host economy, because some of these companies
may meet the criteria for treatment as residents. More generally, a survey collecting
data on construction could jointly collect information on foreign direct investment
and other nonresident-resident transactions. Special note should be taken of thetreatment of construction activity, which is discussed in paragraphs 8.61–8.63 ofChapter 8 and further in this chapter

Insurance services

An enterprise survey or an ITRS could be used to obtain the underlying premiums
and claims data necessary to compile this item. The most comprehensive data
could be obtained from surveying resident insurance companies, in particular for
estimating the exports of insurance services and for estimating reinsurance imports
and exports. Such surveys would collect data on the nonresident policyholders
share in premiums, claims, and reserves. However, the same information will not be
possible for the import of insurance services where the providers of the insurance
services are nonresident to the compilers economy. Thus estimates have to be basedon ratios available from the domestic insurance sector, information derived from
ITRS, or partner economy data, as possible. Data from an ITRS will capture premiums
paid and claims received on a cash basis. See Appendix 2, Insurance Transactions andPositions, for a discussion of how relevant source data are manipulated in order toderive estimates of insurance services.

Financial services

An ITRS or an enterprise survey could be used as a primary source to compile theﬁrst item. Care should be taken to ensure that ﬁnancial service fees are reported
separately from underlying ﬁnancial transactions, particularly if an ITRS is used.
If primary source data are unavailable, this item could be estimated by applying
appropriate ratios to various measures of ﬁnancial activity involving nonresidents. If
signiﬁcant, the collection of supplementary information will probably be necessary
to derive estimates of foreign exchange services when the service element is implicitin transactions rates. The treatment of these services is described further in thischapter. Compilation of the FISIM estimate requires detailed information on position
data on loans and deposits, by maturity structure and currency, as well as theidentiﬁcation of relevant interest rates used by ﬁnancial corporations. A descriptionof the compilation of FISIM is presented in Appendix 3.

Explicitly charged and otherﬁnancial services, except FISIM
Financial intermediation services
indirectly measured (FISIM)

Charges for the use of
intellectual property n.i.e.

An enterprise survey or an ITRS could be used to compile this item. The breakdown ofthese services and their treatment is described further in this chapter.

Telecommunication, computer,and information services

An enterprise survey or an ITRS could be used to compile this item. Care should betaken to ensure the gross reporting of transactions.

Other business services:

An ITRS or an enterprise survey could be used to compile these items. For thecompilation of research and development services, the discussion in Research andDevelopment in this chapter is relevant. For leasing, it is important to note thedifferent treatments of ﬁnancial and operating leasing.

Research and development
Professional and management
consulting services(The treatment of ﬁnancial leasing is discussed in Chapter 10.)

Technical, trade-related, andother business services
Operating leasing
Personal, cultural, and recreational
services; audiovisual and related
services; other personal, cultural,and recreational services

An ITRS or an enterprise survey could be used to compile these items.

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Balance of Payments and International Investment Position Compilation Guide

Table 12.4 Compilation of Items in Other Services (concluded )Description
Government goods andservices n.i.e.

Source and method of compilation
For debits, most information could be obtained from an ITRS or from ofﬁcial sources(as discussed in paragraphs 6.12–6.14 of Chapter 6). For credits, information could
be obtained from balance of payments compilers in partner economies, surveys ofembassies (see Collections on Goods and Services Statistics in Chapter 3), an ITRS,
or a data model. Further in this chapter is presented additional information on thecompilation of this item.

Source: IMF staff.

used. Alternatively, some form of estimation based ona data model may be used.

Construction
12.91 Construction should be recorded in the balance of payments when a company undertakes construction activity in an economy other than the one
in which it is resident, and in which the activity carried out is not substantial enough to recognize it as aseparate institutional unit (see also Chapter 8). Establishing the residency of the construction companies(or its related company) is thus the first step in determining the proper treatment of transactions typicalof a company engaged in construction activity in an
economy other than the one where its headquarters
is located.
12.92 A construction company established in
one economy may undertake the construction oflarge-scale projects (e.g., plant, buildings, bridges)
in another economy either through a direct investment relationship (creating a foreign branch in that
economy or through subsidiary or associate companies in that economy), or by directly undertaking the work itself. If the construction company
undertakes the work itself (via an unincorporatedsite office, for example), its activities may be regarded either as a direct investment activity or as anexport of services by that company, depending on
circumstances.
12.93 If certain criteria are met the work undertaken is to be treated as having involved the creationof a separate institutional unit—a branch—resident in
the economy where the activity is being carried out,
which is a direct investment enterprise (DIENT). Suchcriteria (as recommended in the BPM6) could be as
follows:(1) The project extends over a period of at least
one year.
(2) The maintenance of a complete and separate
set of accounts for the activity (i.e., income
statement, balance sheet, transactions with theparent company, etc.)(3) The activity being subject to tax in the hosteconomy(4) The existence of a substantial physical presence(5) The receipt of funds for its work for its own account, and so forth.
12.94 If some of the aforementioned criteria are
not met, the activity is to be treated as an export by
the construction company. The decision is based on
the weight of the evidence for a set of criteria and not
on any single criterion; for example, it would be very
difficult to identify a branch if for the construction activity a separate set of accounts cannot be prepared or
maintained. Construction activities involving major
projects (bridges, dams, power stations, etc.) that are
carried out through unincorporated site offices, inmany cases, meet the criteria of a DIENT and thus aretreated as part of the production of the host economy,
not as an export of services to that economy. Chapter 8
discusses the residency aspects together with a comparative treatment of the most common transactions
specific to the construction activity in both cases,
first, where the company conducting the construction project is a resident of the host economy (direct
investment relationship), and second, where the construction activity is conducted by a nonresident company in the compiling economy.
12.95 The value of construction recorded in the balance of payments should equal the gross value of output
by the producing company. It should include the value

Servicesof all goods and services used as inputs to the work,
other costs of production, and the operating surplus
that accrues to the owners of the construction company.
12.96 As discussed in Chapter 10 of the BPM6, it
is recommended that construction be disaggregatedinto construction abroad and construction in thecompiling economy. Construction abroad includes thegross value of the construction work for nonresidents
by companies resident in the compiling economy (export of construction, credits). The goods and services
acquired from residents of the host economy by thosecompanies are recorded in the balance of payments ofeconomy of residence of construction company underconstruction abroad debits (i.e., construction-related
expenditure in the host economy by the company
conducting the project26).
12.97 Construction in the reporting economy includes construction work for residents of the compiling economy by nonresident construction companies(import of construction, debits). The goods and services acquired by the nonresident construction company from residents of the compiling economy for
projects in the reporting economy should be recorded
as construction in the reporting economy credits(whether these goods and services were previously
acquired by the residents from within or outside thecompiling economy). As part of the inputs into theconstruction work, the construction company may
choose to purchase some of the goods and services in
its home economy, in which case these still constitutepart of the value of construction. However, because
they have not been purchased from residents of thehost economy, they are excluded from goods and services purchased in the host economy and, equally important, will not be recorded as debit transactions27 by
the host economy.
26

Includes expenditures on goods and services that were procured
from the host economy where the construction activity is taking
place. Imported goods and services from a third economy arerecorded as imports. Goods and services brought directly into thehost economy by the construction company are not balance of
payments transactions.
27
It should be noted that the merchandise trade statistics will generally include the value of goods imported into the host economy
for use on the construction site as imports under the generaland special trade systems. In the case of goods purchased by theconstruction company in its home economy and shipped to theconstruction site, an adjustment must be made to the merchandise trade statistics so as to exclude the value of any such goods
from the balance of payments—goods component.

207

12.98 Depending on the method of data collectionused, it may not be possible to identify separately thegoods purchased from residents of the home economy
and from those of the host economy. For practicalreasons, the compiler may need to estimate a breakdown, or otherwise attribute all goods purchased
to either the host or the home economy of the construction company. Also, it may not always be possible to identify the purchase of goods and services
separately from labor costs (which should in principle
be recorded under primary income if an employeremployee relationship is established—see Chapter
13). In this case, the compiler will need to estimate
a breakdown or, alternatively, allocate all costs either
as goods and services or as compensation of employees (for employees that are residents in the host economy). Where a nonresident construction company
employs workers from third economies for projects in
the host economy, their salaries will not be recorded
as compensation of employees by the host economy
since it is intended that they be employed for the duration of the construction project, which by definition
should be less than one year. Both subcomponents ofconstruction cover the work performed on construction projects and installations by a company in locations outside the economic territory of the company.
12.99 Finally, it is important that the compiler
ensures that the gross flows giving rise to the credit
and debit aggregates for the construction services
are recorded. In other words, the construction credits would result from summing up the credit flows
from construction abroad and from construction in
the compiling economy. Similarly, the construction
debits would consist of debit entries from construction abroad and from construction in the compiling
economy.
12.100 Example 12.1 presents the recording of
construction. Table 8.7 of Chapter 8, which shows
the range of balance of payments entries that should
be recorded for construction activity, should be consulted for additional details.
12.101 As discussed in paragraphs 10.103 of theBPM6, if the external operations of a construction
company are substantial enough, a separate branch,resident in the host economy, will be constituted.
This will usually give rise to a direct investment relationship between the parent and the branch. The

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Balance of Payments and International Investment Position Compilation Guide

Example 12.1 Recording of Construction Activity in Balance of Payments

This example assumes information is available to distinguish all cost-related components and attribute thebalance of payments transactions as appropriate. A company from economy A undertakes a construction
project in economy B for a period of six months1. The total value of the project is 34,500 units of domestic
currency, and the following costs are incurred by the construction company:
Materials purchased from residents of economy A

18,0002

Materials purchased from residents of economy B

1,000
3

Acquisition of materials from residents of economy C

2,000
2

Services procured in economy B (including equipment rental)

3,000

Wages and salaries paid to residents of economy A4

4,500

Wages and salaries paid to residents of economy B

1,000

Total cost of inputs

29,500Gross operating surplus accruing (proﬁt)

5,000

Total gross value of construction work

34,500

The gross value of construction work is calculated as the sum of the inputs into the production process(goods and services consumed as inputs, and labor) and the gross operating surplus accruing to the producing company. Thus, the value of construction is 34,500 units. The following transactions should be recordedin the balance of payments of economies A and B:
Economy A(construction abroad)
Current accountCreditEconomy B(construction in host economy)
Debit

CreditDebit

4,00064,000634,500

1,000

1,000

Net incurrence ofliabilities

Net acquisition ofﬁnancial assets

2,0005

Goods
Services
Construction services

34,500Primary income
Compensation of
employees
Financial accountNet acquisition ofﬁnancial assets

Net incurrence ofliabilities

Other investment
Currency and deposits

27,5005,000

7Reserve assets

Currency and deposits

34,500

1
This example also covers the case of construction work (excluding repairs to existing premises) for an embassy undertaken by aresident unit of the economy where the foreign embassy is located (see BPM6, paragraph 10.177).
2
This is a transaction between a resident and a nonresident, as the company from economy A is not resident in economy B.
3
These imports are not to be recorded in the merchandise trade of the economy B, as they are imported by a nonresident unit. They
are, however, recorded as imports by the economy A.
4
Wages and salaries are paid directly in their accounts in economy A.
5
Covers acquisition of goods from economy C.
6
Includes materials purchased in economy B (1,000) and services procured in economy B (3,000).
7
It is assumed that the work is undertaken for the government of economy B and paid out of reserve assets.

Services

treatment and measurement of construction activity
in the balance of payments in respect of direct investment relationship is discussed further in Chapter 8.

Financial Services
12.102 As stated in Chapter 10 of the BPM6, financial services covered under this heading refer tofinancial intermediation, auxiliary services, and otherfinancial services, other than those associated with insurance and pension funds. These services are almost
exclusively provided by banks and other financial corporations, because of the usually stringent supervisionassociated with their provision. Conversely, financial
institutions rarely produce other services, a fact that is
important in data collection.
12.103 Financial services may be charged for explicitly or implicitly, and some transactions in financial assets may involve both explicit and implicit
charges (for more details, see BPM6, Chapter 10). In
the case of financial intermediaries, the funds necessary to engage in such activities are obtained not only
by taking deposits but also by issuing bills, bonds, orother securities. These funds, as well as own funds,
are used to acquire mainly financial assets not only bymaking advances or loans to others but also by purchasing bills, bonds, or other securities. As mentioned
in Table 12.4, care should be taken to ensure thatcharges for financial service are reported separatelyfrom underlying financial transactions, particularly if
an ITRS is used.
12.104 For many financial services, explicit fees
are charged, and thus estimation does not require any
special calculation. They may be derived either froman ITRS or from bank statements. Surveys on financial claims on and liabilities to nonresidents may alsocollect the explicit fees charged on financial transactions in these instruments (see Appendix 8, model
form 14).
12.105 Implicit charges for financial services
have to be measured indirectly. Ignoring the implicit
charges for financial services may lead to understating the value of such services and also distorting
related financial flows (investment income or financial account recordings). The most common implicit
charges result from (1) estimation of margins on buying and selling transactions; (2) expenses related toasset management that are deducted from property
income receivable, in the case of asset-holding com-209

panies; or (3) margins between the interest rate andthe reference rate on loans and deposits (FISIM).
A description of these services is provided in the relevant section of Chapter 10 in the BPM6. The subheader ahead describes the treatment of financial
services associated with transactions in financial instruments having a spread between their buying andselling prices. The treatment of FISIM is described inAppendix 3.

Margins on Buying and Selling
Transactions—Foreign Exchange Services
12.106 This type of service is often related to theactivities of dealers in financial instruments such as
foreign exchange, shares, bonds, financial derivatives, and other financial instruments. The dealers’charges often are included indistinguishably in the financial transactions to which they relate—that is, theamounts actually paid or received. The service chargethat is to be separated from the actual amount paid
for the financial transactions is calculated as the difference (margin) between the reference price and thedealer’s buying price at the time of purchase, and thedifference between the reference price and the dealer’s
selling price at the time of sale. The reference price isusually a mid-price (i.e., an average—see ahead) between the buying and selling prices.
12.107 Debt securities such as bills and bonds areoften traded on organized markets (see Chapter 10).
A service charge is levied when securities are acquired
and sold by brokers/financial institutions. The service
charge represents in each case the margin added tothe estimated market value of the security that makes
up the purchase price (or ask price) or the price offered to the seller (the bid price). Prices of securities
may change rapidly, and to avoid including holding
gains and losses in the estimation of the service margins, it is important to calculate the margins on sales
and purchases in terms of mid-prices. The mid-priceof a security is the average at a given point in time
between the bid and ask price. Thus the margin on
the purchase of a security is one half of the difference
between the bid and ask prices of the security at thetime of the purchase, and the margin on the sale is theother half of the difference between the bid and ask
prices of the security.
12.108 As stated in Chapter 3 of the BPM6, transactions denominated in foreign currencies should be
converted at midpoint rates applicable at the times of210

Balance of Payments and International Investment Position Compilation Guide

the transactions. When a transactor sells or buys foreign currency to or from a foreign exchange dealer (orbank), the dealer will buy at the buy rate and sell at thesell rate. Dealers derive income from the difference(or spread) between buy and sell rates. The BPM6 recommends use of the midpoint rate because the spreadreflects the provision of services. If actual buy and sellrates were used to measure transactions, a distortion
could be recorded in balance of payments numbers.

rency (financial services exports of 3 units to C), thefollowing transactions should be recorded in the balance of payments of economy A:

12.109 For example, a dealer sells 100 units of foreign currency to importers (to pay for imports) for
101 units of domestic currency, buys 100 units of foreign currency from exporters for 99 units of domestic
currency, and thereby makes a profit of 2 units of domestic currency. If importers and exporters converted
their international trade transactions by using therelevant sell and buy rates, the following transactions
would be recorded in the balance of payments:

Financial account
Other investment
Currency and deposits
102
Of economy B*
Of economy C**
97*It is assumed that economy B purchases the foreignexchange with domestic currency that is held in accounts
with banks in economy A.
**It is assumed that economy C deposits the domestic
currency received into accounts with banks in economy A.

Goods
Net errors and omissions

Credit
99
2

Debit
101

12.110 In the foregoing example, it is assumed thatthe dealer converted transactions at the midpoint rate;
if the dealer also used the buy and sell rate, the offsetting item would be recorded as a transaction in external financial assets. Nevertheless, an apparent deficit
in goods would be recorded in spite of the fact that theeconomy paid, in foreign currency terms, exactly thesame amounts for both imports and exports.
12.111 The problem is avoided if both the exporterand importer convert transactions by using the midpoint rate.
Goods
Net errors and omissions

Credit
100

Debit
100

12.112 If foreign exchange dealers and their counterparts are residents of different economies, service
transactions equal to differences between actual buy
or sell rates and the midpoint rate should be recordedin the balance of payments of transactor economies.
For example, if a foreign exchange dealer in economy
A sells 100 units of foreign currency to a resident of
economy B for 102 units of domestic currency (financial services exports of 2 units to B), and a dealer in
economy A buys 100 units of foreign currency fromresidents of economy C for 97 units of domestic cur-Financial services
Provided to economy B
Provided to economy C

CreditDebit

2
3
Net acquisitionof ﬁnancial
assetsNet
incurrence ofliabilities

12.113 Dealers may also earn profits because theytake speculative positions. For example, they may buy
and hold currencies because they expect the value torise. However, this speculative profit is capital in nature and should not be recorded as income.
12.114 The direct collection of information on balance of payments transactions attributable to foreignexchange trading may be difficult. Resident consumers of the services are unlikely to know the values of
those services implicitly purchased from nonresident
dealers, and, in many cases, resident dealers will be
unable to supply information on services provided tononresidents. A data model, which would enable thecompiler to calculate estimates of foreign exchange
services by multiplying the average spread between
midpoint and buy/sell rates by the volume of foreignexchange transactions with nonresidents, may haveto be used. Information on spreads could come fromdiscussions with dealers. Information on volumes offoreign exchange transactions could be obtained either from the institution responsible for supervisingand regulating the foreign exchange market or frommarket participants. The compiler may also consider
consulting the statistics collected by the BIS from
central banks on the triennial global survey on foreign exchange and derivative market activity.28 The
28

The objective of this survey is to obtain information on the sizeand structure of the foreign exchange and derivative markets. The
most recent survey was carried out in 2010, and the BIS has announced its intention of coordinating the ninth survey in 2013.

Services

frequency of the BIS survey is relatively low; however, it
could provide useful information as a reference point.
12.115 When a resident dealer transacts with a nonresident other than a dealer, a financial service credit
entry should be recorded. When a nonresident dealer
transacts with a resident other than a dealer, a financial
service debit entry should be recorded. When a foreignexchange transaction occurs between a resident dealer
and a nonresident dealer, transactions may occur atthe midpoint between buy and sell prices, with neither
dealer selling services to the other. At other times, one
dealer will act as the price-maker (producer) and theother will be a price-taker (consumer). In economies
where such transactions are significant, the compiler
should endeavor to identify separately those transactions in which the resident dealer is the price-maker(service credits are recorded) from those in which thedealer is the price-taker (service debits are recorded).
12.116 In practice, many transactions in balance of
payments recordings may be reported at buy and sellrates; thus, errors are introduced into the accounts.
Such errors may not have a significant impact in thecurrent account unless the economy is a major provider of foreign exchange services to nonresidents.
However, in the financial account, such errors could
have a significant impact in economies where theturnover of transactions is high. Therefore, the compiler should examine reporting practices and makeadjustments to the accounts (or publish findings)
when serious misreporting occurs.

Charges for the Useof Intellectual Property
12.117 Intellectual property products are largely
the results of research and development, computer
software and databases, and entertainment, literary,or artistic originals.29 Intellectual property products
29

As indicated in the 2008 SNA, paragraph 10.98, they may also
result from mineral exploration and evaluation, but in the vast
majority of cases such products are not subject to internationaltransactions. Such exploration transactions are often by nature
resident-resident (i.e., a notional direct investment enterprise established in the host economy acquiring from a resident of the hosteconomy the rights to use the results of mineral exploration andevaluation). In some cases, yet, the residential status of the mineral
exploration service provider may not be known (e.g., geologists
tend to travel around the world for relatively short periods of time).
In general, services incidental to mineral prospecting and explorations can give rise to international transactions; these are usually
recorded under Technical, trade-related, and other business services(see BPM6, paragraph 10.152, or MSITS 2010, paragraph 3.245).

211

often are subject to substantial international trade.
Commonly the international flows relate to copies
of intellectual property products, such as packaged
software, and musical and film recordings (including
products provided over the Internet; see e-commerce
under the “Travel” section of this chapter) or the services provided by them, but trade in originals,30 suchas research and development, can be important. Given
their growing importance, ensuring the accurate measurement of exports and imports of intellectual property products is essential.
12.118 The BPM6 records transactions in originals and copies of intellectual property products andrelated services in the goods and services account.
Chapter 10 of the BPM6 describes the categories inwhich they are recorded, and Table 10.4 of the BPM6
lists the intellectual property products by major categories and indicates their treatment according to thelicensing type and/or whether the ownership rights
are transferred. This breakdown indicates whether thepayments/revenues related to the intellectual products
are treated either as charges for the use of intellectual
property services, other relevant services (e.g., computer or audiovisual services), capital account transactions, or transactions in goods (e.g., noncustomized
software products provided on physical media).
12.119 One of the most important sources for estimating payments and other related charges for the useof intellectual property products is business surveys(collected as license fees, royalties, and other fees undervarious licensing agreements). If relevant, the survey
may be designed to collect data separately on various
types of licensing agreements, such as unilateral licensing, cross licensing,31 or patent pools.32 All types involvean agreement by the owner of a patent (licensor) toallow another party (licensee) to use, or reproduce andsell a patented invention without transferring the ownership. In the context of economies’ experience withdata collection in the framework of global production,
the globalization survey for multinational companies

30

Originals and copies of intellectual property products are introduced as distinct products.
31
Cross licensing agreements involve an exchange of two or more
patent portfolios and are typically used to allow the mutual useof patents by multiple patent holders in order to secure freedomof operation. Neither party pays monetary royalties to the otherparty, the aim being to create a barrier to entry for new entrants.
32
Patent pools typically consist of the collection of patents required to offer a product or service.

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Balance of Payments and International Investment Position Compilation Guide

conducted by Organisation for Economic Co-operation
and Development (OECD) economies is considered asuitable source for international transactions to be reported under charges for the use of intellectual property, if it provides separate data on international flows
of intellectual property products.
12.120 Payments for the acquisition of intellectual property products under a license to use or to
reproduce and/or distribute may be made in one
single (large) payment, in several installments overthe period of contract, or in a large initial payment
followed by a series of small payments in succeeding years. The recording of payments should follow
the substance of the license agreement in terms oftime for recording (see BPM6, paragraph 10.139).
In practice, it may be feasible to record the payments only when they are made. The recording ofsuch payments in balance of payments would be as
charges for the use of intellectual property, except
for computer, audiovisual, or other similar intellectual property when the license to use is included in
the product sold (i.e., sold to consumers with no reproduction/distribution license attached to it). The
latter are recorded under the relevant goods or services items (e.g., mass produced computer softwarewith right to perpetual use should be included undergoods; downloaded or online use of computer software should be included under services (see BPM6,
Table 10.4, for more details).
12.121 When the indications are that the ownership rights are transferred as well, the recording oftransactions is different (see ahead). The recording
is further complicated by the fact that some of theintellectual property products, such as software, canbe recorded either as goods or services. Also, capital
account transactions involving the acquisition anddisposal of marketing assets,33 for instance, can be difficult to separate from services transactions recording
charges for the use of intellectual property. It is thus
recommended that business surveys on services cover
all flows related to transactions in these products in acomprehensive manner. Depending on its relevancefor the economy, separate surveys by type of intellectual property products may be undertaken (i.e.,
33
Marketing assets include brand names, mastheads, trademarks,logos, and domain names.

separate surveys for computer, research and development, or audiovisual, as such industries have a completely different functioning).
12.122 The information required for the compilation of related flows can also come from other sources,
including customs statistics or the ITRS (depending
on its design). The compiler should be mindful of thecoverage of each source and avoid double counting
where sources overlap.
12.123 The breakdown of the main types of intellectual property products internationally traded follows the EBOPS classification described in the MSITS
2010. The treatment of each of the subcomponents is
as follows.
12.124 Franchise and trademark licensing fees
generally cover all payments and charges for the use of
marketing assets,34 most notably trademarks and franchises. The charges related to trademarks cover boththe initial fee and annual fees for the domain nameregistration for the Internet, as applicable. They also
include fees for sponsorship of related events if the fee
is for the right to use the logo or trademark. For example, a sponsor of the Olympics would include the payments of sponsorship fees if this conveys the right touse the Olympic logo, in advertising, or to place sucha trademark on its products. Generally, payments for
franchise and trademark licensing include an aspectof property income (e.g., putting a nonfinancial, nonproduced asset at the disposal of another party) besides the service itself. In practice, the entire payment
would be treated as a charge for the use of intellectual
property unless additional information is available toallow the breakdown.
12.125 If the ownership rights are transferred (i.e.,
for existing logos, domain names, or trademarks), thebalance of payments records the transactions as acquisition/disposals of nonproduced, nonfinancial assets in the capital account.
12.126 Licenses for the use of outcomes of researchand development cover fees and charges for the useof proprietary rights arising from research and development. In the BPM6, research and development

34

With reference to the rights to sell products under a particular
trademark, brand name, or signature.

Servicestransactions are recorded either as charges for the useof intellectual property or research and development
services. The research and development component
that is part of the former relates to licenses to reproduce and licenses to use outcomes of research anddevelopment. In practice, it may be difficult to differentiate all payments for licenses to reproduce from thesale of proprietary rights (research and development
services), as in some cases the former will represent
sales of proprietary rights.
12.127 Licenses to reproduce and/or distributecomputer software cover the charges for the authorized reproduction and/or distribution (through licensing agreements) of produced software originals.
For example, a manufacturer pays for the right to include the software on the computers that it produces,in which case the payment would be a license to reproduce and/or distribute provided by the owner ofthe original software and recorded in balance of payments as charges for the use of intellectual property.
But a license to distribute does not cover the sale ofa copy of a computer software package that is purchased by an individual or company for individualuse. The sale of the software (customized) for individual or personal use is recorded in computer services. Mass-produced, noncustomized software soldon physical media with the right to perpetual use isincluded under goods.
12.128 Licenses to reproduce and/or distributeaudiovisual and related products, which cover two
product categories: (1) audiovisual and related services and (2) other related products, such as original
works of authors (e.g., translation rights), painters,
sculptors, and so forth, other than those relating to
products of an audiovisual nature. The first categoryof products covers fees and charges for the authorized
reproduction and/or distribution, through licensing agreements, of produced audiovisual originals or
prototypes (e.g., cinematographic works and soundrecordings, including drama performances, musicalperformances, sporting events, etc.). Also included
are rights relating to the reproduction and/or distribution of recordings of live performances on radio,
television, cable, and satellite broadcast.
12.129 In the case of major events, such as the
Olympics, the payments for the rights to broadcast it

213

live often extend over several years prior to the event.
However, the cumulative amount of the prepayments
made with the institution responsible for the organization of the event will be recorded under the charges
for the use of intellectual property during the period
in which the event is actually taking place, the individual payments made over the prior-to-event years
being recorded under trade credit and advances.
12.130 Retransmission rights for sport events arealso covered under this heading. However, licenses
to use audiovisual products that cover, for example,
transactions in audiovisual products provided on
physical media (CDs, DVDs, etc.) and other audiovisual services will be separately recorded as transactions
in goods (CDs, DVDs carrying the right to perpetualuse) or audiovisual and related services, recordingtransactions such as fees to actors (unless employeesof the company making the payments), payments toencrypted television channels, and so forth.
12.131 Statistics on international transactions related to intellectual property services are difficult toseparate from other related activities. In particular, thearrangements for intragroup services may sometimes
entail transferring goods or intangible property. In
some cases, such as know-how contracts containing aservice element, it may be very difficult to determine
where the exact border lies between the ownershiptransfer and licensing of intellectual property.
12.132 Exploiting patents or other intellectual
property products via licensing generates importantcross border transactions between various institutional units, much of these flows reflecting transactions among affiliated companies located in different
economies. This is one of the areas posing considerable statistical challenges because the monetary transactions in the intellectual property products are rarely
recorded by either party, either implicitly or otherwise. It should also be noted that in the presence ofcross licensing agreements, only net figures can bederived (often zero). Where the phenomenon is significant, the compiler should attempt, as possible, toinput values for the gross flows using available data on
fees charged to third parties.
12.133 Depending on the modality of conveying
the rights from one party to another, either entirely
or via a license to use or reproduce, a number of214

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possibilities for recording the transaction arise. Mostoften, the following cases35 are encountered:• Provision of access to the intellectual property
products through a license agreement between
the provider and the recipient in exchange for a
fee that is observable in monetary terms; theseflows should be recorded in the balance of payments under the charges for the use of intellectual property products with a counterentry
under financial account.
• Provision of license to reproduce without a visible fee, either by (1) the parent to a foreign subsidiary with the expectation of receiving property
income in the future or (2) the foreign subsidiary
to the parent in return to previous foreign direct
investment; in both cases, the estimated value of
expected fees should be recorded under charges
for the use of intellectual property and the counterpart transaction under the direct investment
equity capital.
12.134 Accounting for international flows related to intellectual property products poses many
challenges, including difficulties in determining the
economic ownership of intangible products. A particular case could be, in the context of multinational
companies, diverting the production and management of licensing of such products to subsidiaries
located in other economies to maximize their revenues. Moreover, the flows between affiliated companies may be partially or entirely missing fromfinancial reports, and the values of such records may
not necessarily reflect the market value of the companies involved in the flows, leading thus to underestimated values.
12.135 In the case of flows between unaffiliatedcompanies, records may exist in cases of sales or leasing, but due to their intangible nature, these products
are not always tracked and registered in customs,banking, and similar administrative data, and may
also not be evaluated at market prices. The OECD’s
publication Handbook on Deriving Capital Measuresof Intellectual Property Products treats in more detailstatistical challenges related to movements of intellectual property products between affiliated companies

35

More details are covered in the OECD’s publication Handbook
on Deriving Capital Measures of Intellectual Property Products.

in different economies. However, further research at
the international level to clarify the existing standards
is needed, and the Task Force on Global Production
is currently working on developing some guidance inthe field.

Research and Development
12.136 The internationally recognized standards
for the collection and use of research and development statistics are set by the Frascati Manual: Proposed Standard Practice for Surveys on Research andExperimental Development (Paris: OECD, 2002).
These standards are further developed in the OECD’s
publication Handbook on Deriving Capital Measures ofIntellectual Property Products, which follows the 2008
SNA line, introducing for the first time the expenditures on research and experimental development ascapital formation. The balance of payments adopted abroader notion of research and development services
that encompasses the Frascati Manual’s research anddevelopment (the outputs of research and development as treated by 2008 SNA) and technical services
that may also give rise to patents (e.g., other testingand product development activities that may giverise to patents). Further details on the breakdownof this product category are provided in the MSITS
2010 (paragraphs 3.237–3.239) following the EBOPS
classification.
12.137 Valuation of research and development
should take into account all expenditure undertakenin the process of production. Since much of the research and development is carried on own account,by convention, the best measure for its valuation is atcost, unless the market value is observed.
12.138 Surveys specifically designed to capture research and development activities that may be undertaken by both market and nonmarket performers are
one of the most important data sources for estimating international trade in these services. The surveys
identify the transfers of funds to/from abroad related
to the performance of research and development andcould in principle identify the economic nature ofthese transfers. Other source data could be industryspecific surveys targeting data from specialized business companies on their revenues from exports, forinstance. Companies whose main activity is different
from research and development can be surveyed separately using questionnaires that would cover, among

Servicesother information on their research and development, exports and imports. However, research anddevelopment surveys may fail to capture companies
that import research and development services but do
not carry out research and development themselves,and companies that own (and potentially export andimport) economic rights to outputs of research anddevelopment they did not develop themselves (e.g.,patent trolls).
12.139 General trade surveys covering all services
would, however, capture these activities, provided thesurvey clearly identifies the activities and related external flows at the desired level of detail.
12.140 In many economies, an important segmentof research and development is covered by public research organizations, including universities, which
may be classified in the government or nonprofit sectors. Specific surveys could be designed to collect dataon international trade in research and development.
At present, most research and development surveys
do not include questions on payments (domestic orinternational) for the transfer of economic ownershipof research and development outputs carried out inthe past.
12.141 Depending on its design, the ITRS would
also capture research- and development-related
flows. In this context, it is important to distinguishthe payments for a transfer of economic ownershipof research and development outputs (research anddevelopment services), and charges for the use of
research and development outputs (classified undercharges for the use of intellectual services).
12.142 Given existing shortcomings in the currently available data sources for international trade
in research and development services, the compiler
may undertake supplementary studies or cross sourcecomparisons to improve the estimates.

Other Business Services: Operating Leasing
12.143 Paragraphs 10.153–10.157 in Chapter 10 of
the BPM6 describe the distinctive features of operating leasing. Leasing is an important source of financefor many businesses. Distinguishing operating leasingfrom financial leasing is important because the former relates to payments for services whereas the latter is a purely financial transaction. It is important toconsider the terms and conditions of operating leases,215

as in some cases they may closely resemble a financial
lease (leases that last for all or most period of the expected service life of the underlying asset, and where
the lessee assumes the risks and rewards of ownership,such as maintenance costs). In these cases the transactions should reflect the economic, rather than legal,
reality. Although similar, a financial lease is seen as thesale of a product for a loan, and therefore the transactions concerned are excluded from services. The treatment of financial leasing is discussed in Chapter 10.
12.144 Using the ITRS as source data may not be
sufficient to distinguish the operating leases from financial leasing in estimating the cash flows related toleases. In the case of operating leasing, the lessee does
not acquire the economic ownership of the underlying assets. Consequently, the lessee’s balance sheet
does not show any assets or liabilities in respect to thelease contracts; the lessee simply acquires the right touse the underlying assets, reflected by lease payments(operating lease service).
12.145 Further distinctions from operating leasing
should be made in the following cases:• Rental of buildings by international organizations, embassies, and so forth (included in government goods and services n.i.e.)• The leasing of telecommunications lines or capacity (included in telecommunications services)• The rental of mobile equipment (ships, aircrafts,etc.) with crew (included in transport)• Rental of dwellings for accommodation and vehicles to nonresidents during their stays in economies other than their economies of residence(included in travel)• License payments for the right to use intangible
assets, such as software and intellectual property,
are included under specific headings (included incomputer services, charges for the use of intellectual property n.i.e., etc.)• Rent of land and other natural resource lease(included in other primary income); the allocation of the payment for the leasing of dwellings with land, when there is no objective basis
for splitting it between rent on land (primary
income) and rental on the dwellings (operatinglease or government goods and services n.i.e. ifleased by international organizations, embassies,

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and so forth), is done in the favor of the component with the highest value. More elaboration
on rent can be found in Chapter 13, paragraphs
13.98–13.104• Marketable operating leases may create new contracts (assets) when the right can be transferredor subleased; in such cases, the lessee sells theright and thus realizes the price difference (included in capital account—contracts, leases, andlicenses).
12.146 The correct identification of the type oflease covered by the terms of contracts of businesscompanies is essential. If an enterprise survey is used,care should be taken not to overlap with the information already captured through ITRS.
Mobile oil rigs and ﬂoating production,
storage, and off-load vessels (FPSO)

12.147 The hiring of (offshore) mobile oil drillingrigs and floating production, storage, and off-load(FPSO) vessels is likely to be on a long-term basis,
thereby implying a financial lease arrangement thatinvolves an imputed change of ownership (with theresult that the rig or FPSO should be recorded as animport/export of a good). In fact, FPSOs are often
refitted to the specifications of individual fields. In
other instances, more often for onshore work, rigs
are hired for relatively short periods and withoutcrews.
12.148 The mobile drilling rigs and FPSOs shouldbe treated the same as shipping vessels or aircraft leased,without crews, from their principals. In practice, theonshore rigs can be readily identified from records ofport authorities, and relevant data should be available
from operators or lessees. Offshore rigs and FPSOs
may not be captured by the port authorities as they may
never enter harbor. However, as they are usually hiredby only a few exploration companies, they can usually
be identified through other sources of information. The
services provided by mobile oil drillings rigs hired withcrews should be classified as other business services.

Government Goods and Services Not
Included Elsewhere
12.149 The balance of payments treatment andsources for information on the three main typesof transactions recorded in this item are described

subsequently. Due to practical difficulties in distinguishing some of the government-function-related
services that are supplied by and to government units,by convention they are classified under this heading.
Where possible, such services should be classified to
relevant services (see BPM6, paragraph 10.179).

Government Expenditure Abroad (Debits)
12.150 Data on government expenditure abroad
should be available from an ITRS or from official sources(see Chapter 6).36 Should the data not be timely, it may
be necessary to extrapolate certain series—in which casegovernment expenditure policies, budget decisions, andtrends in historical data should be considered.
12.151 Local expenditures of diplomats and othergovernment personnel posted abroad should also berecorded as debits for government goods and services
n.i.e. Estimates of these expenditures could be basedon the wages and so forth—details of which should
be available from government records—paid to these
persons and an assumption about the percentage ofwages spent on such expenditures.

Expenditure by Foreign Governments andInternational Institutions Located in theCompiling Economy (Credits)
12.152 This expenditure could be measured byusing an ITRS or by using a survey of foreign embassies and international institutions. (See paragraphs
3.94–3.97 of Chapter 3 for details on surveys of foreign embassies and international institutions.) In eachcase, source data may provide only broad aggregatesor partial data. Therefore, the compiler may have toestablish a data model that uses data from these andother sources.
12.153 For example, from analyzing historical data,
the compiler may observe a relationship between thenumbers of foreign embassy staff and expendituresby foreign governments. Timely information on staff
numbers, which may be available from an economy’s
Ministry of Foreign Affairs, could be used to derive
current estimates of expenditure by multiplying thestaff number by the historical data ratio. Allowances

36

Wages and salaries paid by embassies and so forth to local
staff—that is, residents of the host economy—should be recorded
as compensation of employees in the balance of payments.

Services

should be made for such factors as inflation. Alternatively, a sample survey of cooperative embassies may
provide information on the relationship between staff
numbers and expenditures, and that ratio could be
multiplied by total staff numbers to derive an overall
estimate.
12.154 As with the compiling economy’s government expenditure abroad, wages and salaries paid byforeign governments and international institutions tolocal staff and to long-term international staff should
be classified as compensation of employees. In certain sources, such as an ITRS, it may be difficult toseparate these wages and salaries from related expenditures. However, it may be possible to determine, either from an occasional analysis of data from othersources or from discussions with certain embassies,
a ratio for dividing total expenditure into appropriatecomponents.
12.155 Local expenditure of diplomatic and similar personnel stationed in the compiling economy
should also be recorded in government goods andservices n.i.e.37 Previous observations about measuring the expenditure of compiling economy officials
stationed abroad are also pertinent here.

Services Associated with the Provisionof Technical Assistance and Aid
12.156 As noted in paragraphs 10.179 and Box 10.6of the BPM6, the value of goods and services, including the administrative costs incurred in the donor
economy as a result of providing technical assistanceand aid, should be included under specific services
provided (e.g., computer services within the telecommunication, computer, and information services orunder professional and management consulting services within other business services). Technical assistance provided by government or an internationalorganization is classified under government goods
and services only when not specified to a specificservice and if the technical assistance personnel are
37

Persons working in international institutions cannot be residents of these institutions. All staff of international institutions
staying in the host economies for 12 months or more should be
regarded as residents of those host economies. Persons staying
in host economies for less than 12 months should be regarded as
residents of the economies in which they maintain permanenthouseholds—typically their economies of origin.

217

employed by the donor government or an internationalorganization. Chapter 14 presents some examples ofrecording technical assistance in balance of payments.
12.157 The balance of payments compiler of thedonor economy could obtain information on the costs
and type of provided services from official sources, suchas records of the aid agency. In the recipient economy,
the balance of payments compiler could obtain information from the embassy of the donor economy or
the relevant domestic ministry or agency. Information
on several related transactions could also be obtained
from an ITRS (e.g., current transfers to government
received through the banking system) or from customs (data on imports of materials and equipment).
An alternative source would be to use OECD’s Official Development Assistance (ODA) records,38 whichshow these costs unclassified by recipient economy.
A particular recipient economy’s share of the domestic administrative costs of a particular donor economy
could be calculated by applying to total administrative
costs the ratio of the recipient economy’s grants to total
grants provided by the donor economy. Care should
be exercised by the compiler to avoid duplication ofamounts when using more than one source.

E-commerce
12.158 An increased use of credit and debit cards andother similar payment means in settling transactions via
the Internet or other computer-mediated networks, more
widely known as electronic commerce (e-commerce),
has been noted recently in many economies. This payment method is used by both business companies andhouseholds/individuals, and the products purchased
through e-commerce may include a wide range of goods
and services (e.g., travel arrangements, e-books, online
games, online insurance, etc.). In principle, charges forelectronically delivered products are included in services, while goods ordered by electronic means and supplied across the border are generally classified as goods(except for some products, such as software products,
obtained with a nonperpetual license to use).
12.159 There are a number of practical challenges
in measuring international e-commerce transactions,in particular those undertaken by the households:(1) these are usually small-scale transactions that may
38

More details on ODA are provided in Chapter 7.

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Balance of Payments and International Investment Position Compilation Guide

not be captured via ITRS; (2) settlement payments
may be on a net basis (possibly via a clearing house)or nontraditional payment systems—payment card
network—may be used; (3) households surveys may
not properly capture these transactions or data may
be collected indistinguishably for domestic and international transactions made via the Internet; (4) shipment of goods may be made via postal and courier
services; and (5) it is difficult to estimate the fees associated with transactions intermediated by tradee-platforms, such as eBay or Amazon.
12.160 The compiler should make efforts to identify
these transactions within the available source data andallocate the amounts to the relevant goods or services
entries. As possible, shipping charges associated with
e-commerce should be allocated to relevant transport

services, and financial services associated with e-commerce should be included in financial services.
12.161 Some economies have established special
surveys collecting data separately from business companies on the use of electronic forms of payments fortheir sales and purchases. To the extent such surveys
distinguish the international transactions from thedomestic ones, they may be a good source for the balance of payments. Where the phenomenon is widely
spread, special surveys may be designed to capture
the main agents facilitating these transactions covering both traditional circuits and the nontraditional
payment systems. Household surveys may also be asource of information for e-commerce. The compiler
should be mindful of the coverage of each source andavoid double counting where sources overlap.

13

Primary Income

Introduction
13.1 Primary income represents the return that accrues to resident institutional units for their contribution to the production process or for the provision offinancial assets and renting natural resources to nonresident institutional units. Primary income includes
the following components:(1) Income Associated with the Production Process(a) Compensation of employees(b) Taxes and subsidies on products andproduction.
(2) Property Income(a) Investment income:• Dividends and withdrawals from income ofquasi-corporations• Reinvested earnings• Interest(b) Rent.
13.2 Further grouping of primary income is discussed in the subsequent sections.

Compensation of Employees
13.3 Compensation for employment may be earned
by persons residing in economies that differ from theeconomies in which they are employed on a shortterm basis (for less than one year) and also by persons
residing in their own economies but employed by anonresident company established in the economy ofthese persons or by foreign government enclaves located in this economy. The former would include earnings of border, seasonal, and other short-term workers
resident in one economy paid by an employer resident
in another economy that are in an employer-employee
relationship. The latter would include compensation
paid by foreign embassies, foreign military establishments, and international institutions to residents ofthe economies in which the embassies and so forth
are located.
13.4 The existence of an employer-employee relationship is central in determining whether the remuneration received by short-term workers is treated in
the balance of payments as compensation of employees
or as fees for services. The identification of an employeremployee relationship requires good knowledge of thetype of activity conducted by resident workers outside
their economy (e.g., construction, housekeeping, agriculture work, etc.) and type of agreement between such
workers and the institutional unit for which they work.
The first characteristic that indicates that the employeremployee relationship exists is whether the employer
has the right to control or to direct what shall be done
and how it shall be done. However, certain control on
the work also exists when the work is provided by aself-employed person. Other characteristics of the existence of employer-employee relationship are existenceof an agreement (formal or informal) between theemployer and employee into which they enter voluntarily and when the remuneration is based on either
the time spent at work or some other objective criteria. Additional criteria that could help determine if an
employer-employee relationship exists are: payment ofsocial contributions by the employer as well as the entitlement of the employee to the benefits that usuallyare provided to employees by a company (e.g., certain
types of allowances, holidays, and sick leave).
13.5 If an individual is contracted to produce a certain amount of work or a given result, this suggeststhat the individual is self-employed and is selling services. An individual is deemed to be self-employed
if: he/she operates his/her own unincorporated company and therefore sells its output; he/she is responsible for the scale of operations and finances, owns orrents machinery for the work; pays social contributions by himself/herself; pays taxes on the provisionof services; and so forth.

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13.6 Several types of services, such as construction,
agricultural services, and software development, canraise questions about the borderline between compensation transactions and sales of services. For instance, if a worker is hired by a nonresident employer
to undertake long-term construction activity and theworker is paid regular remuneration measured by thetime spent at the work, the remuneration should betreated as compensation of employees. However, inmany cases an employer contracts a nonresident individual to conduct a certain amount of construction
work with a certain result. The contracted individual,
in turn, may conduct the work by subcontracting toother nonresident workers. The first contracted individual pays a lump sum to the second contracted individual for the agreed amount of work, and the second
individual further pays to subcontracted nonresident
workers the remuneration for the provided work. If thecontracting parties are residents of the same economy,
the transactions between them are beyond the balanceof payments scope. When the contracted individual isdeemed to be selling construction services to nonresidents, the remuneration received should be registeredin balance of payments as construction services.
13.7 When an employer-employee relationship exists, it may also be important to identify which institutional unit is the employer of the worker, and if this
employing unit is resident or nonresident of the compiling economy. This may be particularly challenging whenan employment agency is involved in the transaction.
13.8 Compensation of employees includes compensation paid in kind, as well as that paid in cash.
Transactions under this item should be recorded ona gross basis—that is, before any deductions for expenses (such as income taxes and acquisition, by theemployee, of goods and services in the host economy).
These expenses should be recorded under appropriatebalance of payments items. Example 13.1 may help
clarify the treatment of compensation of employees.
Example 13.1 Recording of Compensation of
Employees in Balance of Payments

A resident of economy A works for threemonths in economy B and earns US$500 in cash
before tax. In addition, the employer provides accommodation estimated to be worth US$100. The
worker pays income tax of US$70 to the government of economy B. Additionally, the worker con-tributes with US$50 to a social security scheme ineconomy B and spends US$130 on clothing andfood during his stay in economy B. The following
entries would appear in the balance of paymentsof economy A:
Current accountCreditDebit

Services
TravelBusiness

2301

Acquisition of
goods andservices by border,
seasonal, andother short-term
workers230

Primary income
Compensation of
employees

6002

Secondary income
Other current
transfer

120

Current taxes on
income, wealth,etc.
Social contribution
Financial account70

50
Net acquisition of Net incurrence
ﬁnancial assetsof liabilities

Other investment
Currency and deposits

+2503

1

Includes 130 for clothing and food and 100 for accommodation.

500 paid in cash plus 100 for accommodation paid in kind.

2

500 paid in cash minus 70 income tax minus 50 contribution to3social security scheme minus 130 spent on clothing and food.

13.9 Credits for compensation of employees have
two distinct components: (1) compensation earned
by residents working for institutional units abroad and(2) compensation earned by local staff working forforeign embassies and similar institutions—includinginternational organizations—and by local staff working for nonresident institutional units operating in
the compiling economy. Likewise, debits for compensation of employees have two distinct elements:(1) compensation earned by nonresidents working forresident institutional units of the compiling economyand (2) compensation earned by local staff working forthe compiling economy’s foreign embassies and similar institutions located abroad and by local staff working for resident institutional units that have an activity

Primary Income

abroad. The balance of payments compiler should beaware of each of these components because a collection methodology well suited to measuring one component may not be appropriate for measuring another.
13.10 The compensation of employees net of taxes,
social contributions, and other expenses made by theshort-term workers in host economies is included,
along with personal transfers and capital transfers
between households, in the value of personal remittances (see BPM6, paragraph 12.27).

Data Sources
13.11 Compensation of employees is typically measured by using one or more of the following sources: aninternational transactions reporting system (ITRS), enterprise surveys of employers, surveys of travelers, official sources, surveys of embassies, and partner economy
data. More about data sources that could be employed
for collecting and/or estimating compensation of employees is presented in International Transactions in Remittances: Guide for Compilers and Users (IMF, 2009).
International transactions reporting system

13.12 An ITRS may provide satisfactory coverage ofcompensation of employees sent by residents working
abroad or of nonresidents working in the compiling
economy. However, the compiler should understandthat amounts reported in ITRS for compensation of
employees are on a net basis that does not include
expenses in the host economy. The compiler shouldattempt to estimate gross amounts. Also, the data collected through an ITRS on compensation of employees
could include misclassifications, because the ITRS reporters cannot accurately identify if workers are in an
employer-employee relationship and also if they workin the host economy for more than or less than one year.
13.13 The compiler might use an alternative source,
such as a survey of travelers, to make the estimate.1
For example, in order to estimate the gross amount ofcompensation of employees, the compiler might establish percentages of compensation for employmentthat relate to income tax payable to the host economy’s government, to contributions to social and pension schemes, to goods and services acquired in thehost economy, and to the net amount retained by the1

The survey of travelers is discussed in more detail in Chapter 3.

221

employee. Net amounts reported in an ITRS could
then be expanded by using relevant percentages, andappropriate offsetting entries for transfers and travel
could also be calculated. For example, the balance of
payments compiler might establish that, for residents
working abroad, 10 percent of compensation is paidin taxes and social contributions, 15 percent is spenton goods and services, and the remaining 75 percent
is remitted to the compiling economy and recorded inan ITRS. Credits for total compensation of employees
would be equal to the ITRS figure multiplied by 1.33
(grossed up from 75 percent). Transfer and travel debits would be equal to 10 and 15 percent, respectively,of estimates of gross compensation of employees.2
13.14 In order to adjust the ITRS data for misclassifications already mentioned, the compiler might use
variables collected through a survey of travelers, migration survey, or a specialized survey of remittances.
Such variables are the existence of a cross border
employer-employee relationship and the duration ofstay in host economy, by pattern of surveyed workers.3
13.15 Use of an ITRS to measure compensation of
employees will omit compensation paid in kind. Suchcompensation could be identified by using surveys of
travelers, household surveys, or enterprise surveys (fordebits only). However, the compiler should be awareof limitations of each type of survey related to data on
remittances, including compensation of employees. To
improve the coverage of information on remittancescollected through surveys, the compiler should makeefforts to include additional questions in surveys thatwould provide useful information for estimating remittances by components. For example, questions on theexistence of an employer-employee relationship, on typeof remittances received (in cash or in kind), or on channel of remittances (banks, money transfer operators, orinformal channels such as bringing money in-pocket,
hawala, etc.) could be added to a survey of travelers or
to a migration survey. This would bring a great improvement to the estimates of compensation of employees andremittances-related balance of payments components.

2

For best results, separate percentages should be calculated for
nonresidents working in the compiling economy and for residents
working abroad.
3
For more information on types of surveys employed in estimating remittances data, see Chapter 4 of the International Transactions in Remittances: Guide for Compilers and Users (IMF, 2009).

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13.16 The compiler should ensure that compensation for employment paid to local workers by foreignembassies and similar institutions and by companies
that are not residents of the economies in which they
are located (e.g., construction companies engaged in
short-term projects) is not “bundled” with other balance of payments transactions. For example, an ITRS
may record amounts transferred to cover expensesof the compiling economy’s foreign embassies. It
is important that amounts used to pay local staff berecorded separately from other expenses. If this is
not the case, supplementary sources (such as official
sources in the case of embassies located abroad; surveys of embassies in the case of foreign embassies in
the compiling economy; or enterprise surveys in thecase of companies operating in economies in which
they are not resident) could be used to provide necessary balance of payments information.
Surveys of employers

13.17 Surveys of employers could be useful sourcesof information on compensation payable by resident
companies to nonresident employees and on compensation payable to local employees by nonresident
companies located in the compiling economy.4 The
main advantages of using surveys of employers arethat amounts are typically recorded on a gross basis,and compensation paid in kind can often be readily
reported. The disadvantages of using surveys of employers are the amount of effort required to maintaincoverage; the lack of information on credits for compensation of employees earned by residents working
abroad and on compensation paid to local staff ofembassies and so forth; difficulties in identifying nonresidents who are short-term workers residing temporarily in the economy from the company accounting
system; and the expense of conducting a separate
collection to measure what is, for some economies, a
relatively trivial item in the balance of payments. Of
course, collection expenses might be greatly reduced
if the information were collected as part of a generalapproach that used enterprise surveys to compile balance of payments statistics.

4
Such surveys are discussed in Chapter 3, “Collections on Goods
and Services Statistics.”

Surveys of travelers

13.18 As well as collecting information on travel
expenditure, surveys of travelers5 could be used tocollect information on compensation earned by travelers. The main advantage of using this source is thatit collects data directly from workers on a timely basis,and therefore the mistakes due to memory recall
would be avoided. The disadvantage to using a travelers’ survey is that supplementary data sources would
be needed to capture information on compensation
payable to local staff of foreign embassies and so forth,and on compensation payable to local staff working
for companies operating in economies other thanthose in which the companies are resident.
Ofﬁcial sources

13.19 Official sources may be able to provide useful information on compensation payable to the local
staff of the compiling economy’s embassies and soforth located abroad. Also, some economies have official agencies responsible for nonresidents working in
the economy or for residents working abroad. These
agencies could have information that would be useful for compiling the compensation of employees itemin the balance of payments. In addition, administrative data on the number of work visas issued by thecompiling economy’s government could be used toestimate the number of cross border commuters, seasonal, and other short-term workers.
13.20 Also, the border authorities in some economies may conduct studies on the economic impact
of border crossers and for this purpose collect information on number of daily commuter workers. This
information could be useful for estimating the compensation of employees of border workers. The main
disadvantage in using data from the border authorities
is that such a survey is not conducted on a regular basis.
Surveys of embassies and so forth

13.21 Surveys of foreign embassies and similar
institutions, including international organizations,located in the domestic economy could be a goodsource of information on compensation payable to5
For information on this survey, see Chapter 3, “Collections from
Persons and Households.”

Primary Income

resident staff working for these institutions.6 Even if
only a subset of embassies responds to such surveys,
there may be reasonable information on per capita
salary and so forth, which could then be multipliedby the number of local staff working for foreign andinternational institutions in order to obtain an overall
estimate. Information on staff employed by these institutions should be available from an economy’s ministry for external affairs or from similar governmentorganizations.
Partner economy data

13.22 In some economies, partner economy data
may be the best source of information on compensation of employees (particularly credits). Alternatively, partner economy data could be used as a checkon estimates derived from other sources. However,the compiler should assess the data collection and theestimation techniques employed by the partner economies in order to assure that those data are reliable.

Data Models and Extrapolations
13.23 In the absence of complete data, a data modelor models could be used to estimate part or all of thecompensation of employees. The use of most data
models involves multiplying estimates of numbers of
employees by estimates of per capita compensation.
The numbers of residents in an employer-employee relationship abroad and of nonresidents in an employeremployee relationship in the domestic economy could
be available from migration statistics or from an official source, such as a relevant government agency.
Estimates of per capita compensation could be basedon benchmark studies and adjusted for growth occurring in wages after the period of the study and for any
other necessary factors. The estimates could also bebased on other related indicators, such as the average earnings of employees in the compiling economy.
This indicator could be used for deriving estimates ofcompensation paid to nonresidents in an employeremployee relationship in the compiling economy orcompensation paid to local staff of foreign embassies and so forth. In addition, such estimates could
be based on the average earnings of employees in

223

partner economies. This indicator could be used forderiving estimates of compensation paid to residents
in an employer-employee relationship abroad or compensation paid to local staff of the compiling economy’s embassies and similar institutions abroad.
13.24 Extrapolations of compensation of employees generally involve similar techniques. When numbers of employees are extrapolated, provision should
be made for any known or expected developments
taking place in the compiling economy (or in partner
economies) and having a potential impact on thesenumbers. Likewise, when per capita compensation
estimates are extrapolated, account should be taken of
known or expected developments in wages and, whenrelevant, exchange rates.

Investment Income
Introduction
13.25 Investment income is income derived fromownership of external financial assets and payable byresidents of one economy to residents of another economy. The structure of the investment income accountis consistent with that of the corresponding financial
flows and positions, thus facilitating the analysis ofrates of return. Most financial instruments give rise toinvestment income. Debt instruments such as SDRs,
loans, most debt securities, and deposits (including
unallocated gold accounts) give rise to interest. Equity
and investment fund shares give rise to dividends orother distributions from corporate income. Gold bullion, currency, noninterest bearing deposits, financial
derivatives, and employee stock options never giverise to investment income.
13.26 Investment income is broken down by thefollowing components for purposes of compilation(not in BPM6 standard component sequence):• Pure interest (excluding financial intermediation
services indirectly measured (FISIM))• Distributed income of corporations:• Dividends on equity other than on investment
fund shares• Withdrawals from income of quasi-corporations

6

These surveys are described in Chapter 3, “Collections on Goods
and Services Statistics.”• Reinvested earnings on foreign direct investment other than on investment funds

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Balance of Payments and International Investment Position Compilation Guide• Other investment income:• Investment income attributable to insurance
policyholders• Investment income payable on pension entitlements and standardized guarantees• Investment income attributable to investment
fund shareholders• Dividends• Reinvested earnings.
13.27 Investment income should be classified byfinancial account functional categories: direct investment, portfolio investment, other investment, andreserve assets. Direct investment income should beclassified by dividends and withdrawals from income ofquasi-corporations, reinvested earnings (including investment income attributable to investment fund shareholders that are in a direct investment relationship),and interest. These components, except for reinvested
earnings, are further subdivided by counterpart—that is, direct investors, direct investment enterprises(DIENTs), and fellow enterprises. In supplementary
classifications for fellow enterprises, the ultimate controlling parent is identified as resident or nonresident in
the compiling economy, or as unknown. A supplementary item provides direct investment income attributable
to policyholders in insurance, pension, and standardized guarantee schemes, and to investment fund shareholders, with a separate classification of investment
income attributable to investment fund shareholders.
13.28 Portfolio investment income should be classified by dividends on equity other than investment
fund shares, investment income attributable to investment fund shareholders (subdivided into dividends
and reinvested earnings), and interest on debt securities by maturity (i.e., short-term and long-term).
13.29 Other investment income is classified by income on equity and investment fund shares that are
not classified in any other functional categories, interest, and income attributable to policyholders in insurance, pension, and standardized guarantee schemes.
13.30 Income on reserve assets is classified by income on equity and investment fund shares and interest.
13.31 Interest before FISIM should be disclosed asa memorandum item for direct investment, other investment, and reserve assets.

13.32 Close relationships often exist among investment income, transactions in external financial assets
and liabilities (the financial account of the balance of
payments), and positions of these assets and liabilities(the international investment position—IIP). Becauseof these relationships, investment income estimates areoften compiled from sources similar to those used tocompile the financial account and the IIP. Accordingly,
it may be helpful to refer to Chapter 9 in conjunction
with the Investment Income part of this chapter.

Data Sources
13.33 Surveys of companies (including financial
corporations) with external assets and liabilities, an
ITRS, or official sources can be used to measure balance of payments transactions in investment income.
Whatever approach is used, collection and estimation
methods should be well designed to ensure that investment income is measured accurately. Table 13.1
summarizes the possible compilation strategies available to the compiler.
13.34 Enterprise surveys may be selective (e.g.,concentrating only on financial corporations or companies in direct investment relationships) or broadly
based (e.g., covering nearly all companies with external assets and liabilities). Primary income should
be recorded on a gross basis—that is, before the deduction of financial fees and withholding taxes. It is
important that enterprise survey collection forms bewell designed, that reporters have a good understanding of the collection requirements, and that close contact is maintained between the compiler and survey
respondents. Enterprise surveys may include collections from financial intermediaries that report dataon income from securities.
13.35 Data on investment income, such as income
related to official debt and reserve assets, could also
be obtained from official sources. The official debt office may also have information on interest payable byother sectors of the economy, particularly when interest payments are guaranteed by the government. Someeconomies require, either as part of foreign exchange
controls or foreign investment approval procedures,that companies submit applications to remit profits.
These applications could be used to estimate somecomponents of investment income, but be aware thatapplications may not always materialize into actual
remitted profits.

Primary Income

225

Table 13.1 Compilation of Investment Income and Other Primary Income Items
Description

Source and method of compilation

Direct investment income
Income on equity and investment fund shares
Dividends and withdrawals of income fromquasi-corporations
Direct investor in direct investment enterprise
Direct investment enterprises in direct investor
Between fellow enterprises
If ultimate controlling parent is resident
If ultimate controlling parent is nonresident
If ultimate controlling parent is unknown
Reinvested earnings
Investment income attributable to policyholders
in insurance, pension, and standardized guarantee
schemes, and to investment fund shareholders

Data on dividends and withdrawals of income from quasicorporations, together with interest, can be collected
through enterprise surveys or an ITRS. In either case, careshould be taken to ensure that noncash income is collected.
However, the compiler should be aware of the limitationsof ITRS in collecting such datafor example, reporters might
have difﬁculties in identifying the counterpart (direct
investor, direct investment enterprise, or fellow enterprise),
as well as the location of the ultimate controllingparent.

Interest
Direct investor in direct investment enterprise
Direct investment enterprises in direct investor
Between fellow enterprises
If ultimate controlling parent is resident
If ultimate controlling parent is nonresident
If ultimate controlling parent is unknown
Memorandum: Interest before FISIM

Data on reinvested earnings can be collected as asupplement, in enterprise surveys, in an ITRS, or sometimes
as a by-product of a foreign exchange or foreign investment
approval system.
Data on investment income attributable to policyholders ininsurance, pension, and standardized guarantee schemes, andto investment funds shareholders can be collected through asurvey of companies involved in such activity—e.g., insurancecompanies.

Portfolio investment income
Income on equity and investment fund shares
Dividends on equity excluding investment fundsharesInvestment income attributable to investment
fund shareholders
Interest
Short-termLong-term

Income credits and debits (income receivable on claims
on nonresidents and income payable on liabilities tononresidents) can be collected in surveys of companies, surveys
of ﬁnancial intermediaries and/or custodians, an ITRS, or fromofﬁcial records. Care should be taken to ensure that income
accrued but not paid is measured and offset appropriately
in the ﬁnancial account. An alternative methodology may
involve maintaining an inventory of securities held byresidents and estimating the dividends and interest on thosesecurities by using yield analysis.

Other investment income
Withdrawals from income of quasi-corporations
Interest
Memorandum: Interest before FISIM
Investment income attributable to policyholders ininsurance, pension, and standardized guarantee
schemes

Data can be collected through enterprise surveys, an ITRS,
or ofﬁcial sector sources. Some economies estimate income
ﬂows on certain assets, such as other sectors deposits abroad,by using data obtained from international institutions.
Alternatively, data models based on yield analysis may be used
to estimate certain components.

Reserve assets
Income on equity and investment fund sharesInterest
Memorandum: Interest before FISIM

Data can be collected from ofﬁcial sector sources. It includes,
among others, interest receivable on SDR holdings.

Other primary income
Taxes on products and production
Subsidies
Rent

Data can be collected through enterprise surveys, an ITRS,
or ofﬁcial sector sources. Care should be taken to ensurethat rent accrued but not paid is measured and offset
appropriately in the ﬁnancial account. Data on taxes on
products and production should be available from ofﬁcial
sources, such as tax records (in the case of withholding) andrecords of other relevant government agencies (in the caseof fees, ﬁnes, etc.). Data on subsidies also should be available
from relevant government agencies.

Source: IMF staff.

Interest includes also interest payable on SDR allocations.

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Balance of Payments and International Investment Position Compilation Guide

13.36 An ITRS can serve as a useful source ofdata for measuring investment income. However,some transactions require special attention if investment income is to be measured completely andaccurately. Interest accrued and not yet paid will bemissed unless the compiler monitors such transactions carefully. The issue of recording interest on an
accrual basis is discussed further in paragraph 13.73
of this chapter. Furthermore, many investment income transactions are not made through the banking system or do not involve the payment of cash
(e.g., reinvested earnings and investment income
earned on technical reserves held by insurance corporations). Where these transactions are significant,the compiler should ensure that these transactions
are reported and that offsetting entries in the balance of payments accounts are also recorded. For
example, it is likely that the compiler will have toapproach companies and insurance corporations directly to measure reinvested earnings attributable todirect investors and investment income attributable
to policyholders.
13.37 Many survey respondents tend to record
certain transactions after certain costs, such as aftercommissions, fees, or taxes have been deducted. Instructions to the surveys pertinent to these mattersshould be clear to ensure that data are reported according to balance of payments requirements, before
deducting these costs. Also, discounts and premiumincome associated with nonequity securities may
not be separated from other amounts paid at the redemption, so an ITRS should be designed to collectinformation on premiums and discounts that haveto be included under investment income. If not,alternative sources for this information should beestablished.7
13.38 As persons completing ITRS forms may
be unfamiliar with the level of detail, an ITRS must
be well designed to ensure correct classification oftransactions. The compilation of reinvested earnings is discussed in a subsequent section of thischapter.

7
Related financial transactions reported in an ITRS also may haveto be adjusted for premiums and discounts.

Estimation in the Absence of Dataand Extrapolations
13.39 The most common approach to estimating
investment income in the absence of direct information on investment income receipts or payments is
to use a data model in which income yields are applied to levels of financial assets or liabilities.8 Thisapproach is quite commonly used to estimate interest and dividends on securities and is sometimes
used to estimate income on other financial items,
such as loans and deposits. However, this approachis rarely used to measure direct investment income.
Like most other data models, the income yield model
often works well when used at a detailed level of disaggregation. For example, better estimates of portfolio investment income debits would be derived if
separate models were established for equities and for
debt securities. In more sophisticated models, theincome on each type of security held might be estimated separately. Data models are further discussed
in Chapter 8.
13.40 One of the keys to developing estimates ofgood quality is choosing an appropriate income yield.
For estimates of dividend debits, the average dividend
yield in the compiling economy’s stock markets could
be a good indicator. For estimates of dividend credits, the weighted average yield in the stock markets ofpartner economies could be appropriate. For interest
debits and credits, separate models could be developed for each significant type of instrument and byeach currency in which financial assets and liabilities
are denominated. For example, for loan liabilities denominated in U.S. dollars, an appropriate yield might
be the United States lending rate, adjusted for risk (ifany) associated with the compiling economy. International Financial Statistics (IFS), which is publishedby the IMF, provides a number of interest rates that
may be useful in determining appropriate yields.9 If
disaggregation of this nature is not possible, then a8Levels of financial assets and liabilities may either be measured
directly or derived by using the perpetual inventory method.
Perpetual inventory models for portfolio securities typicallyinvolve use of appropriate financial market indices to determine
the impact of nontransactions changes in levels. However, at aminimum, stock should be measured annually.
9
These rates are included in world and regional tables provided at
the beginning of issues of IFS.

Primary Income

weighted average yield, with weights determined on
the basis of whatever information is available, could
be applied. Regarding the currency composition of financial assets and liabilities, the BPM6 recommends a
set of tables to be compiled as memorandum item thatcover currency composition of debt claims to nonresidents (Table A9-I-1a) and of debt liabilities to nonresidents (Table A9-I-2a).
13.41 When actual data are not available on atimely basis, estimates of investment income may haveto be extrapolated from data for earlier periods. Most
extrapolation techniques for portfolio and other investment income involve determination of historicalincome yields. These yields are then adjusted, in thecase of interest, for changes in interest rates and credit
risks and, in the case of dividends, for changes in profitability and policies with regard to the retention of
earnings.10 The adjusted yields are then applied to estimates of positions, which may be based on actual dataor extrapolated. Alternatively, the compiler may use
known interest payment schedules for certain components of debt and yield analysis for the remainder.
13.42 For the extrapolation of direct investment
income, similar techniques could be used. For equity income on direct investment, the best results areusually achieved when total equity income—that is,dividends and withdrawals from income of quasicorporations plus reinvested earnings—is extrapolated and then broken down into component parts on
the basis of historical distribution patterns and known
changes in these patterns. The compiler may also beable to obtain useful information on profitability andon dividend payments from discussions with a few
significant direct investors (in the case of credits) and
DIENTs (in the case of debits).

10

Changes in interest rates will not fully impact other investment
income in the periods in which the changes occur because manyfinancial assets and liabilities will have fixed rates of interest. The
compiler should analyze the composition of other investment
assets and liabilities to determine the fixed-interest component.
This information should be used to moderate the impact ofchanges in interest rates on income estimates. For dividends,
information on changes in profitability could be available fromprofit surveys used to compile national accounts or from tax
records. Information on changes in distribution policies could
be obtained from stock exchanges. For example, changes in theratio of average dividend yields to the inverse of the average
price/earnings ratio could be used as an indicator of changes in
distribution policies.

227

Calculation of Reinvested Earnings
for Direct Investors and Investment
Fund Shareholders
13.43 Reinvested earnings are calculated by using theaccounts of DIENTs or investment funds. Reinvested
earnings of a company are the owner’s share of the company’s retained earnings or net saving (before reinvested
earnings payable are deemed distributed). Retained earnings or net saving (before attributing reinvested earnings)
of a company may be formally stated as follows:
Retained earnings11 =+ Net operating surplus (operating revenue minus operating expenses)+ Net dividend income receivable+ Dividends receivable Dividends payable+ Net interest receivable+ Interest receivable Interest payable+ Company’s share of retained earnings of any direct
investment enterprises+ Net rent receivable+ Rent receivable Rent payable+ Net current transfers+ Current transfers receivable
 Taxes and other current transfers payable Adjustment for the change in pension entitlements.

13.44 In the next step, to obtain reinvested earnings, each shareholder/owner’s share of retained
earnings is determined by multiplying total retained
earnings by the percentage of the shareholder/owner’s
claims on these retained earnings:
Reinvested earnings =Retained earnings
 Percentage of equity held by the shareholder/owner.
13.45 Thus, reinvested earnings do not include
any realized or unrealized holding gains or losses(e.g., holding gains and losses due to price changes,

11

See the BPM6, paragraph 11.34, and the 2008 SNA, paragraph 26.63.

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Balance of Payments and International Investment Position Compilation Guide

exchange rate changes, or other changes in volumeof assets, such as write-offs); consequently they are
excluded from this calculation. Because business accounting measures of profits often include holding
gains or losses, adjustments to business accounting
records may be necessary.
13.46 All of these data should be available from theaccounts of companies concerned and, more particularly, from company income and expenditure and profit
and loss statements. For direct investment, companies
could be permitted to report on an individual basis ora group of related companies could report on a consolidated basis. When these companies are consolidated,
they are referred to as a “local enterprise group.” In thecase of a resident direct investor, the local enterprisegroup includes the institutional unit that directly owns
a foreign direct investment enterprise (DIENT), theresident companies that directly or indirectly control
this company, and the resident companies that any ofthese companies directly or indirectly control in theirown economy. In the case of a resident DIENT, thelocal enterprise group includes the resident company
that is directly controlled or influenced by a foreign direct investor, plus the institutional units that it directly
or indirectly controls in its own (local) economy. To
be fully consistent with requirements of the balance of
payments methodology, the balance of payments compiler may have to make some of the adjustments thatare subsequently discussed.
13.47 One of the components of the retained earnings is the net operating surplus, which is the value addedfrom the operations of the company—that is, the valueof the outputs less the value of the intermediate inputs;
less consumption of fixed capital (including any provision for this consumption); less taxes on production (lesssubsidies); and less compensation of employees.
13.48 Consumption of fixed capital should be
calculated on the basis of current replacement cost
(BPM6, paragraph 11.45). However, company accounts may reflect a variety of bases, including historic cost depreciation. When advising companies on
how to report, the compiler could suggest that consumption of fixed capital be calculated by using current cost accounting methods and by excluding any
special tax allowances for depreciation, such as accelerated depreciation allowances. Alternatively, thebalance of payments compiler may, in conjunction

with the national accounts compiler, make an aggregate adjustment, which is based upon knowledge ofcompany accounting practices, to consumption of
fixed capital estimates underlying reported reinvested
earnings data. Another option is for the balance of
payments compiler to ask companies on what basis
consumption of fixed capital was recorded; when current replacement cost was not used, the compiler may
consider making adjustments to data reported in individual collection forms.
13.49 Net operating surplus should be adjusted todetermine retained earnings by taking into accountother current earnings (such as dividends receivable),
net interest receipts (interest receivable less interest
payable), current transfers (such as subsidies received),
and the reinvested earnings receivable from othercompanies (including companies located abroad).
13.50 Retained earnings are finally obtained after
deducting taxes due for payment from net earnings
and any dividends due for payment (or withdrawals
from income of quasi-corporations). A shareholder/owner’s share of retained earnings should be calculated according to the shareholder/owner’s equity
share in the company.
13.51 As previously noted, the calculation of retained earnings should exclude capital gains andlosses, even if these are included in company profit
and loss statements. For example, if a company paid
a dividend because it sold a financial asset on which
it made a windfall profit—that is, the sale price of theasset was much greater than the purchase price—the
distribution to the investor should be shown in the financial account as a distribution of equity capital andexcluded in the calculation of reinvested earnings.
13.52 Insurance companies may be DIENTs. Net
operating surplus of insurances companies is equal to
the following:
Net operating surplus (operating revenue minus operating expenses) =Output from “production” (whereby calculated as
actual premiums earned plus premium supplements
minus adjusted claims incurred (or changes in actuarial reserves)+ Dividends/interest receivable from the investmentof own assets
 Operating costs (salaries, rent, etc.).

Primary Income

13.53 Deposit-taking corporations (banks) may also
be DIENTs. Net operating surplus for deposit-taking
corporations and other financial corporations should
equal fee-based revenue (including imputed fees suchas those from foreign exchange trading), plus property income receivable, less property income payable.
Write-downs and write-offs of loans and other financial instruments are capital losses, and so they should
be excluded from the calculation of operating surplus.
13.54 Reinvested earnings can also be derived fromexamination of a company balance sheet. One of thecomponents of a balance sheet is shareholder funds.
Shareholder funds may change in a period as a resultof the following:• Issues less redemptions of shares• Extraordinary items, such as capital gains and losses• Changes in revaluation reserves• Retained earnings.
13.55 Thus, retained earnings can be measured
directly or derived by deducting the first three components from the total change in shareholder funds.
However, the compiler should be aware that a company balance sheet may be prepared according toaccounting rules that differ from those required by
the balance of payments methodology. (In particular,differences may arise with position valuations, recording and classification of capital gains and losses,
and consumption of fixed capital.) The differences
may have an impact on the derivation of reinvested
earnings from balance sheets, and when the impact
is significant an appropriate adjustment should be
made. For this reason, many balance of paymentscompilers prefer to calculate reinvested earnings byanalyzing profit and loss statements (in which appropriate adjustments are more easily identified) rather
than calculating reinvested earnings from balance
sheets.
13.56 When a chain of direct investment relationships exists, it is clarified that reinvested earnings
should be recorded between the direct investor andits directly owned DIENTs only—that is to say when
there is an immediate 10 percent or more equity ownership; this directly owned DIENT should include its
share of the reinvested earnings of DIENTs in its ownership chain in the calculation of its own reinvested
earnings.

229

13.57 Reinvested earnings can be negative or
positive in sign for both the investor and the DIENTor investment funds. Negative reinvested earnings
indicate that, for the reference period, the dividends
paid out by the DIENT or investment funds are higher
than net earnings in that period or that the company
is operating at a loss.
13.58 Negative reinvested earnings incurred bya resident direct investment enterprise should be recorded as follows:• Negative debit for investment income on direct
investment—Income on equity—reinvested
earnings• Offsetting negative entry in the financial
account—Direct investment—equity—reinvestment of earnings (net incurrence of liabilities).
13.59 Negative reinvested earnings obtained by aresident direct investor should be recorded as follows:• Negative credit for investment income on direct investment—Income on equity—reinvested
earnings• Offsetting negative entry in the financial account—Direct investment—equity—reinvestment of earnings (net acquisition of financial assets).
13.60 Thus, if a DIENT incurs an operational lossof 100 units, the following balance of payments entries that should be recorded are presented ahead.
A. For the direct investment enterprise:
CreditDebit

Current accountPrimary income
Investment income
Direct investment
Income on equity
Reinvested
earnings−100
Net acquisitionof ﬁnancial
assetsNet
incurrence ofliabilities

Financial accountDirect investment
EquityReinvestment of
earnings

−100

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Balance of Payments and International Investment Position Compilation Guide

B. For the direct investor:
CreditDebit

Current accountPrimary income
Investment income
Direct investment
Income on equity
Reinvested
earnings

100
Net acquisitionof ﬁnancial
assetsNet
incurrence ofliabilities

Financial accountDirect investment
EquityReinvestment of
earnings

100

shown in the primary income accounts is shown after
adjusting for FISIM—“pure interest”; also, there is amemorandum item for interest before adjusting for
FISIM—“actual interest” (see BPM6, Box 10.5, for anumerical example).
13.63 Interest is recorded in the balance of payments on an accrual basis.13 That is, interest on theamount of principal outstanding is recorded as accruing continuously to the creditor. Accrued interest is theamount ultimately receivable by the creditor and payable by the debtor. Accrued “actual interest” (disseminated as a memorandum item) also includes FISIM
accrued. Accrued interest may differ from the amountdue to be paid during a specified period, and thisamount may, in turn, differ from the amount actually
paid in the period. In the balance of payments, offset
entries to accrued interest can take one of three forms.

13.61 For investment fund shares owned by nonresidents and for direct investors’ equity in their DIENTs,
retained earnings are imputed as being payable to theowners/direct investors and reinvested as an increase in
their equity. In other cases of equity owned by nonresidents, there is no imputation of income or financial account transactions to the owners on account of retained
earnings. As the result, the increase in the value of theequity caused by the accumulation of retained earnings not attributed to owners is reflected in increased
value in equities in IIP without transactions in balanceof payments and is, therefore, shown as a revaluation.

13.64 First, if interest is accrued during a particular period but not due for payment in that period, theoffset to the accrued interest should be recorded as afinancial account transaction in the same type of instrument as the underlying principal. For example, if
a resident (e.g., nonfinancial corporation) of the compiling economy holds a bond issued by a nonresident
company, and interest of 10 is accrued but not due
for payment during a particular period, the following
balance of payments entries should be recorded:

Recording Interest Incomeon an Accrual Basis

Current account13.62 The interest can be seen as including both anincome element and a charge for a service (FISIM).12
The identification of FISIM as the financial service
implicitly included in interest requires corresponding
adjustments to interest as recorded in the primary income account. Actual interest payable by borrowers ispartitioned between a “pure interest” charge at the reference rate (in primary income) and FISIM (a service).
Similarly, pure interest receivable by depositors is calculated by applying the reference rate to depositors,
and depositors are shown as consuming a service
equivalent to the difference between the actual interest and interest at the reference rate. The interest

CreditPrimary income
Investment income
Portfolio investment
Interest
Long-term

Detailed discussion on FISIM is presented in Appendix 3 of thisGuide.

10
Net acquisitionof ﬁnancial
assetsNet
incurrence ofliabilities

Financial accountPortfolio investment
Debt securities
Other sectors
Nonﬁnancial
corporations
Long-term

13
12

Debit

10

For numerical examples on recording of accrued interest on
loans see External Debt Statistics: Guide for Compilers and Users,
Box 2.3.

Primary Income

13.65 When interest is actually paid—which, in thecase of a security issued at a discount with no interest
payments, will be when the security is redeemed—the
offset to the payment that flows through the banking
system should be recorded in the financial account as
a reduction in investment in the instrument in which
the offset to the accrued interest was recorded, rather
than as investment income. Following the foregoing
example, when the security matures and interest andprincipal are paid, the following balance of payments
entries should be recorded:

Net acquisitionNetof ﬁnancial
incurrence ofassetsliabilities
Financial accountPortfolio investment
Debt securities
Other sectors
Nonﬁnancial
corporations
Long-term

10

Other investment
Currency and deposits
Deposit-taking
corporations
Short-term

10

13.66 Second, if interest accrued during a particular period is paid during that period, the offset tothe accrued interest is simply a financial transaction
through the banking system.
13.67 Third, if the interest accrued during a particular period is due for payment during that period but
not actually paid (interest in arrears) the offset to theaccrued interest should be recorded as a financial account transaction in the same type of instrument as
the underlying principal. Balance of payments entries
are similar to those presented earlier for the accrued
interest.
13.68 Data on arrears are important in their own
right, and thus should be presented as supplementary items, where significant, or memorandum itemsin the case of exceptional financing (see BPM6, Appendix 1).
13.69 For debt securities (portfolio investment)
and other types of debt, accrued interest should be
calculated in accordance with interest terms speci-

231

fied in the contract.14 For example, if a bond is issued
at par and the contract specifies a fixed-interest rateof 10 percent each year, the accrued interest for eachyear should be calculated as 10 percent of the amountoutstanding. On the other hand, if variable interest
rates are applicable to debt, the prevailing rate appropriate to the debt instrument should be used to calculate accrued interest.
13.70 If the debt security has coupon payments,
in both cases described earlier the result may differ
depending on coupon interest payments made during the period. If coupon interest payments are higher
than calculated accrued interest (i.e., the instrument
was issued at a premium), the difference should berecorded as a withdrawal of investment in the underlying security in the financial account. If coupon interest payments are lower than accrued interest (i.e.,
the instrument was issued at a discount), the difference should be recorded as further investment in theunderlying security.
13.71 It should be noted that, for debt securities,
the valuation in the balance sheets and recording ofpurchases and sales in the financial account and positions do not depend on the method used for the
calculation and recording of interest accrual. Acquisitions and disposals of debt securities are recorded attransaction prices, and the positions are recorded atmarket prices or fair values.
13.72 To obtain the information necessary forproperly recording accrued interest on securities, thebalance of payments compiler could approach creditors and debtors through enterprise surveys or a supplement to an ITRS.
13.73 The nature of an ITRS makes it more difficult to measure interest on an accrual basis than on a
payment basis. Nonetheless, an ITRS can be used as asource for measuring investment income in the balance of payments because interest, in many cases, ispaid in the periods in which it is accrued. The compiler need be concerned largely about collecting supplementary information for significant cases in whichinterest is not paid in the same period in which it is accrued (e.g., interest in arrears and interest on zero cou-

14

Debtor approach. Box 11.2 of the BPM6 gives an example of azero-coupon bond.

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Balance of Payments and International Investment Position Compilation Guide

Figure 13.1 Dates Associated with Dividends

Date declared

Ex-dividend date

Date payable

Shares go ex-dividendor start quoted ex-dividend

To the owner at date declared

If shares are sold, the buyer does not receive
this dividend payment
Dividends are recorded
Other accounts receivable / payable

pon and deep discounted bonds). Conversely, the useof yield analysis to derive estimates of investment income accords closely with the requirements of accrual
accounting but is an approximation of the method
preferred in the BPM6 for recording interest. The compiler should be aware of situations in which prevailing interest rates are not relevant for the calculation of
accrued interest—that is, in the case of fixed interest,
nontradable debt—and should ensure that these areconsidered in the calculation of interest yields.

Dividends and Ex-dividend Date
13.74 For corporations, the distributed income isin the form of dividends. For quasi-corporations, theinvestment income is withdrawals from income ofquasi-corporations, such as distributed branch profits, which are recorded when they actually take place.
13.75 Dividends represent a part of income thathas been generated over a substantial period; sometimes they may be related to the company’s profits inthe previous period, and in other cases, they are only
loosely related or not at all.

able is recorded as other accounts receivable/payable(see Figure 13.1).15

Superdividends
13.78 As mentioned, dividends may be or may not
be related to the company’s profits in the previous
period. For practical reasons, no attempt is made toalign dividend payments with earnings, except when
the dividends are disproportionately large. Superdividends are extraordinarily large dividends that are outof line with recent experience on the amount of income available for distribution to the owners of thecorporation or quasi-corporation. They arise when
the corporation declares payments disproportionately
large relative to the recent past level of dividends andearnings. The superdividends can be identified by thefollowing characteristics:(1) They are often paid out of the proceeds from salesof fixed assets, operating units, or liquidations.
(2) The level of dividends declared is greatly inexess of previous dividends and trends in earnings (considering around the last five years).

13.76 There are three dates associated with dividends:(1) The date they are declared(2) The ex-dividend date: this is the date when the
declared dividend is excluded from the market
price of shares. The holder of the security at
the moment shares go ex-dividend is entitled
to receive the dividend on the date payable(3) The date they are settled.
13.77 Dividends are recorded at the moment theshares go ex-dividend (date 2). Between the ex-dividend
date and actual settlement (2 and 3), the amount pay-

13.79 The excess payment should be excluded
from dividends and treated as a financial transaction,
specifically as withdrawal of shareholders’ equity fromthe corporation. Equally, liquidating dividends paid
to shareholders should be recorded as a withdrawal ofequity (see Example 13.2).
15
According to GFSM 2014, in the unusual case where there is no
ex-dividend date (which may occur when there is only a single
shareholder in certain public corporations), dividends should berecorded at the time they are declared. This methodology may bealso used in the international accounts.

Primary Income

233

Example 13.2 Calculation of Dividends

On March 4, a DIENT of the compiling economy declares a payment of dividends of US$800. On June 26
its shares go ex-dividend, and on July 14 the company pays dividends. Knowing that the level of dividends
paid in each of the last five years was US$200, the following balance of payments entries should be recordedin the balance of payments of the DIENT’s economy, assuming that the US$800 is a material amount forthat economy:
Balance of payments for quarter 1 (dividend declared payable to holders of record on June 26): No entries should
be recorded.
Balance of payments for quarter 3(payments are made):

Balance of payments for quarter 2(shares go ex-dividend):
CreditNet acquisitionNetof ﬁnancial
incurrence ofassetsliabilities

Debit

Current accountPrimary income
Other investment

Investment income

Currency and deposits

Direct investment

Other sectors

Income on equity andinvestment fund shares
Dividends

Short term

800

Other accounts payable—other

200

Other sectors
Short-term

Net acquisitionNetof ﬁnancial incurrence ofassetsliabilities

800

Financial accountDirect investment
Equity and investment
fund shares
Equity other than reinvestmentof earnings
Direct investor in direct
investment enterprises

600

Other investment
Other accounts payable—other1

1

Between the ex-dividend date and the payable date dividends

Other sectors
Short-termand superdividends are recorded as other accounts receivable/

800

Investment Income Attributable
to Investment Fund Shareholders
13.80 Investment funds are collective investment
undertakings through which investors pool funds forinvestment in financial or nonfinancial assets. Those
units acquiring shares in the funds thus spread theirrisk across all the instruments in the fund. Investment
funds provide a convenient, accessible, and affordable
vehicle for financial investment. Typically, investment
funds sell shares or units to the public and invest ina diversified portfolio of securities, although they

payable—other.

may also invest in other assets, including real estate,or they may be limited to a small number of investors. Investment fund shares have a particular role infinancial intermediation as a collective investment inother assets, so they are identified separately.
13.81 Investment fund shares refer to the sharesissued by mutual funds, rather than the shares themutual fund may hold. Each share represents a proportional equity in the investment portfolio managed
by investment funds.

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Balance of Payments and International Investment Position Compilation Guide

13.82 Investment income attributed to holdersof shares or units in investment funds includes thefollowing:

investment funds, and investment income should also
be recorded under direct investment income attributable to investment fund shareholders.

(1) Dividends distributed to investment fundshareholders

13.88 Investment income attributable to investment
funds shareholders is recorded in other investment income when it cannot be classified in any other functional
category (see BPM6, paragraph 11.106). This could be
the case when funds are limited to certain investors(who are not direct investors), such as unincorporated
funds, instead of being available to the public generally.

(2) Reinvested earnings attributed to investment
fund shareholders.
13.83 Dividends attributable to investment fundshareholders are recorded in exactly the same manneras dividends for individual corporations. Dividends are aform of investment income covering all distributions ofprofits by corporations to their shareholders or owners.
13.84 It is considered that the net earnings of investment funds after deducting the operating expenses belong to shareholders. When only a part of
the net earnings is distributed as dividends, the part ofretained earnings owned by nonresident shareholders
should be treated as if they were distributed to themand then deemed reinvested.
13.85 Reinvested earnings are recorded using thesame principles as those described earlier for foreign DIENTs; any undistributed earnings of an investment fundowned by nonresidents are shown as reinvested earnings in the primary income account and as reinvestmentof earnings in the financial account. When nonresident
shareholders own only part of the shares of the investment fund, the amount that is deemed to be remitted
to, and reinvested by, the nonresident shareholders is
proportional to the percent share of the equity owned.
13.86 Investment income attributable to nonresident owners of investment fund shares (both dividends and reinvested earnings) is usually recorded
as portfolio income; nonresident shareholders’ participation usually provides less than 10 percent of thevoting power in the investment fund, but it may also
arise in other functional categories—that is, direct investment, other investment, or reserve assets.
13.87 Investment funds could be DIENTs whena nonresident shareholder owns 10 percent or moreof the voting power in the investment fund. In thiscase, dividends and reinvested earnings attributable
to that shareholder should be recorded under direct
investment income. As mentioned before, this heading refers to income attributed to the shares issued bymutual funds, rather than to income attributed to theshares the mutual fund may hold, except when investment funds invest in other investment funds. In thiscase, investment funds can be direct investors in other

13.89 There may be considerable holding gains andlosses on investment fund shares; indeed, the mostfrequent reason for acquiring these instruments is tobenefit from the holding gains that arise from holding them. Investment income attributable to ownersof investment funds excludes holding gains and losses
arising from investment by the funds. Holding gains
and losses are recorded in the other changes in financial assets and liabilities account.

Fees for Securities Lending without
Cash Collateral
13.90 Securities lending without cash collateralconsists of the delivery of securities by their owner (thesecurities lender) for a given period of time to anotherparty (the securities borrower). In this circumstance,
legal ownership of the securities is transferred to theborrower (and the borrowers can subsequently on-sell
the securities outright to other entities), but the economic risks and rewards of ownership remain withthe original owner, who remains susceptible to gains
and losses from changes in prices of the securities.
13.91 The lender receives a fee from the borrower
under the securities lending agreement that represents a return to the security lender for putting the securities at the disposal of the securities borrower. Thissecurities lending fee received by the securities lenderis, by convention, to be recorded as interest, underother accounts receivable/payable in other investment
income, rather than in the category associated with the
instrument to which this payment relates (see BPM6,
paragraphs 5.73 and 11.68).
13.92 The economic owner of securities (securities
lender) continues to record investment income on the
securities (see BPM6, paragraph 11.69). If coupons
or dividends are paid to the securities borrower, whothen pays the securities lender, a rerouting from thesecurities borrower to the securities lender of thesepayments is recorded. In this way the payments arePrimary Income

235

recorded as transactions between the issuer of the securities and the securities lender. This maintains consistency between stocks and flows.

nomic activity by nonresidents (such as short-term
construction or installation projects) is insufficient toconstitute a branch.

13.93 If the total payment by the securities borrower to the securities lender includes both the securities lending fee and the rerouted payments, andthese two elements cannot be disaggregated in themanner described above, for practical reasons, thecompiler may wish to record the total payment as interest in other investment income.

13.99 The f.o.b. valuation for international accounts
purposes means that export taxes are treated as payable
by the exporter and that import duties and other taxesof the importing economy are payable by the importer;
therefore these are resident-to-resident transactions
and are not recorded in the international accounts. In
some cases, an exporter of a good contractually agrees
to pay import duties. In such cases, the duties are outside the scope of the primary distribution of income in
the international accounts. This treatment is adopted
because the duties arise from the process of importation, and so they are an obligation of the importer. They
are, therefore, treated as payable by the importer, andso are resident-to-resident transactions. The amountof import duties paid by the exporter, therefore, is notincluded in the f.o.b. value of the goods. Similarly, if an
importer agrees to pay export taxes, the tax is still an
obligation of the exporter. The amount of the export tax
paid by the importer, therefore, is included in the f.o.b.
value of the goods and rerouted through the exporter.

Other Primary Income
13.94 Other primary income is a residual categorythat includes primary income other than compensation of employees and investment income. This category includes the following:(1) Taxes on products and production(2) Subsidies on products and production(3) Rent.
13.95 Data sources available to collect other primary income are presented in Table 13.1.

Taxes and Subsidies on Products
and Production
13.96 Taxes and subsidies on products and production are recorded separately in other primary income.
This includes any payments of taxes on production
payable by a resident to another government as wellas any subsidy receivable by a resident from anothergovernment.
13.97 Taxes on products and production are included in the primary income account, while taxes
on income and wealth are included in the secondary
income account (e.g., taxes on capital gains and taxes
on wages and salaries) (BPM6, paragraphs 11.92 and12.28). A tax on products is a tax that is payable perunit of a good or service (e.g., value-added tax andimport duties). These taxes may be added to the pricesof the goods or services sold. Other taxes on production consist of all taxes except taxes on products thatcompanies incur as a result of engaging in production(e.g., payroll taxes and business licenses).
13.98 For most economies, taxes and subsidies
receivable from or payable to nonresident producers
would be nonexistent or negligible. They arise if aninternational or regional organization levies its own
taxes or pays subsidies. They may also arise when eco-13.100 In some circumstances, a duty or other tax
may be imposed by the customs authorities withoutownership being acquired by a resident of that economy.
Examples may include goods to be processed, repaired,or stored, or for use by visitors. In such cases, when customs duties are payable by nonresidents, the duties arerecorded as taxes on products in other primary income.

Rent
13.101 The income payable for the use of a natural
resource is called rent. Natural resources include land,mineral rights, forestry rights, water, fishing rights, airspace, and electromagnetic spectrum.
13.102 Rent covers income associated with theownership of natural resources. Natural resources giverise to property income other than investment income.
Rent may arise in cross border situations, but rarely,
because all land is deemed to be owned by residents,
if necessary by creating a notional resident unit. An
example where rent may be recorded in the international accounts may be short-term fishing rights interritorial waters provided to foreign fishing fleets. It
is also possible that other natural resources adjoining
a border could be extracted from a base on the otherside of the border, thus giving rise to rent. Anotherexample of rent in the balance of payments is given in236

Balance of Payments and International Investment Position Compilation Guide

Box 10.1, describing the treatment of production sharing agreements.
13.103 Payments and receipts by government ofrent on land areas without buildings (such as embassies, consulates, military bases, representative offices
with diplomatic status) that are used by other governments that rent them for diplomatic, military, or otherpurposes should be shown as rent. For rent on landand buildings see the section ahead.
13.104 Another component that is classified under
rent is related to agreements in professional sports
involving the sale of rights to use players. Underso-called loan agreements, a player is allowed totemporarily play for a club other than the one withwhom the player is currently under contract. The fees
paid under loan agreements should be recorded inproperty income as rent. More details on transfer ofrights to use the sport players are presented in “Contract, leases, and licenses” in Chapter 15.

Rent and Rentals
13.105 The compiler should distinguish between
rent and rentals. Rentals are payments made underan operating lease to use a fixed asset, such as buildings or equipment, belonging to a resident in anothereconomy. Rent is a payment made under a resource
lease for the use of a natural resource. Rent is considered property income and included in the primary
income account while rentals are treated as sales orpurchases of services.
13.106 An operating leasing is one in which thelegal owner of a produced asset has the operating risks
and rewards from ownership of the asset. It is the responsibility of the legal owner to provide any necessary
repair and maintenance of the asset. Under an operating lease, the asset remains on the balance sheet of thelessor (owner) even though it is used by the lessee. The
operating leasing gives rise to services and is recorded
as technical, trade-related, and other business services(if leased by a commercial entity), and as government
goods and services n.i.e. (if leased by international organizations, embassies, and so forth). A resource leaseis an agreement whereby the legal owner of a natural
resource that has a very long or infinite life makes it
available to a lessee in return for a regular payment,
which is recorded as rent. The resource continues tobe recorded on the balance sheet of the lessor (owner)
even though it is used by the lessee.
13.107 The differences between rent and rentals
are illustrated in Figure 13.2.

Figure 13.2 Difference Between Rent andRentals
Rent

Rentals

Payment made under
Operating leases
Resource leases
For the use of
Natural resources
Fixed assets(Nonproduced assets)(Produced assets)(Very long or inﬁnite life)(Finite life)

Included inPrimary income

Services

13.108 In practice, however, a single payment may
cover both rent and rentals when an institutional unit
rents land that consists of land in its natural state andbuildings situated on it in a single contract, or lease,in which the two kinds of payments are not differentiated from each other. The allocation of the payment
between rent and rentals when there is no objective
method of splitting it is done in the favor of component with the highest value. (See also “Operating Leasing” in Chapter 12.)

14

Secondary Income

14.1 The transactions recorded in the secondary
income account pertain to those current transfers between residents and nonresidents that directly affectthe level of gross national disposable income and thus
influence the economy’s ability to consume goods andservices.
14.2 From an accounting point of view, the entry
made in the secondary income account balances the
economic value in kind or in cash recorded in the goods,
services, or financial account provided to or received
from a nonresident company without quid pro quo.
14.3 Transfers should be distinguished as current
or capital. Capital transfers, which are part of the balance of payments capital account, are discussed in
Chapter 15. Current transfers are all transfers that are
not capital (see BPM6, paragraphs 12.13–12.15).
14.4 In the balance of payments, the current transfers are classified as those involving the compiling
economy’s general government and those involving

other (domestic) sectors. The latter are further split
into personal transfers (transfers between resident andnonresident households) and other current transfers.
14.5 Table 14.1 summarizes sources and methods
that could be used to compile the specific types of current transfers described in more detail ahead.

Data Sources and Methods
International Transactions Reporting
System (ITRS)
14.6 An ITRS can serve as a cost-efficient and comprehensive data source to capture cash transactions
throughout the whole balance of payments. However,supplementary collection of information apart fromITRS is necessary to capture all noncash transactions,as well as other complex transactions that are notchanneled through the banking sector. For instance,
certain technical assistance activities involving technical assistance personnel are often funded directly by

Table 14.1 Compilation of Secondary Income Items
Description

Source and method of compilation

General government
Current international cooperation:
Technical assistanceFor the donor economy (debits), data should be available from ofﬁcial
records from the donor company within the government sector responsible
for coordinating technical assistance. For the recipient economy (credits),
information should be available from ofﬁcial records of the recipientcompany within the government sector responsible for coordinatingexternal aid, from donors records, or from partner economy data. Project
data should provide the breakdown of the project costs into the relevant
components (see main text and examples). Costs incurred in the donors
economy should be included in the value of technical assistance. Data on
the cash component could be available from an ITRS. Data could also be
available from partner economy records.

Budgetary grants

For both recipient and donor economies, data should be available fromofﬁcial budget records or from an ITRS. Care should be taken to ensure thatinvestment grants are recorded, in the capital account, as capital transfers
rather than as current transfers. Data could also be available from partner
economy records.

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Balance of Payments and International Investment Position Compilation Guide

Table 14.1 Compilation of Secondary Income Items (concluded)(continued)
Description

Source and method of compilation

Contributions (membership fees)
payable to international organizations
and transfers by the internationalorganizations to governments (as amatter of policy)

Data should be available from ofﬁcial budget records or from theresponsible agency, such as the ministry of external affairs.

Taxes on income, wealth, and othertaxes including ﬁnes, penalties, fees(that are taxes and not a payment for aservice), etc. (credits only)

Data should be available from ofﬁcial sources, such as tax records (inthe case of taxes on income and wealth), and records of other relevant
government agencies (in the case of fees, ﬁnes, etc.).

Social contributions payable bynonresidents (credits only)

Data should be available from ofﬁcial budget records, from the responsible
agency (such as the ministry of social security), including social contributions
paid by both employers and employees.

Social beneﬁts—for example, pension
and nonpension beneﬁts payable tononresidents (debits only)

Data should be available from ofﬁcial budget records, from the responsible
agency (such as the ministry of social security), or from an ITRS.

Scholarships for education (debits only)

Data should be available from ofﬁcial budget records or from theresponsible agency, such as the ministry of education. It is important thatthe counterpart to this transfer be recorded in the travel credits item if thescholarship relates to study in the donor economy.

Other miscellaneous current transfers ofgeneral government

Data could be available from ofﬁcial records or, for cash transfers, froman ITRS.

Other sectors
Personal transfers (including workers’
remittances)

Data could be available from an ITRS, surveys of money transfer operators,
employers and recruitment organizations, or household surveys (such as
income and expenditure surveys). Data could also be available from partner
economy records.

Other current transfers:
Taxes on income, wealth, etc.
(debits only)

Data could be available from an ITRS or from enterprise surveys. Care should
be taken that these transactions are recorded as transfers and not netted
against other related transactions, such as income payments.

Social contributions, social beneﬁts

Data could be available from an ITRS, from the records of a local payments
agent (if such an agent exists), from surveys of households, or from partner
economy information.

Net premiums and claims on nonlife
insurance, life insurance, andreinsurance

An ITRS or enterprise surveys could be used to obtain underlying data on
premiums and claims; such data could be used to calculate these entries.
However, as explained in Appendix 2, the compiler must manipulate thesedata to derive estimates of transfers associated with nonlife insurance andreinsurance.

Current international cooperation

Data on transactions of ﬁscal entities could be collected from thegovernment administrative records (in economy of residence ofgovernment) or through enterprise surveys (in economy of residence ofﬁscal entity). Data could also be available from partner economy records.

Scholarships for education

Data could come from the local agency responsible for distributing the
grants (if such an agency exists), from scholarship foundations, education
institutions, or from partner economy records. It is important that the offset
to the transfer be recorded in the travel debits item if the scholarship relates
to study outside the recipient economy.

Other miscellaneous current transfers

Data could come from an ITRS or from surveys of enterprises andhouseholds.

Source: IMF staff.

Secondary Income

donor governments and other nonresident companies
and cannot be captured through the ITRS. Also, whenusing ITRS for personal transfers in cash between
households, the compiler needs to be cautious inorder to distinguish properly personal transfers fromtransactions that satisfy other purposes, such as saving, investment, or making private gifts in the formof grants (see Table 14.2). Regarding social contributions paid to nonresident pension funds, data from an
ITRS can capture only the compensation of employees net of contributions.

Other Data Sources
14.7 Surveys of domestic insurance companies andpension funds are possible data sources that enable
the compiler to capture information on a conceptually sound basis, including information necessary for
imputing cross border insurance components, andadjusting for accrual accounting.
14.8 The same comprehensive approach will not be
feasible when companies are nonresident to the compiler’s economy. In that case, and for other items—in
the absence of data—estimates may be developed
via data models by using ratios and secondary data
sources, such as partner economy data.
14.9 Official data sources, such as government
accounts, could be used to measure current international cooperation, taxes on income and wealth, orsocial security transactions.

Personal Transfers
14.10 Personal transfers consist of all current transfers in cash or in kind made or received by resident
households to or from nonresident households. They
often consist of regular transfers in cash or in kind between members of the same families that are resident
in different economies, when family members with
the intent to work abroad for a year or longer sendhome resources to support their relatives.
14.11 Personal transfers include workers’ remittances, but are not confined to transfers within families
and income from employment (see BPM6, paragraph12.21). For economies with diasporas abroad, personaltransfers constitute an important source of income,sometimes even exceeding receipts from exporting
goods and services.

239

14.12 Several institutions are involved in providing international remittances services to households:(1) international money transfer operators (MTO)
licensed to provide cross border money-transferring
services; (2) commercial banks; and (3) in some cases
government-owned companies, which are allowed toengage in remittance services through their branches
overseas.
14.13 Not all transactions channeled throughMTOs or commercial banks from individuals andhouseholds abroad, and between households, represent personal transfers. The compiler needs to distinguish personal transfers from transactions that satisfy
other purposes, such as transferring funds between
accounts for saving (pure financial account transaction), putting up housing units (real estate), or making private gifts in the form of grants (which may
be capital transfers). Importers may sometimes use
MTOs to pay for their goods.

International Transactions in Remittances
14.14 The international concept of “remittances”
is broader than that of personal transfers, as it also
encompasses the net income generated by short-term
workers abroad—that is, compensation of employees; however, it is measured net of the expenses incurred abroad for travel, transport, taxes, and social
contributions. Three main measures of remittancesare (1) personal remittances; (2) total remittances;and (3) total remittances and transfers to NPISHs (seeBPM6, Appendix 5).
14.15 The high international interest in analyzing remittances data and their impact on economic
development led to the publication of the 2009 International Transaction in Remittances: Guide for Compilers and Users.1 It summarizes the definitions andconcepts related to remittances in the balance of payments framework, and it includes guidance on data
sources and compilation, as well as several case studies of economies.
14.16 The remittances categories are included
as supplementary items in the balance of payments
statement; they are cumulative measures that are1
It can be downloaded from the IMF Website at http://www.imf.
org/external/np/sta/bop/remitt.htm.

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Table 14.2 Borderline Cases for Account-to-Account Transfers
ExamplesClassiﬁcation in the balance of payments of the reporting
economy A

Individual employed short-term in economy B transfers
most of his salary to his account in home economy
A; he spends the residual part for accommodation,transport, and food in economy B.

Primary income—compensation of employees—credit (thegross amount of his salary); services—travel—debit (theamount spent in economy B)

Individual employed long-term in economy B transfers
part of his salary to his mothers account in economy A.

Secondary income accountpersonal transfers—workers’
remittances—credit (the amount transferred to his mothersaccount)

Individual employed long-term in economy B transfers
part of his salary and income revenue to his account inhome economy (economy A), to which his ﬁancée hasaccess directly or through an ATM.

Secondary income account—personal transfers—workers’
remittances—credit (the amount transferred to his account);
recorded when transfer takes place as opposed to whenﬁance withdraws funds from the accountIndividual employed long-term in economy B transfers
funds to his savings account in home economy(economy A).

Financial account—other investment—currency anddeposits—net incurrence of liabilities [increase] (the amounttransferred to the savings account)

Individual employed long-term in economy B transfers
funds to economy A and acquires real estate.

Financial account—direct investment—liabilities—equity andinvestment fund sharesnet incurrence of liabilities [increase](the amount transferred to economy A)

Individual employed long-term in economy B transfers
funds to the account of his brother in economy A forbuying real estate for the brothers family.

Capital account—capital transfers (of which: between
households)—credit (the amount transferred to economy A)

Individual resident of economy A is attending a twoyear masters program at a university in economy B,
where he regularly receives ﬁnancial support from his
family resident in economy A.

Services account—travel (personal travel—education—
related) —debit (the amount transferred by the family andany additional amounts spent by the student in the economy
of study)

Source: IMF staff.

compiled by combining components that are included/identified in different standard componentsof the balance of payments. For instance, personal
remittances are compiled by adding to two standard
components—personal transfers and compensationof employees net of taxes, social contributions, andother expenses made by the short-term workers inhost economies—the capital transfers between households. Or total remittances are calculated by adding
to personal remittances the amount of social benefits
received by resident households / paid to nonresident
households.
14.17 Data sources for collecting data on components used in compiling remittances measures aredescribed in chapters or paragraphs that cover the
standard balance of payments components to which
they pertain (e.g., see travel for expenses in host economy, other current transfers for social contributions,social benefits, and taxes; and capital transfers forcapital transfers between households).

Other Current Transfers
Taxes on Income, Wealth, and So Forth14.18 Cross border current taxes on income,wealth, and so forth consist mainly of taxes on incomes, capital gains, and financial transactions(BPM6, paragraph 12.28). In principle, taxes on income are deducted at the source and should be attributed to the period in which the income is earned.
In practice, however, taxes may sometimes be recorded in the periods in which they are paid; someflexibility may be needed because the liability to
pay income taxes can be determined only in a lateraccounting period than that in which the income
accrues.
14.19 For taxes receivable on employment income,the local or national government usually withholds
part of the employee’s compensation based on theemployee’s estimated tax liability (withholding tax);
only the net compensation is paid to the employee

Secondary Income

abroad.2 The compiler should keep in mind that thecompensation of employees should be recorded ona gross basis, including taxes on income. Although
the tax payment to the local government is paid by adomestic employer, it does not constitute a domestictransaction; the compiler needs to include the income
tax receivable in the employee’s gross compensation
and regard the tax as being paid by the nonresident
employee (see BPM6, paragraph 11.23). Tax refunds
from the government where the employee is working
abroad to the nonresident employees are deductedfrom taxes received—that is, as negative taxes (seeBPM6, paragraph 12.28). Withholding taxes on interest and dividends are often calculated by the compiler
as a fixed percentage of gross transactions.
14.20 Many economies have joined multilateraltaxation arrangements. According to these arrangements, employees may either pay taxes in their economy of residence and are exempted from income
taxes in the economy of employment, or the taxation
is deducted at the source, and thus employees are
exempted from taxation by the government of theireconomy of residence.
14.21 In any case, the compiler may approach tax
authorities to request aggregate information on tax
records and on any existing withholding tax arrangements with third economies in order to make thenecessary adjustments to compensation of employees
and corresponding taxes in the secondary income account. The compiler needs to increase the net amounts
for compensation of employees reported in the ITRS
by the percentages that relate to income tax withheldby the host economy’s government; or use the information from government entities on numbers of crossborder employees, short-term workers, and local staff
hired by foreign embassies, international organizations, and nonresident donor governments, to estimate average income and average tax rates thereon.
Economies with tax arrangements may agree to exchange information in order to pursue tax evasion,and such information may be useful in compiling thebalance of payments accounts.
14.22 Alternatively to collecting data directly fromtax authorities, the compiler could estimate taxes by

2
Only taxes payable by nonresident workers in the reporting
economy are recorded in the balance of payments.

241

applying implicit tax rates to compensation of employees and make adjustments for tax refunds fromthe government to the nonresident employee.
Example 14.1 Taxes on income and wealth

Mr. A is a resident of economy A and lives at theborder of economy B. He works at company B in
economy B, and earns US$3,000 net after tax. The
governments of economy A and B concluded a bilateral taxation agreement based on which nonresident employees pay 10 percent taxes on their taxable
income earned in the host economy. The compiler
needs to increase the net earnings (US$3,000) that
constitute 90 percent of total earnings to arrive at
the gross income (US$3,333), and reroute the 10
percent tax payment payable (US$333) to government B through Mr. A’s employment compensation. The following entries would appear in thebalance of payments of economy A:
CreditDebit

Current accountPrimary income
Compensation of
employees

3,333

Secondary income
Financial corporations,
nonﬁnancial
corporations,households, and NPISHs
Other current transfers

333

Current taxes on
income, wealth, etc.

333

Net
Net
acquisition of incurrence
ﬁnancial assets of liabilities
Financial account
Other investment
Currency and deposits
Deposit-taking
corporations, except
the central bank

3,000

14.23 Conceptually, the compiler needs to also
make the distinction between taxes levied and fees
charged by government entities in return for services
provided to nonresidents. The distinction is made

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Balance of Payments and International Investment Position Compilation Guide

based on the amount of work involved on the partof government—for example, whether there is any
regulatory function exercised; this is not always clear
cut in practice. But as a convention, amounts payableby households for licenses to own or use vehicles,boats, or aircraft, as well as licenses for recreational
hunting or fishing, are treated as taxes, whereas
amounts payable by households for all other kinds oflicenses, permits, certificates, passports, and so forth
are treated as purchases of services (see BPM6, paragraphs 10.180–10.181 and 12.30).

Social Contributions and Social Beneﬁts
14.24 Estimations for pension transactions are relevant for economies with high percentages of borderworkers and guest workers in the domestic economy
or abroad, and for economies with international organizations that employ a significant number of residents of the compiling economy.
14.25 Social contributions to and benefits frompension funds are recorded in the secondary income
account. The 2008 SNA and BPM6 distinguish betweensocial security schemes and employment-related
schemes other than social security, partly based on theprovider of the social insurance or pension. The partprovided by general government is called social security (assuming it provides social benefits to members of
the community as a whole, or of particular sections of
the community), and the part provided by employers
is called employment-related schemes other than social security (see 2008 SNA, paragraph 17.118).
14.26 Employment-related schemes other thansocial security are further classified as defined benefit or defined contribution schemes according to
how the benefits are determined—that is, by who isbearing the risk of the scheme to provide an adequate
income in retirement (see BPM6, paragraph 7.65).
Conceptually, these two schemes trigger transactions in accounts similar to the ones in insurance accounting (see Appendix 2, “Insurance Transactions
and Positions”)—namely, the derivation of an outputof the pension fund is recorded in the services account; the net3 contributions made to the pension
fund are recorded in the secondary income account,
as well as the benefits received; the change in pension

3“Net” implies that the service charge has been deducted; see Appendix 2 for further details.

entitlements due to transactions is recorded in the financial account; and the investment income earnedon existing entitlements is recorded in the primary income account. However, the different features with regard to the benefits payable upon retirement result indifferences in the accounting concepts of these pension schemes and, consequently, in how the compiler
will have to design the reporting forms to obtain therelevant information.
14.27 Appendix 2 provides an overview of thecharacteristics of accounting in both schemes, followed by how the pension fund accounting data need
to be manipulated in order to derive balance of payments and IIP components according to the BPM6.
The underlying methodology is explained by using
numerical examples.
14.28 The Social security schemes part of Appendix 2 presents a short description of social security systems. Accounting for social security funds isless complex, because current workers’ contributions
are used by the government company operating thescheme to pay out current benefits.
14.29 Information on cross border workers or“resident aliens” can be sought from government
agencies issuing work permits and visas, or from tax
authorities. The latter may also be relevant for pension
benefits paid to or received for retirees as they may
be subject to domestic taxation, or double tax treaties. Pension funds should likely be able to provide
either aggregate information on actual contributions
received from the respective companies on behalf of
their nonresident employees, or on average contribution rates relative to gross wages; information should
also be available on the benefits that are being paid toretirees abroad. Through surveying domestic pension
funds, the compiler is able to request information on aconceptually correct basis as explained in Appendix 2.
In general, the compiler will need to inquire about thepension plans’ breakdown into its cross border components. Model form 13 in Appendix 8 is an example
of a pension fund survey form.
14.30 In case of social benefits received by retirees
from nonresident pension funds, the collection of data
could be more difficult considering that the nonresident providers of benefits are not available for survey
in economy of residence of retirees. An ITRS could
capture the benefits received if the amounts are transferred through the banking system. Pensions from

Secondary Income

abroad could also be transferred through the postal
service, specifically in economies with bilateral postal
agreements. If the postal administration is reporting
data on cross border transactions for the balance of
payments purpose, the compiler should request theidentification in the reported data of transactions
related to pensions. In case the postal administration does not report such data, the compiler should
consider establishing the collection of data from thepostal administration, including on transfers of pensions. Also, the household survey could provide valuable inputs for estimating the benefits received fromabroad by retired household members.
14.31 Data from an ITRS will be on a cash basis
and capture only the compensation of employees netof contributions. For residents paying contributions
to defined benefit pension funds abroad, the net salary received on the domestic bank account would
serve as a basis for estimating both the employee andemployer contributions; information on average contribution rates for employees and for employers could
be used for this purpose. Secondly, a small percentage
thereof should be derived as pension service payable
to pension funds abroad. The ITRS provides information on economies to and from which salaries andwages are paid/received. The compiler could contact
the authorities in these economies respectively, to obtain appropriate ratios for their contribution rates andservices estimates.

Net Nonlife Insurance Premiums andClaims and Calls under Standardized
Guarantees
14.32 Nonlife insurance premiums4 and nonlife insurance claims are recorded in the secondary income
account. The chief function of nonlife insurers lies in
the proper redistribution of premiums earned andother income to individuals of homogeneous groups
that have incurred losses. Furthermore, funds at thedisposal of the insurance unit, called (nonlife) insurance technical reserves, are invested in financial andother assets to generate income. The insurance technical reserves and the corresponding income from theirinvestment, called premium supplements, are assetsof the policyholders and liabilities of the insurancecompanies.
4
Insurance premiums are recorded net of the service charge; see
Appendix 2 for further details.

243

14.33 The BPM6 is based on and in strong accordance with the accounting terminologies that
insurance companies use to set up their accounts.
Nevertheless, the compiler needs to make certain adjustments before data can be used to derive relevantbalance of payments entries according to the BPM6.
These adjustments are necessary, for instance, to determine and differentiate the amounts of premiums
related to direct business with policyholders, and theamounts related to reinsurance (see Appendix 2, “Insurance Transactions and Positions”).
14.34 There are differences between nonlife andlife policies leading to different types of entries in
the international accounts. For life insurance, theprebenefits period generally extends throughout theentire life of the contract and there is little or no uncertainty about the payment. The payments madeover the years are regarded as a financial investment(or saving), which will be returned to the policyholder in later years. Thus the recording of premiums(net of services) and benefits is made in the financial
account.
14.35 The compiler can obtain most comprehensive data for exports of insurance services from surveying resident insurance companies. To enable anappropriate coverage of the domestic insurance sector, a survey frame should be available, including alist of insurance companies, which may be provided
by the authority issuing the licenses for insurance
business. Through surveying domestic insurancecompanies, the compiler is able to request information on a conceptually correct basis—that is, premiums earned and claims due—as well as insurance
technical reserves and the income earned on thosereserves.
14.36 Resident insurance companies should reportdetails of premiums and claims in respect of businessobtained from abroad and in respect of international
reinsurance flows. In addition, these companies may
be asked to report details of premiums and claims in
respect of insurance written by them on imports. Insurance terms may differ due to different accounting
practices that are being applied in worldwide insurance accounting.
14.37 For estimating the import of insurance services (debit), the compiler could apply the ratio of domestic service charge on premiums to premiums paid
to nonresident insurance companies.

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Balance of Payments and International Investment Position Compilation Guide

Current International Cooperation
Forms of technical assistanceand their data source

14.38 Current international cooperation consists ofcurrent transfers in cash or in kind between the governments of different economies or between governments
and international organizations (see BPM6, paragraph12.47). External aid provided by governments througha nonresident entity created to undertake fiscal functions is also considered to be current international
cooperation (see BPM6, paragraphs 12.48). These
can include cash transfers for the purpose of financing current expenditures by the recipient government,or shipped aid items like food and medication. Especially for cash transfers, the compiler needs information from the government on the purpose of the cash
grants provided to or received from abroad in order todistinguish current from capital transfers.
14.39 Capital transfers are transfers in which theownership of an asset5 changes from one party to another; or that oblige one or both parties to acquireor dispose of an asset; or where a liability is forgivenby the creditor. Cash transfers involving disposals of
noncash assets (other than inventories) or acquisitionof noncash assets (other than inventories) are also
capital transfers (see BPM6, paragraph 12.13). Some
information may be readily available on individual
projects that are being monitored and supervised bygovernment entities such as the Ministry of Financeor the Ministry for Development.
14.40 Current transfers related to transactions offiscal companies owned or controlled by the general
government that are residents of another territory
occur if the fiscal company provides borrowed funds
to a third party (not to the general government that
established or controls it). In this case, a current or
capital transfer between the government and the fiscal
company is imputed with an offset entry in the reduction of government’s equity in the fiscal company (seeBPM6, paragraphs 8.24–8.25). Data on transactionsof fiscal companies could be collected from the government administrative records (in economy of residence of government) or through enterprise surveys(in economy of residence of fiscal company).

5
Assets in this paragraph generally refer to fixed assets and otherassets that are capital in nature (see BPM6, paragraph 12.13).

14.41 The valuation of technical assistance should
be done distinguishing between assistance in kind andthose in cash. The value of the assistance in kind includes(1) the value of goods and services themselves (it will be
the market value if acquired form market producers or
the cost value if produced by the delivery agency), and(2) the associated costs that could be identified in relation to the delivery of related goods and services.6
14.42 Regarding the assistance in cash (financial
assets), their value should reflect the transfer value; itis difficult to distinguish administrative costs directly
related to the cash transfer. For practical reasons, theadministrative costs are excluded from the cash assistance, even if it creates an inconsistency with thevaluation of assistance in kind.
14.43 For aid in kind the customs authorities generally can provide information on the recipient sector(government or nongovernmental organization), as
well as on the purpose (e.g., emergency aid, material for
construction), as these goods are exempted from taxes
and duties. This information should be cross-checkedwith project data from government entities. In somecases, depending on the funding arrangements withdonors, goods can be imported within the context ofa technical assistance project, but the funds to pay forthe goods may have been separately provided by thedonors to the government’s accounts. In other words,
those goods methodologically constitute a regular import paid with donor money (see Example 14.3).
Technical assistance

14.44 Technical assistance in the form of staffed missions sent to economies for undertaking project work
is another form of international cooperation that needs
to be captured in the balance of payments accounts.
Such projects include a number of components that are
relevant for the balance of payments. The total cost of
projects should be registered as a transfer as a counterentry for transactions that reflect the goods, services, orfunds provided by the donor within the technical assistance project. The costs include administrative expenses
incurred in the donor economy, costs incurred in therecipient economy (e.g., for transport, administrative
arrangements), and the salaries paid to short-term technical assistance personnel as well as long-term person-6

See 2008 SNA, paragraph 22.101.

Secondary Income

nel and local staff. Furthermore, while on mission in therecipient economy, staff spend part of their salaries7 foraccommodation and for consumption; long-term staff
also often transfer part of their salary to their home
economies (see examples ahead).
14.45 Technical assistance activities of such kindcannot be captured through ITRS data except for thecases when funds within the technical assistance project are transferred to the government or to the project
implementation units’ accounts established in recipient economy. As is often the case, donor governments
transfer funds directly to the accounts of the contractors, who in turn send personnel to the recipient
economies. Compensation of employees’ receivablefor staff hired in the context of technical assistanceis recorded in the balance of payments if it concerns
local staff or other residents in the recipient economy
that are being employed or paid for directly by thedonor government or international organizations. If,
on the other hand, the staff is resident in the recipient
economy and considered employed by the recipientauthorities, but paid through funds of the donor government, a current transfer receivable is recorded in
the recipient economy’s balance of payments, whereas
the compensation of employees is recorded only in thedomestic accounts. Should the recipient authorities,
however, hire short-term technical assistance staff
7
The salaries are often transferred to local bank accounts (increase in liabilities of the local commercial bank vis-à-vis thenonresident staff, and at the same time increase in banks’ foreign
currency assets).

245

themselves (for instance, from third economies), thiswould again incur compensation of employees debits.
14.46 Data source for the noncash transfers within
the technical assistance projects is the donor or recipient company within the government sector responsible for coordinating external aid. Project data
should provide the breakdown of the project costs
into the relevant components (see examples ahead).
Travel expenditures of short-term staff can be approximated by using ratios applied on salaries. The
cash component of the projects could be captured
through an ITRS or through the same companies as
for noncash transfers.
14.47 For valuing certain services provided in kind,such as health-related or emergency relief-related services, which are provided pro bono or at a salary that significantly understates the value of the service provided, thecompiler needs to approximate the value of these services
with prices that would have been paid if the services weresold in the market (see BPM6, paragraph 3.72).

Examples of Technical Assistance
Reporting in the Balance of Payments
14.48 The following examples differentiate the way
technical assistance is funded, and by whom technical assistance personnel are employed. Example 14.2,
14.3, and 14.4 explain the balance of payments entries
from the viewpoint of the recipient economy; Example 14.5 switches to the recordings in the balance of
payments of the donor economy. Appendix 8 provides
model forms for official sources (e.g., ministries).

Example 14.2 Technical assistance personnel employed by donors

In this example, technical assistance is funded through the representative office of an international organization1 or a foreign donor government. The personnel are employed by the international organization/
donor government, which transfers the salaries to a local bank account. The overall project in this example
comprises consulting services for government accounting, cash grants to finance current expenditures, andthe shipping of donated office supplies.
From the government entity in the recipient economy, the compiler is able to obtain the following breakdown of the project costs during the accounting period:
Total cost of technical assistance for providing consulting2 services: 155of which:
Salaries paid to short-term3 technical assistance personnel: 70

Salaries paid to long-term4 technical assistance personnel, or locals: 35
Administrative costs incurred in donor economy: 5
Other expenses in recipient economy with regard to consulting services: 45

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Balance of Payments and International Investment Position Compilation Guide

Example 14.2 Technical assistance personnel employed by donors (concluded)

Additionally, donors agreed to provide the following aid:
Cash grants paid by donors to finance other current expenditures: 200
Office supplies shipped from donor economy: worth 100

Short-term staff are assumed to spend a portion of their salaries for accommodation and consumption in the recipient economy while on duty. The compiler should try to estimate an average ratio for
travel expenses to salaries, and preferably base it on a small and recurring sample of short-term technical assistance personnel in the economy. Information could also be obtained from payments madeby nonresidents from their local bank accounts or by credit cards. Long-term staff might transfer a
proportion of their salary to bank accounts in their home economies. This could be captured from the
ITRS. The compiler needs to distinguish personal transfers from transactions that satisfy other purposes, such as transferring funds between accounts for saving (pure financial account transaction),acquiring housing units (real estate), or making private gifts in the form of grants (capital transfers).
The total technical assistance project costs (155) are recorded as an import of consulting services counterbalanced by a transfer receivable under current international cooperation in the secondary income
account. During the period, expenses (45) for other business services are incurred by the donors in connection with the project and paid with foreign currency to the local banks. The salaries for short-term (70),and long-term and local (35) personnel are transferred from abroad in foreign currency to the local banks,
where staff have local bank accounts. Local bank accounts of short-term staff are external liabilities of thelocal banking sector (70). The assumed ratio of travel expenses that short-term staff incur during duty is
about 30 percent of their average salary. Expenses that short-term staff have for food and accommodation (21) are paid from their accounts. Long-term staff are assumed to have transferred part (15) of theircompensation of employees receivable to their bank accounts abroad. The additional cash grant for othercurrent expenditures (200) is transferred by the donor to the local central bank.
The following entries should be recorded in the balance of payments of the recipient economy:
CreditCurrent account
Goods
Services
TravelBusiness
Other businessservices
Professional andmanagement
consulting services
Primary income
Compensation of
employees
Secondary income
General government
Current
international
corporation
1

Debit
100

21
45

35

155+100+200

155

Financial account
Other investment
Currency and deposits
Deposit-taking
corporations, except
the central bank
Other sectors
Nonﬁnancial
corporations,households and
NPISHsReserve assets
Other reserve assets
Currency and deposits

Net acquisitionof ﬁnancial
assetsNet
incurrence ofliabilities

+70
+35
+45
15

+70
21

+15

+200

Branches of international organizations are considered nonresidents.
Technical assistance covers a wide range of different services, and should be classified according to the nature of services (BPM6,
Box 10.6).
3
Short-term refers to personnel that remain in the recipient economy for less than one year.
4
Long-term refers to personnel that remain in the recipient economy for one year or longer.
2Secondary Income

247

Example 14.3 Technical assistance personnel employed by recipient government

In this example, technical assistance is funded by an international organization or a foreign donor government; however, the local recipient government receives the funds in full and uses them to cover the salaries ofthe long-term and short-term technical assistance personnel, as well as all other expenses, including imports
from third economies.
From the government entity in the recipient economy, the compiler is able to obtain the following breakdown of the funds received for covering the project costs:
Cash grants received to finance current expenditures: 450of which:
To pay salaries to short-term technical assistance personnel: 70
To pay salaries to long-term technical assistance personnel, or locals: 35
To pay for other expenses in recipient economy with regard to consulting project: 45
To pay for imports of office supplies: 100
Resident-to-resident transactions of the recipient of the grant: 200.

The total cash grant (450) is recorded as transfer receivable under current international cooperation in thesecondary income account and as foreign currency received in the central bank reserve assets. The recipient
government transfers salaries to the local bank accounts of the short-term personnel (70). Local bank accounts of short-term staff are external liabilities of the local banking sector (70). The assumed ratio of travel
expenses short-term staff incur during duty is again about 30 percent of their average salary. Expenses thatshort-term staff have for food and accommodation (21) are paid from their accounts. Long-term staff are
assumed to have transferred part (15) of their compensation of employees to support their relatives abroad,which is recorded as personal transfers in the secondary income account. The office supplies (100) are imported by the recipient government and paid from the grant funds.
The following entries should be recorded in the balance of payments of the recipient economy:
CreditCurrent account
Goods
Services
TravelBusiness
Primary income
Compensation of
employees
Secondary income
General government
Current international
corporation
Financial corporations,
nonﬁnancial
corporations,households, and NPISHs
Personal transfers

Net acquisitionNetof ﬁnancial
incurrence ofassetsliabilities

Debit
100

21
70

450

15

Financial account
Other investment
Currency and deposits
Deposit-taking
corporations, except
the central bankReserve assets
Other reserve assets
Currency anddeposits

 15

450
100

+70
21

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Balance of Payments and International Investment Position Compilation Guide

Example 14.4 Grants and donations sent to local NPISHs in the recipient economy

In this example, local nonprofit institutions ser-ving households (NPISHs) (called nongovernmental organizations) receive from their headquarters abroad collected donations for consumption (e.g., paper, office supplies)
and cash grants to finance teachers’ salaries in the current period.
From the customs authorities and the banking data, the compiler is able to obtain the following breakdownof donations received during the accounting period:
Donations received to finance current teachers’ salaries: 200
Paper and office supplies received to equip schools: 140

The following entries should be recorded in the balance of payments of the recipient economy:

CreditCurrent account
Goods
Secondary income
Financial corporations,
nonﬁnancial
corporations,households, and
NPISHsOther current
transfers
Miscellaneous
current transfers
Of which: Current
transfers to NPISHs

Debit

Net acquisitionNetof ﬁnancial
incurrence ofassetsliabilities

140
Financial account
Other investment
Currency and deposits
Deposit-taking
corporations, except
the central bank

+200

140
200

Example 14.5 Long-term technical assistance missions ﬁnanced by the donor government (fromthe perspective of the donor economy)

If all technical assistance personnel are resident in the recipient economies and receive salaries from thedonor government: from the government entity in the donor economy, the compiler is able to obtain the following information on sponsored technical assistance missions to recipient economies.
Total cost of technical assistance missions: 185
Of which:
Salaries paid to long-term technical assistance personnel: 50
Salaries paid to locals: 40
Administrative costs incurred in the donor’s own economy: 10
Salaries paid to short-term technical assistance personnel—residents of donor’s economy: 85

In this example, a breakdown of the services provided to beneficiary economies abroad is not available. The
compiler in the donor economy, therefore, classifies the technical assistance as government services.

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249

Example 14.5 Long-term technical assistance missions ﬁnanced by the donor government (fromthe perspective of the donor economy) (concluded)
CreditCurrent accountServices
Government goods
and services n.i.e.
Primary income
Compensation of
employees
Secondary income
General government
Current international
corporation

Debit

185

50
40

Net acquisitionof ﬁnancial
assetsFinancial accountReserve assets
Other reserve assets
Currency anddeposits

Net
incurrence ofliabilities

50
40

185

Miscellaneous current transfers

14.49 NPISHs have a center of predominant economic interest in the economy in which they were legally created, and are often financed largely or entirely
by current or capital transfers from abroad to support
their functions as charity, relief, or aid organizations(see BPM6, paragraph 4.101). Aid in cash from NPISHs
headquarters institutions and other donors may be captured through ITRS, if available, or through undertaking

surveys of NPISHs. Central registers for NPISHs can bea good initial source for defining a valid sample. Aid in
kind could be captured through customs data; data on
the recipient sector as well as the purpose may be alsoavailable in customs data. Furthermore, administrative
data from government agencies responsible for handlinginternational disaster and other relief efforts can also bea good source for identifying and compiling current andcapital transfers by NPISHs.

15

The Capital AccountIntroduction
15.1 The capital account shows capital transfers
receivable and payable between residents and nonresidents, and the acquisition and disposal of nonproduced, nonfinancial items.
15.2 Capital transfers are transfers in which theownership of an asset (other than cash or inventories)changes from one party to another; or which obliges
one or both parties to acquire or dispose of an asset(other than cash or inventories); or where a liability is
forgiven by the creditor. A capital transfer results in acommensurate change in the positions of assets of one
or both parties to the transaction without affecting thesaving of either party.
15.3 Nonproduced nonfinancial assets include
intangible assets covering contracts, leases, licenses,
and marketing assets; and natural resources (generally land). The capital transfers include debt forgiveness and assumption, extraordinary claims
associated with nonlife insurance, and investment
grants. The capital transfers are usually irregularin nature, can be large (particularly in the case ofcapital transfers) and are usually limited in sector(to government, insurance, and charitable organizations), or industry (mining, forestry, fishing, communications, etc.).

Acquisitions and Disposals ofNonproduced, Nonﬁnancial Assets
Intangible Assets
Marketing assets

15.4 Marketing assets include items such as brandnames, mastheads, trademarks, logos, and Internet
domain names. When marketing assets are sold separately from the company that owns them, they aretreated as the net acquisition/disposal of a nonproduced, nonfinancial item; when they are sold as partof the sale of a company, they are included in the valuation of the company.

15.5 Franchising agreements can provide a company with the right to use or license to use the marketing assets of the franchisor. Franchising agreements
are included in trade in services as a charge for the useof intellectual property n.i.e. Reporters in businesssurveys of trade in services may not understand thedistinction between the purchase of marketing assets
and the license to use them under a franchise agreement and may misreport them. As a consequence,model survey form 6 in Appendix 8 includes questions
on the purchase or sale of marketing assets to try toensure accurate reporting of franchising, and to provide a data source for the purchase or sale of marketing
assets. An international transactions reporting system(ITRS) may also identify situations where transactions
in marketing assets have taken place in isolation fromthe company that owned them.
15.6 It is relatively unusual for transactions inmarketing assets to take place separately from theunderlying company; as such, any occasion wherethese transactions are identified should be subject tofurther scrutiny by the balance of payments compiler.
Contracts, leases, and licenses

15.7 Contracts, leases, and licenses include marketable operating leases, permissions to use natural
resources that are not recorded as outright ownershipof those resources, permissions to undertake certain
activities (including some government permits), andentitlements to purchase a good or a service on an
exclusive basis.
15.8 One example of a marketable operating leaseis a type of time-share arrangement that involves
a transferable right to use. Table 15.1 describes thetreatment of alternative time-share arrangements.
15.9 For time-share arrangements, there will usually
be a body corporate that manages the accommodation
complex and provides services (e.g., scheduling of use,organizing waiting lists, and facilitating transactions).

The Capital Account251

Table 15.1 Treatment of Alternative Time-Share Arrangements1
Type ofarrangement

Classiﬁcationof asset

Up-front
payment

Periodic ﬂow

Transaction in asset if theright is resold

Deededownership

Ownershipof land andbuildings

Direct investment
in notional unit ineconomy where
time-share islocatedAccommodation services intravel (imputed based onequivalent market prices) andinvestment income (income
on direct investment equity)

Equity of the time-share holder(direct investment)

Right to use

Transferable
right to use

Prepayment ofaccommodation(trade credit andadvances)

Accommodation services
in travel

Extinguishment of trade credit
and advances + Nonproduced
nonﬁnancial asset (capital
account) (equal to difference
between selling price and value of
prepaid accommodation services)

MembershipsystemNontransferable
right to use (notan economic
asset)

Prepayment ofaccommodation(trade credit andadvances)

Accommodation services
in travel

Trade credit and advances

Source: IMF staff.
This table differs in presentation (not in substance) from Table 10.3 in the BPM6 in regard to the capital account entry when a “right to use”
is resold by showing the capital account transactions in the ﬁnal column.

1This company may be able to be included in a businesssurvey in the host economy that covers trade in services (as services will be provided in association withthe management of the complex) and transactions in
nonproduced, nonfinancial assets.
15.10 Contracts, leases, and licenses also include
licenses for mineral exploration and extraction, forestry licenses, fishing licenses, water rights, airspacelicenses, spectrum licenses, and emissions rights, andpermits, if they are marketable. If the assets are sold by
a government to a business company, then a notional
direct investment enterprise (DIENT) often is created.
If the criterions for recognizing a DIENT are not met,then the license payments are treated as a rent andincluded in primary income. Information on marketable licenses may be sourced from the government
authorities that issue the licenses in the host economy.
The compiler in the economy of the license holder canuse a business survey that covers trade in services andtransactions in nonproduced, nonfinancial assets as
there will usually be services provided associated withthe license. Businesses holding the licenses will generally be limited to specific industries—particularly
mining exploration, fishing, forestry, telecommunication, manufacturing, and electricity generation.
15.11 Marketable assets also include the entitlements to purchase a good or a service on an exclusive

basis. This relates to the case when one party that contracted to purchase goods or services in the futuretransfers the obligation of the second party of the contract to a third party. Although human capital is notrecognized as an asset in macroeconomic accounts, insome cases the contracts may entitle the holders with
exclusive right for his services and limiting the ability of a named individual to work for others. In suchcases the contracts are regarded as assets. A common
example of such contracts is for sports players where,
for example, a football club can sell the exclusive
rights to the services of a particular player to anotherclub.1 Some agreements in professional sports involving the sale of rights to players are called “transfer
agreements” and others are called “loan agreements.”“Transfer agreements” occur when the player’s registration is transferred from one club to another, andthe buying club pays compensation (a fee) for therights to the player. Under “loan agreements,” a player
is allowed to temporarily play for a club other than the
one with which the player is currently under contract.
The “loan arrangement” may last a short period oftime (such as a few weeks) or extend all season-longor even for a few seasons.

1

See 2008 SNA, paragraph 17.368.

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Balance of Payments and International Investment Position Compilation Guide

15.12 When the sale of rights to a player involves
a cross-border transaction, the fee paid by the party
acquiring the player under a “transfer agreement”
should be classified under gross acquisitions/disposals
of nonproduced nonfinancial assets in the capital
account. In contrast, amounts paid under “loan agreements” (which, as noted, involves the temporary transfer of rights to use the services of players) should berecorded in property income as rent. This is because—
similar to payments for natural resource rights—
contracts, leases, and licenses are nonproduced
nonfinancial assets, and so the recording of outrightpurchases/sales (capital account) and payments for the
temporary transfer of rights (rent) should be similar.
15.13 Both “transfer” and “loan” agreements may
be of a variety of forms with different terms, including those related to risk factors, transfers of registration, salaries for the players, players’ sponsorship andmedia rights, and so on. The compiler would needa variety of details regarding the terms of the agreements (with particular attention to agreements thatare significant in value) to determine appropriate classifications in the balance of payments.

Land
15.14 International transactions in land and othernatural resources do not usually arise because notional
resident units are generally identified as the ownersof these immovable assets. As a result, purchases andsales of these assets are generally resident-to-resident
transactions.
15.15 International transactions in land arise
when foreign governments or international organizations purchase or enter into long-term (financial)leases of land for purposes of establishing or extending their enclaves, diplomatic missions, or militarybases. Transactions are also recorded when controlof land changes by mutual agreement or decision ofinternational court, or when an economic territory is
split and compensation is paid for the land. Uncompensated splits of economic territories and unilateralannexation of territory by an economy are not capital
account transactions; the change in territory is treatedas a volume change in the other changes in assets andliabilities account.
15.16 The assets and liabilities of any institutional
units that are resident in the territory that is sold/purchased are accounted for in the reconciliation of
the international investment position through theother changes in volume account. Only the value ofthe land is recorded in the capital account; any buildings, structures, or other improvements on the land
are recorded as purchases of construction services. If
it is not feasible to split the values of land and structures, the classification in the balance of payments
should be according to which value is deemed to behigher: if the land is more valuable, the transaction
will be recorded in capital account, and if the value ofstructures is deemed to be higher, the transaction will
be recorded under construction services.
15.17 Information on international transactions inland (both credits and debits) usually can be sourced
from government records. To draw a distinction
between the value of land and buildings, the compiler
could use data collected through the land register as
an additional source.

Capital Transfers
15.18 The compiler needs to distinguish between
capital transfers (the entry in the balance of payments
as an offset to an unrequited transfer of a capital item)
and current transfers (all other transfers, recordedin the secondary income account). It is possible thatsome cash transactions may be regarded as capital by
one party to the transaction and as current by the otherparty. A large economy that regularly makes investment grants in cash to a number of smaller economies
may regard the outlays as current, even though they
may be specifically intended to finance the acquisitionof assets. So that a donor and a recipient do not treat
the same transaction differently, a transfer should beclassified as capital for both parties even if it involves
the acquisition or disposal of an asset, or assets, by
only one of the parties. When there is doubt about
whether a transfer should be treated as current or capital, it should be treated as a current transfer.

Debt Forgiveness, Debt Assumption, andActivation of One-Off Guarantee
Debt forgiveness15.19 Debt forgiveness is the process of cancellinga debt with the agreement of both parties. It differsfrom the write-off or cancellation of a debt, whichis the recognition of the creditor that a debt can no

The Capital Account253

longer be collected and treated as a volume change.
Bankruptcy of the debtor may also extinguish a debt
position; if the debt is unrecoverable, it is also treatedas a volume change.

creation of the liability. The original debt of the
debtor is written off in the accounts of boththe original debtor and the creditor (other hanges
in financial assets and liabilities account).

15.20 Governments or international organizations (IO) are usually the creditor in cases of debt
forgiveness (other governments may be the debtor),
but forgiveness is not restricted to government/IOto-government positions. The extinguishment ofdebt between two commercial companies including
between companies in a direct investment relationship is more often a case of debt cancellation or debt
write-off, and is recorded as other volume changes.

(2) If the debt-assuming party does not acquire a
claim on the (original) debtor because the debt
assumer seeks to give a benefit to the debtor(as is sometimes the case when governments
assume debts) or the debt-assuming party assumes a claim that is lower in value than thevalue of the debt, then unless the guarantor
is in a direct investment relationship with theoriginal debtor (see (c)), a capital transfer fromthe debt-assuming party to the original debtor
is recorded. The claim on the original debtor by
the creditor is extinguished (financial accountentry).

15.21 Information on debt forgiveness may beavailable from government authorities in the economy of the creditor. In the economy of the debtor, thedebtor should already be included in business surveys
of external financial assets and liabilities and the forgiveness can be identified through this vehicle.
Debt assumption and activation of one-off
guarantees

15.22 Debt assumption occurs when one party
takes on the liability of another party. The debt
assumption may be the result of the activation of aguarantee or without a guarantee being in place. In
cases where debt assumption takes place, the debtassuming party is usually a government (the government of the economy in which the original debtor is
located) or a company in a direct investment relationship with the original debtor (noting that companies
in the same economy can be in a direct investment
relationship).
15.23 The transactions that are recorded when debt
is assumed depend on whether the debt-assuming
party has a claim on the original debtor; in all cases,
the claim of the creditor on the debt-assuming party
is created through a financial account entry. In cases
described ahead three parties involved in the transactions (creditor, original debtor, and debt-assumer) areresidents of different economies:(1) If the debt-assuming party does not acquire a
claim on the (original) debtor because the original debtor no longer exists (e.g., the original
debtor has been liquidated), a capital transferfrom the debt-assuming party to the creditor
is recorded as the corresponding entry to the(3) In other cases, the debt-assuming party acquires a claim on the original debtor as a resultof the assumption of the debt (financial account entry) and a debt liability to the creditor.
Such a claim may be on the original debtor as adebt claim or as an increase in the guarantor’sequity in the original debtor (e.g., assumptionof the debt owed by a subsidiary will improvethe balance sheet of the subsidiary and, hence,the direct investor’s equity in the subsidiary).
In this case, the claim on the original debtor by
the creditor is extinguished (financial accountentry).
15.24 Table 15.2 identifies the balance of payments
transactions and other changes in financial assets andliabilities that should be recorded in each case. For
the purposes of the table, a company in economy A
assumes the debt of a company in economy B that is
owed to a company in economy C. Where two of thecompanies are in the same economy, the transactions
shown in the table between those two companies are
not recorded in the balance of payments accounts, as
they are resident-to-resident transactions, but they
could affect international investment positions, as
when external liabilities change institutional sector
due to debt assumption by a government. The tableshows the entries in the accounts from the perspectiveof the compiler in each of the three economies.
15.25 Information on debt assumption should beavailable from government records in the cases where
governments assume debt. Where a direct investor

Appropriate ﬁnancial
account debt
entry3 (C)[increase]

Appropriate ﬁnancial
account debt entry(C) [decrease]

Appropriate ﬁnancial
account entry2 (A)[increase]

Net incurrence ofliabilities

Appropriate ﬁnancial
account debt entry(C) [decrease]

Net incurrence ofliabilities

Appropriate ﬁnancial
account debt
entry (A)[increase]

Debt claim (B)[decrease]

Equal to the value of claim on original debtor acquired by A.

Equal to the value of the liability to C acquired by A.

Appropriate ﬁnancial account debt entry (B)[decrease]

Appropriate ﬁnancial account debt entry (C)[decrease]3

Appropriate ﬁnancial account debt entry (A)[increase]

Net acquisition of ﬁnancial assets

Appropriate ﬁnancial account debt entry (B)[decrease]

Appropriate ﬁnancial account debt entry3 (A)[increase]

Net acquisition of ﬁnancial assets

Appropriate ﬁnancial account debt entry (B)[decrease]

Appropriate ﬁnancial account debt entry (A)[increase]

Net acquisition of ﬁnancial assets

Capitalaccount—
capital transfer—othercapital transfers (A)CreditNet acquisition of ﬁnancial assets

Other change
in ﬁnancial
assets andliabilities
account (IIP)

Balance of payments of economy C(creditor is resident)

Appropriate ﬁnancial account entry (A)[increase]

Net incurrence of liabilities

Capital account—capital transfer1 (A)CreditCapital account—capital transfer (A)CreditDebt liability (C) [decrease]

Equal to difference between the incurred liability to creditor and acquired claim on original debtor.

Appropriate ﬁnancial accountdebt entry (C) [increase]

Net incurrence of liabilities

Appropriate
ﬁnancial
account
entry2 (B)[increase]

Net incurrenceof liabilities

Appropriate ﬁnancial
account debt
entry (C)[increase]

Net incurrenceof liabilities

Appropriate ﬁnancial
account debt
entry (C)[increase]

Other change in ﬁnancial assets and liabilities
account (IIP)

Balance of payments of economy B(original debtor is resident)

2

Appropriate ﬁnancial
account entry(B) [increase]

Net acquisition of ﬁnancial assets

Capitalaccount—
capitaltransfer1(B)Debit

Net acquisition ofﬁnancial
assetsCapital account—capitaltransfer (B)

Debit

Capital account—capitaltransfer—other capitaltransfers (C)Debit

Net incurrenceof liabilities

Balance of payments of economy A(debt assumer is resident)(A assumes debt of B owed to C)

1

Source: IMF staff.

Original debtor
exists, full claimof debt assumer
on original debtor(e.g., increase indirect investment
equity) (case c)

Original debtor
exists, reduced
claim from debt
assumer on original debtor (case b)

Original debtor
exists, no claim
from debt assumer
on original debtor(case b)Original debtor
ceases to exist(case a)Case

Table 15.2 Treatment of Debt Assumption

The Capital Accountassumes the debt, this information may be available
through a business survey of external financial assets
and liabilities. Similarly, information from the original debtor (when it continues to exist) and from thecreditor can be collected in the same survey.

Nonlife Insurance Claims
15.26 Nonlife insurance premiums and claims are
generally treated as current transfers within the secondary income account in the balance of payments.
When a catastrophic event occurs that gives rise to
extraordinary claims beyond normal business processes, some part of the claims may be treated as capital transfers. Catastrophic events include earthquakes,
tsunami, floods, cyclones, hurricanes, hail storms,
bushfires, and so forth, except where these events canbe considered periodic and expected within the normal course of nonlife insurance business.
15.27 It may be difficult for the parties to identify
these events consistently, so, as a simplifying convention, all cross border nonlife insurance claims areclassified as current transfers unless it is necessary
to record a capital transfer to be consistent with thenational accounts. Coordination with the compilersof the national accounts is necessary to ensure consistent treatment within the macroeconomic accounts.
15.28 Catastrophic events that cause extraordinary
claims on domestic insurers will generate similar
claims on reinsurers. Where the reinsurer is a nonresident, these claims would be treated as capital transfers to the same extent as the original claims on theinsurers.
15.29 Extraordinary claims that are treated as capital transfers should be excluded from the calculationof insurance services. Similarly, the extraordinary
losses associated with these claims should be excluded
from the calculation of profit (loss) of insurers thatare DIENTs. Any loss that remains after exclusion of
the extraordinary losses should be treated as a normal
loss from current operations.
15.30 Where catastrophic events have occurred,
the events may have had a significant impact on thepolicyholders themselves and the infrastructure to
support usual surveying practices may have broken
down, making it difficult to collect data. This could
result in timing and coverage issues, and the compiler

255

may need to make careful estimates until more accurate data become available.
15.31 “Insurance Transactions and Positions” inAppendix 2 provides a more detailed discussion of thecompilation of data about the insurance industry.

Investment Grants
15.32 Investment grants consist of capital transfers
in cash or in kind made by governments or international organizations to other institutional units tofinance all or part of the costs of their acquiring fixed
assets. The recipient of an investment grant is often
a governmental unit. Investment grants can include
also technical assistance (e.g., consulting) related tothe investment project. Technical assistance that istied to or is part of capital projects is classified as capital transfers (BPM6, paragraph 12.50).
15.33 As all flows are to be expressed in monetary
terms, the monetary values of in-kind transactions
need to be indirectly measured or otherwise estimated.
15.34 If an investment project continues over a long
period of time, an investment grant in cash may be paidin installments. Payments of installments continue tobe classified as capital transfers even though they may
be recorded in a succession of accounting periods.
15.35 If the donor and recipient are both privatecompanies in a direct investment relationship, thegrant is not considered a capital transfer. The grantis considered an injection of direct investment equity
capital when the direct investor is the donor and a
DIENT is the recipient, and a distribution of profits
or a withdrawal of equity when the donor is a DIENTand the recipient is the direct investor.
15.36 Example 15.1 shows the balance of payments
entries for the investment grants.
15.37 Information on donors can be sourced fromofficial records when the donor is the government.
Model form 16 in Appendix 8 provides examples of
the information that could be requested from theseorganizations on investment grants. Information onrecipients can usually be sourced from official records.

Capital Taxes
15.38 Capital taxes consist of taxes levied at irregular or infrequent intervals on the values of the assets

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Balance of Payments and International Investment Position Compilation Guide

Example 15.1 Investment Grants

From the government entity, the compiler of economy B was able to obtain the information on the grants(in cash and in kind) received from abroad during the accounting year:(1) A cash grant was transferred to the government for the construction of a road: 155(2) The government of economy A built a school in economy B during the year and provided it as a donation to economy B. The school was built using the donor’s labor and materials. The total cost of the
project was 70, of which:estimated cost of the construction materials (imported from economy C): 30
salaries paid to constructors: 25
architectural and engineering services: 15
The following entries should be recorded in the balance of payments of economy B for the accounting year:
CreditCreditDebit

Current account

Capital accountGoods and services
Goods
General merchandise

Capital transfers
General government
Other capital transfers

Services
Construction
Other business services
Technical, traderelated, and otherbusiness services

30

Financial account25

15

or net worth of institutional units, or on the valuesof assets transferred between institutional units as aresult of legacies, gifts, or other capital transfers. Thatis, capital taxes consist of levies on capital items andtaxes on capital transfers.
15.39 Recurrent taxes on income and wealth as well
as taxes on financial and capital transactions are classified as current transfers in the secondary income
account.

Other investment
Currency and deposits
General government

Debit

155+70NetNetacquisition of incurrence ofﬁnancial assets
liabilities

155

15.40 Information on capital taxes should be available from the revenue authorities in the economies
where the taxes are levied. The compiler in the economy of the payers of capital taxes may benefit frompartner economy data in compiling capital tax debits.

16

Exceptional Financing Transactions

Introduction
16.1 The recording of exceptional financing transactions in the balance of payments is relevant in thecontext of analytical presentation described in Chapter 14, paragraphs 14.16 and 14.17, and in Appendix
1 of the BPM6. The analytic presentation is used also
in the IMF’s publication Balance of Payments Statistics
Yearbook and International Financial Statistics. Exceptional financing combines financial transactions
under financial arrangements made by the authorities (or by other sectors fostered by the authorities)of an economy to meet balance of payments needs.
These transactions can be viewed as an alternate to or
in conjunction with the use of reserve assets and IMF
credit and loans to deal with payments imbalances.
Appendixes 1 and 2 of the BPM6 provide details
on exceptional financing transactions and also ontransactions related to debt reorganization that giverise to exceptional financing. The analytic presentation of balance of payments statistics aims to distinguish between transactions in reserves (and closely
related items) and other transactions, and draws a line
between the ways that monetary authorities financebalance of payments needs (below the line) and allother transactions (above the line).
16.2 This chapter (1) provides guidance on identifying transactions in the standard presentation thatare exceptional financing, (2) discusses the rearrangement of balance of payments transactions to highlight
exceptional financing components of the analytic
presentation, (3) reviews the treatment of a range of
exceptional financing transactions in the analytic presentation of the balance of payments, (4) discusses thetiming of recording and the valuation of exceptional
financing transactions, and (5) identifies data sources
for exceptional financing transactions.

Identifying Exceptional Financing
Transactions
16.3 Exceptional financing transactions are transactions that are undertaken by the authorities toaccommodate balance of payments needs. Exceptional
financing transactions include both direct financing(e.g., intergovernmental grants, debt forgiveness) andindirect financing (e.g., accumulation of arrears). It
includes arrears on both interest and principal, borrowing to meet balance of payments requirements, rescheduling of loans and other obligations that are either inarrears or due, debt swaps, grants from other governments for balance of payments support, and debt forgiveness. These transactions can all be regarded as new
extensions of credit, or as alternatives to raising funds.
The early repayment of borrowings (prepayment) associated with balance of payments financing needs is also
included in exceptional financing. Arrears are identified/included as transactions in the analytic presentation (in contrast to the standard presentation) because
this presentation is focused on the actions of monetary
authorities to meet balance of payments financing
needs, and the accumulation of arrears may be viewed
as a monetary authority’s action for this purpose.
16.4 In some cases, such as rescheduling or refinancing of existing debt, the identification of the
exceptional nature of the transaction is straightforward. In other cases, exceptional financing transactions cannot be identified using totally objective
criteria; examples of such cases may include borrowing for balance of payments need, or advance
repayment of debt. In such cases, it is necessary to
decide whether the purpose of the transactions by theauthorities (or by other sectors on their behalf) is to
manage the balance of payments deficit or surplus.
16.5 As a general rule, exceptional financing
transactions should meet two criteria: (1) to be258

Balance of Payments and International Investment Position Compilation Guide

undertaken for balance of payments needs and (2) tohave a direct or indirect impact on reserve assets.

Recording Exceptional Financing
Transactions

16.6 It is sometimes necessary to examine prepayments and advance payments to determine whether
they are exceptional financing transactions. If a balance of payments need exists or appears imminent, andthe debtor agreed with the creditor to prepay debt at asignificant discount using a reserve asset currency, thisprepayment is an exceptional financing transaction.
In other cases, prepayments and advance payments
should not be included in exceptional financing.

16.8 Table A.1.1 in Appendix 1 of the BPM6 provides a comprehensive description of the accounting
for exceptional financing transactions. As a generalrule, when exceptional financing transactions concern
the use of external resources that will be repaid later,
the items that should be included below the line are thecredit entries that indicate the use (disbursement) of
the resources. The debit entries that subsequently balance these financings are included above the line in theappropriate items of the financial account. However,when arrears occur, debt is swapped, and debt is repaid
or cancelled through transfers, then both the debit andcredit entries for these transactions are recorded under
exceptional financing, or below the line. The recordingof some specific cases is presented in Table 16.1.

16.7 Disbursements by monetary authorities in thecurrent period also should be examined to determine
whether they should be included in exceptional financing. Borrowing from the IMF should be included in
exceptional financing. Borrowing for general budget purposes should not be included in exceptional financing.

Table 16.1 Examples of Recording of Exceptional Financing Transactions1
Balance of payments item

Standard presentation

Analytic presentation

Accumulation of arrears: In standard presentation accumulation of arrears is not reported as a transaction; however, in
analytic presentation they are presented as exceptional ﬁnancing transactions below the line.
Example: In the reported period, the general government failed to repay 10 units of income and 100 units of principal on
long-term loan.
Above-the-line
CreditCurrent accountPrimary income, investment
income, other investment, interest

Debit

Credit10
Net acquisition ofﬁnancial assets

Financial account
Other investment, liabilities,
loans, general government,
other long-term

Net incurrence ofliabilities

Debit
10

Net acquisition ofﬁnancial assets+10

Net incurrence ofliabilities−100

Below-the-line
Exceptional ﬁnancing
Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Other investment, loans
Accumulation of arrears, principal+100
on long-term debt
Accumulation of arrears, original+10
interest
Debt forgiveness: Only forgiveness of debt (principal and interest) in arrears or due for payment in the current period isreported as exceptional ﬁnancing. Forgiveness of future payments is recorded as repayments above the line under the
relevant instrument, offset by a capital or current transfer that is also recorded above the line.
Example: In the reported period, the creditor forgave 220 units of debt in arrears on long-term loan, including 200 units
arrears on principal and 20 units arrears on accrued interest; 180 units of debt due for payment in the reported period,of which 30 units of accrued interest and 150 units of principal; and 310 units of debt not yet due, of which 10 units ofinterest and 300 units of principal.

Exceptional Financing Transactions

259

Table 16.1 Examples of Recording of Exceptional Financing Transactions (continued)
Balance of payments item

Standard presentation

Analytic presentation(i) Debt arrears (forgiveness of principal/interest already in arrears)
Above-the-line
CreditCapital account
Capital transfers, debt
forgiveness

Debit

CreditDebit

Net incurrence ofliabilities

Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Debit

220
Net acquisition ofﬁnancial assets

Financial account
Other investment, liabilities,
loans, general government, otherlong-term–220

Below-the-line
Exceptional ﬁnancing
CreditDebit

CreditNet acquisition ofﬁnancial assets

Net incurrence ofliabilities

Net acquisition ofﬁnancial assets

Capital transfers
Debt forgiveness220
Net incurrence ofliabilities

Other investment, loans
Repayment of arrears, principal–200

Repayment of arrears, interest–20(ii) Payments falling due (forgiveness of principal/interest due in the current period)
Above-the-line
CreditCurrent accountPrimary income, investment
income, other investment,interestCapital account
Capital transfers, debt forgiveness

Debit

Credit

30

Debit
30

180
Net acquisition ofﬁnancial assets

Financial account
Other investment, liabilities,
loans, general government,
other long-term

Net incurrence ofliabilities

Net acquisition ofﬁnancial assets–150

Net incurrence ofliabilities–150

Below-the-line
Exceptional ﬁnancing
CreditDebit

Capital transfers, debt forgiveness

CreditDebit

180(iii) Debt not yet due (forgiveness of principal/interest due in the future)
Above-the-line
CreditDebit

CreditDebit

Current accountPrimary income, investment
income, other investment, interest

–

–

–

–

Capital account
Capital transfers, debt
forgiveness

300

300

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Balance of Payments and International Investment Position Compilation Guide

Table 16.1 Examples of Recording of Exceptional Financing Transactions (continued )Balance of payments item

Standard presentation
Net acquisition ofﬁnancial assets

Financial account
Other investment, liabilities,
loans, general government, otherlong-term

Net incurrence ofliabilities

Analytic presentation
Net acquisition ofﬁnancial assets–300

Net incurrence ofliabilities–300

Below-the-line
Exceptional ﬁnancing
Debt reﬁnancing: Existing debt instrument is extinguished, and a new (or similar) debt instrument with new terms iscreated.
Example:Loan-for-loan exchange: In the reported period, the government exchanged existing loans (50 units principal arrears, 25
units interest arrears, 30 units due for payments principal, 12 units due for payment interest, 60 units principal not yetdue, and 40 units interest not yet due) for a new single loan. Interest not yet due will be recorded in the period when it
is accrued.
Loan-for-bond-swap: The existing loan with the aforementioned terms is extinguished with funds raised from the issuance of a bond issued at 70% discount. The nominal value of the bond is 200 and issuance (discounted) value 140.
(i) Loan-for-loan exchange
Above-the-line
CreditCurrent accountPrimary income, investment
income, other investment,interest

Debit

Credit12

Net acquisition ofﬁnancial assets
Financial account
Other investment, liabilities,
loans, general government, otherlong-term

Net incurrence ofliabilities

Debit
12

Net acquisition ofﬁnancial assets

+177
–165

Net incurrence ofliabilities–30–60

Below-the-line
Exceptional ﬁnancing
Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Net acquisition ofﬁnancial assets

Other investment
Liabilities, loans
Drawing of new loan

Net incurrence ofliabilities+177

Repayment of arrears, principal–50

Repayment of arrears, interest–25

Loan-for-bond-swap (debt owed to private creditors)
Above-the-line
CreditCurrent accountPrimary income, investment
income, other investment,interest

Credit12

Net acquisition ofﬁnancial assets
Financial accountPortfolio investment, liabilities,
debt securities, general government, long-term

Debit

Net incurrence ofliabilities
+140

Debit
12

Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Exceptional Financing Transactions

261

Table 16.1 Examples of Recording of Exceptional Financing Transactions (continued )Balance of payments item

Standard presentation

Other investment, liabilities,
loans, general government, otherlong-term

Analytic presentation
–532

–128

Below-the-line
Exceptional ﬁnancing
Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Net acquisition ofﬁnancial assets

Financial accountPortfolio investment, liabilities,
debt securities
Other investment, loans
Repayment of arrears, principal
Repayment of arrears, interest

Net incurrence ofliabilities
+140

–50
–25

Loan-for-bond-swap (debt owed to ofﬁcial creditors)
Above-the-line
CreditCurrent accountPrimary income, investment
income, other investment,interestCapital account
Capital transfers, debt forgiveness

Debit

Credit

12

Debit
12

37
Net acquisition ofﬁnancial assets

Financial accountPortfolio investment, liabilities,
debt securities, general government, long-term
Other investment, liabilities,
loans, general government, otherlong-term

Net incurrence ofliabilities

Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

+140

–165

–30
–60

Below-the-line
Exceptional ﬁnancing
CreditDebit

Capital account
Capital transfers, debt forgiveness

CreditDebit

37
Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Net acquisition ofﬁnancial assets

Financial accountPortfolio investment, liabilities,
debt securities

Net incurrence ofliabilities+140

Other investment, loans
Repayment of arrears, principal–50

Repayment of arrears, interest–25

Debt prepayment is reported as exceptional ﬁnancing only if it is for balance of payments needs.
Example: In the reported period, the government prepaid under a bilateral agreement, using reserve assets, an outstanding loan in the value of 130 units for 75 units:(i) From a commercial creditor(ii) From an ofﬁcial creditor

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Balance of Payments and International Investment Position Compilation Guide

Table 16.1 Examples of Recording of Exceptional Financing Transactions (concluded)
Balance of payments item

Standard presentation

Analytic presentation(i) From a commercial creditor
Above-the-line
Net acquisition ofﬁnancial assets
Financial account
Other investment, liabilities, loans,general government, other long-term

Net incurrence ofliabilities

Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Net acquisition ofﬁnancial assets−75

Net incurrence ofliabilities–753

Reserve assets, other reserve
assets, currency and deposits–75

Below-the-line
Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Reserve assets
Exceptional ﬁnancing
Other investment, liabilities,
loans, prepayment−75(ii) From an ofﬁcial creditor
Above-the-line
CreditDebit

CreditDebit

Net incurrence ofliabilities−130

Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Net acquisition ofﬁnancial assets

Net incurrence ofliabilities

Net acquisition ofﬁnancial assets−75

Net incurrence ofliabilities

CreditDebit

CreditDebit

Capital account
Capital transfers, debt forgiveness55
Net acquisition ofﬁnancial assets

Financial account
Other investment, liabilities,
loans, general government, otherlong-term
Reserve assets, other reserve assets,
currency and deposits−75

Below-the-line

Reserve assets
Exceptional ﬁnancing
Capital account
Capital transfers, debt forgiveness55
Net acquisition ofﬁnancial assets

Financial account
Other investment, liabilities,
loans, prepayment

Net incurrence ofliabilities

Net acquisition ofﬁnancial assets

Net incurrence ofliabilities–130

Source: IMF staff.
1

For the purpose of showing the balancing of counterentries in ﬁnancial account, the “credit” and “debit” are used instead of “net increaseof ﬁnancial assets” and “net incurrence of liabilities.”
The BPM6 does not explain how the difference in price between old and new debt should be attributed to instruments involved in the2transaction. Because the main purpose of the analytic presentation is to highlight the transactions with exceptional character, the Guide
recommends that transactions below the line (arrears) be presented at the nominal value and that the remaining value be attributed to
instruments extinguished above the line (e.g., loan).
3

The difference between nominal value and prepayment value equal to 55 units is registered in IIP reconciliation as valuation changes.

Exceptional Financing Transactions

Timing of Recording and Valuation of
Exceptional Financing Transactions
16.9 The valuation of exceptional financing
transactions is not always straightforward. For example, debt swaps and other forms of debt conversion
undertaken for balance of payments purposes may
raise complex issues: What is the value of the liability that is cancelled? What is the value of the asset
that is acquired? Is there an element of debt forgiveness? Clear answers to these questions may not exist.
If the debt is traded on a market, the listed price may

263

be regarded as the value to be used in determining
transactions and IIP values for the liability. Whenthe debt is exchanged for another debt, the value ofthe new debt is used to value the original liability
with a valuation change recorded, unless there is element of debt forgiveness involved. Debt forgivenesswould not be associated with a purely commercial
transaction.
16.10 Table 16.2 presents in an aggregated format
the valuation principles for different types of exceptional financing transactions.

Table 16.2 Timing of Recording and Valuation of Exceptional Financing Transactions
Timing of recording
Debt forgivenessAt the time speciﬁed in the agreement that the forgiveness takes place
Debt rescheduling At the time both parties record thechange in terms of the liability intheir books; if no precise time isdetermined, the decisive one is thetime when the creditor records thechanges in its books.

Debt reﬁnancing

Same as for debt rescheduling

Debt-for-equity
swap

At the time both parties record theexchange of value in their books

Debt-fordevelopment
swap

Same as for debt-for-equity swap

Debt prepayment

At the time when the transaction
takes place

Debt assumption

At the time the debt is removed fromthe original debtors balance sheet

Source: IMF staff.

Valuation
Market price is the basis for valuation for ﬂows and positions,
except for loans and deposits, where the nominal value is used.
The value of the new debt and of the old debt typically will beequal; if not equal, transactions should be valued at the valueof the new debt. If there is a difference in the value between
the old and new debt, this difference is recorded in revaluationaccount in IIP. When there is no established market price forthe new debt, an appropriate proxy is used.
For nonmarketable debt owed to ofﬁcial creditors, any reduction in the nominal value of the old debt is recorded as debt
forgiveness.
The old debt is extinguished (valued) at the value of the new
debt instrument, with the difference between it and the valueof the old debt recorded in the revaluation account in IIP.
Exception for nonmarketable debt (loan) owed to ofﬁcial
creditors: the old debt is extinguished at its original value, withthe difference in value with the new instrument recorded as
debt forgiveness.
The old debt is valued at the market value of the equity
acquired. If the market value of the equity is lower that thevalue of the old debt, a valuation adjustment is recorded in IIP
under the swapped debt instrument.
The old debt is valued at the value of the new liability
acquired. If the value of the liability acquired is lower that thevalue of the old debt, a valuation adjustment is recorded in IIP
under the old debt instrument.
At the value of the prepaid amount; if the market value ofthe prepaid debt is less than the amount recorded in the IIP, avaluation adjustment is recorded in IIP under the prepaid debt
instrument.
If the debt is owed to ofﬁcial creditors and it is nonmarketable,
the transaction is valued at the nominal value of the debt.
The difference between nominal value and the amount paid isrecorded as debt forgiveness.
At the nominal value of the outstanding debt assumed by the
new debtor

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Balance of Payments and International Investment Position Compilation Guide

Data Sources and Collection of Dataon Exceptional Financing
16.11 As described in the foregoing sections,
exceptional financing transactions have specific features, and proper identification of such transactions
often requires knowledge of details about relatedtransactions. Difficulties in using collections such as
through international transactions reporting systemor business surveys for gathering data on exceptional
financing transactions arise from the fact that many
exceptional financing transactions (e.g., debt forgiveness, debt rescheduling, debt refinancing) do not resultin cash transactions. Also, some exceptional financing
transactions may not be recorded as separate transactions in the standard presentation (e.g., accumulation
and repayment of arrears). Consequently, the compiler needs additional data sources, or needs to collectdetails about transactions that permit them to identify
exceptional financing transactions in existing reportforms. Additional information that needs to be collected to allow a proper classification of exceptional
financing transactions is presented in Table 16.3.
16.12 Data on exceptional financing transactions
would typically be available from official sources. The

most prevalent official data sources for exceptional
financing transactions are: central bank information on reserves; public sector debt monitoring unit’s
record on external debt management; government
accounts; and foreign aid accounts on grants for balance of payments purpose. Useful general information
can be also gathered from mass media on negotiated/planned debt refinancing/rescheduling, debt forgiveness, and new borrowing for balance of payments
needs. Exceptional financing transactions are uniquein nature and are conducted by the public sector(including central banks), and so they usually are wellmonitored by mass media. Therefore, in most cases,
the compiler may be able to obtain good information
on upcoming exceptional financing transactions. He/
she should consult in advance with concerned institutions regarding the reporting of detailed data on suchtransactions.
16.13 Whatever data sources are used, data collections should be well designed, and should capture allnecessary details to assure correct recording of exceptional financing transactions. For example, reportforms should collect detailed data for each individual
significant exceptional financing transaction

Table 16.3 Additional Information on Exceptional Financing Transactions
Exceptional ﬁnancing transactions

Additional information to be collected for proper classiﬁcation

Arrears (accumulation, repayment)

Debt service schedule
Principal by maturity (short-term and long-term) not paid when due
Interest by type (original and penalty) not paid when due
Extinguishment of arrears on principal and interest by source of ﬁnancing (e.g.,
repayment, cancellation, rescheduling)

Current and capital transfers

Intergovernmental grants by source, destination, and typeNew borrowing for balance of
payments purpose

Information on purpose of borrowing, on terms of borrowing, on creditors, and on
debtors

Reserve assets

Use of reserve assets for repayment of arrears and other exceptional ﬁnancing transactions (e.g., prepayment/buyback)
Increase in reserve assets as result of exceptional ﬁnancing transactions (drawing of
new loans, issuance of new debt securities, intergovernmental grants received)

Debt reﬁnancing, rescheduling,debt swaps, debt forgiveness

Detailed terms of agreements on such kinds of transactions
Paris Club agreed minutes (umbrella agreement) Bilateral agreements underumbrella agreement

Source: IMF staff.

17Serviceability and Accessibilityof External Sector Statistics

17.1 The focus of this chapter is on two important aspects of data quality assessment—serviceability andaccessibility—and on their applicability to the external
sector statistics. Serviceability of statistics refers to theextent to which datasets are kept in good working condition to be able to serve various users’ needs effectively.
Accessibility refers to the extent to which statistics are
made available to users in a clear and understandable
manner; the adequacy of the forms of dissemination;
the level of restriction in accessing the data; the extent
to which pertinent metadata are made available and kept
up-to-date; and the availability and promptness of support to data users. Serviceability and accessibility are twoof the five dimensions of the IMF data quality assessment
framework (DQAF), the Fund’s organizing model of theReport on the Observance of Standards and Codes (Data
ROSC). Other dimensions of data quality are assuranceof data integrity, methodological soundness, accuracy
and reliability, along with the prerequisites of qualitythat relate to institutional aspects (see Box 17.1). These
attributes of data quality are applicable in the assessmentof external sector statistics.

Serviceability
17.2 To serve the various users’ needs effectively,
external sector statistics must be in good working
condition. This requires that data and metadata must
be kept relevant, produced in a timely manner within
the defined periodicity, be fully consistent within thedataset, and based on a clearly defined revision policy
and practice. These attributes are elaborated uponahead.
17.3 To remain relevant for effective use, external
sector statistics must be closely monitored through acomprehensive and well-established process of consultation. The consultation process must involve bothcompilers and users of the statistics and, to the extent
possible, must involve several stakeholders including

representatives from the government, private sector,
and the academia. In some economies, such consultation involves formally established advisory bodies oruser groups that bring together both compilers andusers. The advisory bodies provide an opportunity forthe compiling agency to identify the extent to whichuser views are reflected in the ongoing work of external sector data developments, compilation, and analysis. Feedback received from such bodies play a crucialrole in helping to prioritize developmental projects
for external sector statistics.
17.4 Timeliness and periodicity of production are
another important element in data quality assessment.
Timeliness usually refers to the time lag between thereference period (to which the data pertain) and thedate at which the data become available (including
the time lag between the advertised date for releaseand the actual date of release). For example, the reference period may be the 2011 calendar year, but data
may not become available for analysis until June 2012.
These aspects are important and should be taken into
consideration when assessing data quality, as lengthy
delays between the reference period and data availability, or between advertised and actual release dates,
can have implications for data accuracy or reliability,
and the credibility of the statistical agency. If data collection is expected to be ongoing, the frequency of release is an important measure of data serviceability.
Frequency includes information about the proposedfrequency of repeated collections and when data will
be released for subsequent reference periods. To assistin evaluating the timeliness and periodicity aspects ofproduction of external sector statistics or products,
the following questions could be helpful:• What gap of time exists between the reference
period, the time when the data were collected,
and time when the statistics became available?

266

Balance of Payments and International Investment Position Compilation Guide• Are there likely to be subsequent surveys or datacollection issues for this topic?
• Are there likely to be updates or revisions to thedata after official release?
• What is the gap between the advertised and actual release dates of the data?
17.5 Consistency within the dataset is anotherimportant element in assessing the extent to which
external sector statistics are serviced. Consistency
refers to the internal coherence of a statistical collection, product, or release, as well as its comparability
with other sources of information, within a broad
analytical framework and over a reasonable periodof time. To be well serviced, external sector statistics
must be coherent within the dataset, over time, andwith other major datasets. The use of standard concepts, classifications, and target population promotes
coherence, as does the use of common methodology
across surveys. Consistency is an important element
as it provides an indication of whether the dataset
can be usefully compared with other sources to enable data compilation and comparison. However, thisdoes not necessarily imply full numerical consistency,
but consistency in methods and collection standards.
Whenever the agency responsible for external sector
statistics introduces changes in source data, methodology, or techniques, it is imperative that historicalseries are reconstructed as far back as reasonably possible. Quality statements of statistical measures must
include a discussion of any factors that would affectthe comparability of the data over time. To this end,
the coherence of a statistical collection, product, or
release can be evaluated by considering a number of
key aspects:• Changes to data items—To what extent a longtime series of particular data items might beavailable, or whether significant changes haveoccurred to the way that data are collected andanalyzed• Comparison across data items—This refers to
the capacity to make meaningful comparisonsacross multiple data items within the same collection. The ability to make comparisons may beaffected if there have been significant changes incollection, processing, or estimation methodology that might have occurred across multiple
items within a collection.

• Comparison with previous releases—The extent to which there have been significant changes
in collection, processing, or estimation methodology in this release compared with previous
releases, or any “real world” events that have impacted on the data since the previous release• Comparison with other products available—
This refers to whether there are any other data
sources with which a particular series has been
compared, and whether these two sources tell thesame story. This aspect may also include identification of any other key data sources with which
the data cannot be compared, and the reasons for
this, such as differences in scope or definitions.
17.6 The IMF DQAF provides comprehensive
guidance on consistency evaluation, and the following questions could be helpful in this regard:• Is it possible to compile a consistent time seriesof a particular data item of interest over a number of years?
• To what extent can a user meaningfully compare
several data items within this collection?
• Could any natural disasters or significant economic events have influenced the data since theprevious release?
• Have these data been confronted with other data
sources, and are the messages consistent from alldata sources?
17.7 Finally, fully serviced external sector statistics
must follow a well-articulated data revision policy
and practice. The IMF DQAF specifies three attributesof good revision policy. Firstly, the revision policy
must follow a regular, well-established, and transparent schedule. For example, revision policy should beclearly stated in balance of payments quarterly publications, as well as for users accessing the data online. Quarterly data could be revised on an ongoingbasis, while data for previous years could be revised
once a year. Secondly, preliminary data or first estimates must be clearly identified and users with directaccess to such data informed accordingly. Because of
the need for more information, the recent financial
crisis has brought to the fore the need to provide clear
guidelines for compiling “flash” estimates of datasets.
Thirdly, whenever major revisions are carried out, it isimportant to explain the changes with, or before, firstrelease of revised data.

Serviceability and Accessibility of External Sector Statistics

Accessibility
17.8 Generally, accessibility of a statistical collection, product, or release can be evaluated by considering the extent to which data and metadata aremade available to the general public and the level ofassistance provided to users. Good access to external sector data requires that pertinent metadata aremade publicly available in a clear and understandable
manner; forms of dissemination are adequate; andstatistics are made available on an impartial basis andare up-to-date; and prompt and knowledgeable support service is available to users. As regards the latter,
pertinent information should be publicly available inappropriate formats and through appropriate delivery channels, and should be written in plain language
adapted to the level of understanding of the main usergroups. For many citizens, the news media provide
their only exposure to official statistics; therefore it isvery important that the statistical agency responsible
for external sector statistics be able to communicate
effectively with the media. The media uses many vehicles to reach their audiences, including newspapers,
magazines, and other periodicals, as well as radio,
television, and the Internet. Newspaper and otherprinted media can provide more detailed coverage ofstatistical information. The Internet has also become aprominent source of information for many data users;
thus it is important to have a good Internet site to facilitate easy retrieval of data and dissemination of key
messages to the media.
17.9 The statistical agency responsible for external
sector statistics must ensure that its clients are able
to access and correctly interpret the information on
statistical methods, concepts, variables, and classifications used in producing statistical results. This meansthat external sector statistics must be presented ina manner that facilitates proper interpretation andmeaningful comparisons. To promote proper interpretation, publication of external sector statistics
should feature a section with comprehensive metadata providing key concepts, definitions, and data
sources for the main accounts. If data quality assess-267

ment is made, any discrepancies should be adequately
explained to the reader. For a major statistical release,
it is often helpful for the statistical agency to organizea press briefing event.
17.10 Good access to external sector statistics requires that users be provided with adequate information on how and where to access key information, thecontact person, and other services, including information on any charges. Where feasible, special dataservices could be provided, including special or nonstandard groupings of data items or outputs, and theirusefulness and their costs. For example, the publication for each release should include tables and charts(if appropriate) as well as analysis of developments inthe form of highlights. The highlights could be used toconvey significant findings, comparisons, and trends
to assist the media, and other users, in understanding and using the publications. This approach helps todemonstrate the relevance of external sector statistics
to the general public and fosters informed decision
making throughout society more effectively.
17.11 Users often have more confidence in the integrity of the statistics if they are released according
to a published advanced release schedule giving thedate (and preferably the time) when the figures will beavailable to all users. It is essential that the dates in theschedule are met.
17.12 The extent to which the agency responsible
for external sector statistics can communicate effectively with and through the media has a large impact
on how well it can achieve these objectives. Thus it isin the best interest of the agency responsible for disseminating external sector statistics to build a strong
working relationship with the media, to make it easy
for journalists to report on statistical informationin an accurate, timely, and informative manner, andto take steps to increase media coverage as a way ofreaching the broader society with important statistical information. The key to building strong working
relationships with the media is to understand whothey are and how best to meet their information needs
in a manner that is both proactive and user friendly.

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Balance of Payments and International Investment Position Compilation Guide

Box 17.1 The Data Quality Assessment Framework
The DQAF covers ﬁve dimensions of quality and a set of prerequisites for the assessment of data quality. The coverageof these dimensions recognizes that data quality encompasses characteristics related to the institution or system behindthe production of the data, as well as characteristics of the individual data product. Within this framework, each dimension comprises a number of elements, which are in turn associated with a set of desirable practices. The following are
the statistical practices that are associated with each dimension:
Prerequisites of quality—The environment is supportive of statistics; resources are commensurate with needs of statistical programs; and quality is a cornerstone of statistical work.
Integrity—Statistical policies and practices are guided by professional principles, are transparent, and are guided by
ethical standards.
Methodological soundness—Concepts and deﬁnitions used are in accord with internationally accepted statisticalframeworks; the scope is in accord with internationally accepted standards, guidelines, or good practices; classiﬁcation and sectorization systems are in accord with internationally accepted standards, guidelines, or good practices;and ﬂows and positions are valued and recorded according to internationally accepted standards, guidelines, orgood practices.
Accuracy and reliability—Source data available provide an adequate basis to compile statistics; statistical techniques
employed conform with sound statistical procedures; source data are regularly assessed and validated; intermediate results and statistical outputs are regularly assessed and validated; and revisions, as a gauge of reliability, aretracked and mined for the information they may provide.
Serviceability—Statistics cover relevant information on the subject ﬁeld; timeliness and periodicity follow internationally accepted dissemination standards; statistics are consistent within the dataset, over time, and with other major
datasets; and data revisions follow a regular and publicized procedure.
Accessibility—Statistics are presented in a clear and understandable manner, forms of dissemination are adequate,
and statistics are made available on an impartial basis; up-to-date and pertinent metadata are made available; andprompt and knowledgeable support service is available.

APPENDIX

1

Conversion Matrix from the
BPM5 to the BPM6

Comments and Explanatory Notes to the Conversion Matrix
For the balance of payments and IIP, the conversion matrix matches the standard components and additional details of the
BPM5 to the standard components and selected other items of the BPM6; see:• BPM5 Balance of Payments: Standard Components, pages 43–48• BPM5 Tables 7 and 8, Balance of Payments: Standard Components and Additional Detail• BPM5 International Investment Position: Standard Components, pages 108–111• BPM5 Table 9, International Investment Position: Standard Components and Additional Detail• BPM6 Appendix 9 Standard Components and Selected Other Items
The Comments column of the conversion matrix provides further explanation and information regarding the changes
between the BPM5 and BPM6. To enhance clarity, the titles of BPM5 standard components are shown in italics in thecomments.
The conversion matrix follows the Standard Components and Selected Other Items of the BPM6. In a number of cases theorder of the BPM5 items has been adjusted to facilitate the linking.
In the conversion matrix, the corresponding items of the BPM5 and BPM6 are linked via arrows. To reduce confusion, incases where nonrelated arrows cross, different fonts have been selected for the crossing arrows.
In cases where the BPM5 item is broken down in the BPM6, split arrows are used to link all new items to the old one. Splitarrows are also used when the BPM6 shows not only the original BPM5 item, but also an “of which” item thereof that was
not included in the BPM5. For the sake of clarity, in those cases different fonts are used to distinguish the “of which” item.

Goods sold under merchanting

Goods acquired under merchanting(negative exports)

Net exports of goods undermerchanting

General merchandise on a balance of
payments basis
Of which Re-exports

Goods (P61/P71)* BPM6 includes a reconciliation table to show the relationship between merchandise
trade statistics and goods on a balance of payments basis; see BPM6, Table 10.2.

1. General merchandise* Merchanting of goods is included under exports of goods (both gross/net); see
BPM6, paragraphs 10.41-10.49. In BPM5, merchanting a is included in 9.1 Merchanting and other trade-related services. When these goods are kept in inventories fromone period to the next, BPM5 recommends that the purchases are booked as imports,
and the subsequent sales as negative imports of goods. In that case, any difference
between the value of the goods when acquired and relinquished is entered under
Merchanting and other trade-related services; see BPM5, paragraphs 207, 213 and262. In BPM6, the acquisition of the good is classiﬁed as a negative goods exportof the economy of the merchant, and the sale is a positive goods export, with thedifference between sales and purchases recorded as 'net exports of goods undermerchanting’.

9. Other business services
9.1 Merchanting and other traderelated services (partly; see below
for other trade-related services )* Unlike in BPM5, re-exports, that is goods produced in other economies and previously imported, which are exported without a substantial transformation, should
be separately recorded if they are a signiﬁcant proportion of exports; see BPM6,
paragraphs 10.37 - 10.40.

4. Goods procured in ports by carriers* In BPM6, general merchandise includes goods procured in ports, which in BPM5 is
separately classiﬁed; see BPM6, paragraph 10.17(d).

* In BPM6, goods bought abroad for own use or to give away that exceed customs
thresholds are included in general merchandise; see BPM6, paragraph 10.20. In BPM5,
these goods are recorded in travel; see BPM5, paragraphs 212 and 250.

* In BPM6, migrants personal effects are not classiﬁed as transactions as in BPM5 andso are no longer included in goods, nor elsewhere in the international accounts; see
BPM6, paragraph 10.22 (b).

* In BPM6, Goods for processing and Repairs on goods are recorded under Services,
unlike BPM5 where these items were recorded under goods.

Comments on Change in Treatment or Clariﬁcation

a. Goods

A. Goods and services

Goods and services (P6/P7)

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)
1. Current accountRemapping

Balance of Payments Account Items

Current account

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

BPM6 Changes in Treatment or Classiﬁcation
270
Balance of Payments and International Investment Position Compilation Guide1.1.1 Passenger

1.1.2 Freight
1.1.3 Other

Freight

Other

1.1 Sea transport

1. Transportation

Passenger
Of which: payable by border,
seasonal, and other short-term
workers

Sea transport

Transport*1

1.3.3. Other modes of transport / Other(partly)

3. Repairs on goods

Maintenance and repair
services n.i.e.

5.2 Other (partly)

5.1 Held as a store of value

5. Nonmonetary gold

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

2. Goods for processing

Remapping

Manufacturing services on physicalinputs owned by others
Goods for processing in reporting
economy — Goods returned (CR),
Goods received (DR) Goods forprocessing abroad - Goods sent (CR),
Goods returned (DR)Services (P72/P82)

Nonmonetary gold

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)* This supplementary item is needed for the compilation of Personal remittances; see
BPM6, paragraph 12.51 (a) and Appendix 5.

* Transport services is renamed (BPM5: Transportation) in line with the Central Product Classiﬁcation (CPC); see BPM6, paragraph 10.61.

*The BPM5 item Repairs on goods has been renamed in Maintenance and repair
services n.i.e. Unlike BPM5, this item is included under services, rather than goods.
It comprises Maintenance of transport equipment, which was recorded in Other
transport, other in BPM5; see BPM6, paragraphs 10.72 - 10.73 and BPM5, paragraphs
200 and 240.

* In BPM6, the fee received for the processing services rendered is included in
Manufacturing services on physical inputs owned by others; gross reporting is
supplementary; see BPM6, paragraphs 10.62 - 10.71. In BPM5, goods sent abroad
for manufacturing services are included in Goods for processing and a simultaneous change of ownership is imputed, except under certain circumstances; see BPM5,
paragraph 199. In BPM6, imputed ﬁnancial account entries for trade credit requiredby the imputed ﬂows for 'goods for processing' are no longer needed.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6
271

OtherFreight

Passenger
Of which: payable by border,
seasonal, and other short-term
workers

For all modes of transport*2

Postal and courier services* This supplementary item is needed for the compilation of Personal remittances; see
BPM6, paragraph 12.51 (a) and Appendix 5.

* In BPM5, postal and courier services is included in Services, 3. Communication
Services. In BPM6, it is included in services / transport; see BPM6, paragraphs 10.74,
10.82–10.85.

1.3.3 Other (partly)
3. Communications services (partly)* In BPM5, 1.3.3 Other transport / Other includes maintenance of transport equipment; see BPM5, paragraph 240. In BPM6, maintenance of transport equipment isincluded under Maintenance and repair services n.i.e.; see BPM6, paragraph 10.72.

1.3.2 Freight

Freight

Other* This supplementary item is needed for the compilation of Personal remittances; see
BPM6, paragraph 12.51 (a) and Appendix 5.

1.3.1 Passenger* This supplementary item is needed for the compilation of Personal remittances; see
BPM6, paragraph 12.51 (a) and Appendix 5.

Comments on Change in Treatment or Clariﬁcation

Passenger
Of which: payable by border,
seasonal, and other short-term
workers

1.3 Other transport

1.2.3 Other

Other

Other modes of transport

1.2.2 Freight

Freight

1.2 Air transport

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

1.2.1 Passenger

Remapping

Passenger
Of which: payable by border,
seasonal, and other short-term
workers

Air transport

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)

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Construction
Construction abroad*3
Construction in the reporting
economy*3

For both business and personal travel
Goods
Local transport services
Accommodation services
Food-serving services
Other services
Of which
Health services
Education services

Health-related
Education-related
Other

9. Other business services (partly)

4. Construction services

2.2.3 Other

2.2.2 Education-related

2.2.1 Health-related

2.2 Personal

Personal

2. Travel

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

2.1 Business

RemappingBusiness
Acquisition of goods and services byborder, seasonal, and other shortterm workers
Other

Travel

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)* The separate items Construction abroad and Construction in the reporting economy
are introduced as supplementary items; see BPM6, paragraphs 10.105 - 10.106. In
BPM6, expenditures by nonresident construction enterprises on local supplies areincluded in Construction services; see BPM6, paragraph 10.102. In BPM5, they are partof Other business services (see BPM5, paragraph 254). As in BPM5, goods and services
provided from the home economy of the enterprise (resident-to-resident transactions)should be excluded from general merchandise and/or services of the local economy.
Other than in BPM5, goods and services acquired from third economies are recorded
under general merchandise and/or services for the economy of the enterprise; see
BPM6, paragraph 10.102.

This supplementary breakdown of travel allows for closer links with
tourism satellite accounts as well as supply and use tables BPM6,
paragraph 10.95.

* In BPM6, goods bought abroad for own use or to give away thatexceed customs thresholds are included in general merchandise; see BPM6, paragraph10.20. In BPM5, these goods are included in travel.

* The recording of alternative time-share arrangements (either as direct investment
or other investment / trade credit, with periodic counterﬂows in accommodation
services in travel) is explained; see BPM6, paragraph 10.100 and Table 10.3. BPM5 does
not discuss time-share arrangements, but the description in BPM6 is in line with thegeneral principles of BPM5.

* This supplementary item is needed for the compilation of Personal remittances; see
BPM6, paragraph 12.51 (a) and Appendix 5.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6
273

B.2 Investment income (partly) Financial
intermediation charge indirectly measured

8. Royalties and license fees

Financial intermediation services
indirectly measured (FISIM)

Charges for the use of intellectual
property n.i.e.*1

6. Financial services

Financial services
Explicitly charged and otherﬁnancial services

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)
5. Insurance services

Remapping

Insurance and pension services*1
Direct insurance
Reinsurance
Auxiliary insurance services
Pension and standardized
guaranteed services

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)* BPM6 uses the title Charges for the use of intellectual property instead of Royalties
and license fees in BPM5. It includes charges for the use of (i) franchises and trademarks, like in BPM5; and (ii) the outcomes ofresearch and development (R&D). In BPM6, as in BPM5, outright purchases/sales offranchises and trademarks are recorded in the capital account. Charges for the use of
intellectual property also includes licenses to reproduce and/or distribute (i) software;and (ii) audiovisual and related services; (BPM5 is not explicit on the recording oflicenses to reproduce and/or distribute). See BPM6, paragraphs 10.137–10.140 and
Table 10.4.

* BPM6 recognizes FISIM on loans and deposits when those loans and deposits areprovided by, or deposited with, ﬁnancial corporations (as deﬁned in BPM6, paragraphs 4.63 - 4.64); see BPM6, paragraph 10.127. In BPM6, FISIM can be attributed
to interest on loans and deposits in direct investment, other investment, and reserve
assets, but not portfolio investment. In BPM5, FISIM is not recognized in Financial
services; see BPM5, paragraph 508.

* Financial dealers' implicit charges via margins are included under ﬁnancial services;
see BPM6, paragraph 10.119. In BPM5, implicit margins are not discussed separately
and may therefore be included in theﬁnancial ﬂows. In BPM6, services of asset-holding entities to their owners, whereasset management costs are taken out of income, are included in ﬁnancial services;
see BPM6, paragraph 10.124. In BPM5, these costs are not discussed separately andmay therefore be included in investment income.

* In BPM6, premium supplements are taken into account in deriving insurance
services; see BPM6, paragraph 10.111 and Appendix 6c. BPM5 accepts ignoringthese ﬂows on practical grounds; see BPM5, paragraph 257. In BPM6, reinsurance
and direct insurance are treated consistently; see BPM6, paragraph 10.111, whereas
BPM5 recommends recording the balance of all ﬂows between resident insurers andnonresident reinsurers (and vice-versa) in services; see BPM5, paragraph 257. In contrast to BPM5, the estimate of insurance claims used to derive the value of insurance
services may be adjusted to take account of claim volatility; see BPM6, paragraph10.114 (c).

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

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Balance of Payments and International Investment Position Compilation Guide

9.2 Operational leasing services
9.3 Miscellaneous business, professional,
and technical services

Technical, trade-related, and otherbusiness services

9.1 Merchanting and other trade-

2.A.2. Acquisition/disposal of nonproduced,
nonﬁnancial assets (partly)

2. Capital and Financial Account

9. Other business services

Professional and management
consulting services

Research and development services

Other business services*1

Information services

7. Computer and information services

Computer services

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

3. Communications services (partly)

RemappingTelecommunications services

Telecommunications, computer, andinformation services*1

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)* In BPM6, merchanting is recorded under Goods / Net exports of goods under merchanting, unlike services in BPM5; see BPM6, paragraphs 10.41–10.49.

* In BPM6, the results of R&D are considered produced assets. Outright purchases andsales of the results of R&D are therefore recorded under Research and development
services; see BPM6, paragraphs 10.147–10.148. In BPM5, sales and purchases of theresults of R&D are recorded in the capital account / nonproduced nonﬁnancial assets;
see BPM5, paragraph 358. In BPM6, charges for the use of the outcomes of R&D are
included in Charges for the use of intellectual property. In BPM5, the provision of
R&D services is included under 9.3 Miscellaneous business, professional, and technicalservices; see BPM5, paragraph 264.

* In BPM6, Computer services includes (i) licenses to use software; and (ii) outrightpurchases/sales of software. Computer services does not include (i) licenses toreproduce and/or distribute software (see Charges for use of intellectual property;
BPM6, paragraph 10.137 (b)); and (ii) transactions in noncustomized (mass-produced)
software provided on physical media with right to perpetual use, which need to berecorded under goods (the latter is not a change, but clariﬁcation to BPM5 ). See
BPM6, paragraph 10.143 and Table 10.4.

* In BPM6, a grouping of telecommunications, computer, and information services is
introduced (see BPM6, paragraph 10.141). This includes the following BPM5 items:(i) 3. Communications services (exceptpostal and courier services, which are recorded
under Transport in BPM6); and (ii) 7. Computer and information services.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6275

11. Government services n.i.e.

10.2 Other personal, cultural, and recreational services

Other personal, cultural, and recreational services

Government goods and services
n.i.e.*1
Tourism-related services in traveland passenger transport

10.1 Audiovisual and related services

Audiovisual and related services

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)
10. Personal, cultural, and recreational
services

Remapping

Personal, cultural, and recreational
services*1

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

This supplementary item allows for a link with tourism satellite accounts as well as
supply and use tables BPM6, paragraph 10.95.

* BPM6 describes the service charge of lotteries and gambling as the margin between the gambling charges and the winnings payable by the operator. The service charge is included under Other personal, cultural, and recreational services;
see BPM6, paragraph 10.170. Winnings payable between the operator and theparticipants are recorded under Personal transfers; see BPM6, paragraphs 12.53- 12.54. BPM5 only discusses the recording of gambling in terms of Other current
transfers; see BPM5, paragraph 303. Gambling by visitors abroad (not discussed inBPM5) is to be included in travel; see BPM6, paragraph 10.88.

* In BPM6, Audiovisual and related services, and Other personal, cultural and recreational services include (i) licenses to use the products; and (ii) outright purchases/
sales. Audiovisual and related services do not include (i) licenses to reproduce and/or distribute (see Charges for the use of intellectual property); and (ii) transactions
in non-customized (mass-produced) products provided on disks, etc., which need tobe recorded under goods (this is not a change, but clariﬁcation to BPM5 ). See BPM6,
paragraphs 10.162 - 10.166 and Table 10.4.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

276
Balance of Payments and International Investment Position Compilation Guide

Remapping

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

Comments on Change in Treatment or Clariﬁcation* Fees on securities lending and gold loans. In BPM6, fees on securities lending and gold loans are clariﬁed and treated as interest if the fees accrue to the owner lending these assets (see BPM6,
paragraphs 11.67 - 11.68) with the counter-entry in other accounts receivable/payable; see BPM6, paragraph 5.73. BPM5 does not discuss these fees explicitly. As in BPM5, fees payable to custodiansetc. for the administrative services associated with the lending are recorded in Financial services.

* Reserve assets. In BPM6, income on reserve assets is identiﬁed separately. If not available for publication, income from reserve assets may be included in other investment / interest; see BPM6, paragraph 11.109. In BPM5, income on reserve assets is included in other investment income; see BPM5, paragraph 281.

* Interest. In BPM6, interest income is adjusted to show 'pure' interest, i.e. the ﬁnancial intermediation services indirectly measured (FISIM) component is included in Financial services; see BPM6,
paragraphs 11.74 - 75. BPM6 recognizes FISIM on loans and deposits when those loans and deposits are provided by, or deposited with, ﬁnancial corporations (as deﬁned in BPM6, paragraph 4.64);
see BPM6, paragraph 10.127. FISIM can be attributed to interest on loans and deposits in direct investment income, other investment income, and reserve assets, but not portfolio investment. BPM5
does not recognize FISIM; see BPM5, paragraph 258, note 7. Nonetheless, it is included as additional detail in BPM5, Table 7 to allow reconciliation with the SNA.

* Dividends. In BPM6, dividends are recorded when the shares go ex dividend; see BPM6, paragraph 3.48; in BPM5: when payable; see BPM5, paragraphs 282 and 284. Withdrawals of income fromquasicorporations are recorded when withdrawn, consistent with BPM5 principles; see BPM6, paragraph 11.31. BPM6 describes superdividends, which should be recorded as withdrawals of equity,
not primary income; see BPM6, paragraph 11.27. The term 'superdividends' is not discussed in BPM5, but the treatment in BPM6 is in line with the general principals of BPM5 (notably liquidating
dividends; see BPM5, paragraph 290). In BPM6, the title Income from quasicorporations replaces the BPM5 term Distributed branch proﬁts; see BPM6, paragraph 11.26. Adjustments for transfer pricing (which may result in a counterentry in dividends or equity ﬂows) are clariﬁed; see BPM6, paragraphs 11.101 - 11.102. This clariﬁcation is not a change from BPM5; see BPM5, paragraphs 97 - 103.

* Compensation of employees. The employer-employee relationship is clariﬁed to distinguish between compensation of employees and payment for services in BPM6, paragraph 11.12. This is a clariﬁcation to BPM5 and in accordance with its general principles. Yet, it may result in reclassiﬁcations involving compensation of employees and services.

* The term Primary income is introduced to be consistent with the 2008 SNA; see BPM6, paragraph 11.1. Rent and Taxes/subsidies on products and production are explicitly included in primary income; see BPM6, Tables 11.1, 11.2, and 11.3.

Primary income: General Comments

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6
277

Reinvested earnings (D43D)
Investment income attributable
to policyholders in insurance,
pension schemes, and standardized guarantees, and to investment fund shareholders (D44D)
of which: Investment
income attributable toinvestment fund shareholders(D443D)

2.1.1.2 Reinvested earnings andundistributed branch proﬁts

2.1.1.1 Dividends and distributed
branch proﬁts

2.1.1 Income on equity

2.1 Direct investment* In BPM6, the title Reinvested earnings replaces the BPM5 term Reinvested earnings
and undistributed branch proﬁts, without changing the substance of the item.

* See Primary income, general comments: dividends from direct investment.

* Unlike in BPM5, direct investment income is broken down by type of FDI relationships; see BPM6, paragraph 6.37.

2. Investment income

Investment income
Direct investment
Income on equity and investment
fund shares
Dividends and withdrawals from income of quasi-corporations (D42D)
Direct investor in direct
investment enterprises
Direct investment enterprises
in direct investor (reverse
investment)
Between fellow enterprises
if ultimate controlling parent
is resident
if ultimate controlling parent is
if ultimate controlling parent is
unknown

Comments on Change in Treatment or Clariﬁcation* See Primary income, general comments: compensation of employees.

B. IncomeBPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

1. Compensation of employees

RemappingCompensation of employees (D1)Primary income

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)

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Balance of Payments and International Investment Position Compilation Guide

Investment income on equity andinvestment fund shares
Dividends on equity excluding
investment fund shares (D42P)
Investment income attributable
to investment fund shareholders(D443P)
Dividends
Reinvested earnings

Portfolio investment

Memorandum: Interest before
FISIM

Interest (D41D)
Direct investor in direct investment
enterprises
Direct investment enterprises in
direct investor (reverse investment)
Between fellow enterprises
if ultimate controlling parent isresident
if ultimate controlling parent is
if ultimate controlling parent is
unknown

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Remapping

2.2.1 Income on equity(dividends) (partly)

2.2 Portfolio investment

2.1.2 Income on debt (interest)

2.1.2 Income on debt (interest), (partly)

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)* Other than in BPM5, reinvested earnings of investment funds are included inprimary income for portfolio investment, with counterpart in the ﬁnancial account;
BPM6, paragraphs 11.37 - 11.39.

* See Primary income, general comments: dividends.

* See Primary income, general comments: interest.

* In BPM6, 'actual interest', i.e. interest including FISIM, is a memorandum item; see
BPM6, paragraph 11.74. This item corresponds with interest reported under BPM5.

* See Primary income, general comments: interest.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6
279

2.3.3 Imputed income to households
from net equity in life insurance and inpension funds

Investment income attributable topolicyholders in insurance, pension
schemes, and standardized guarantees(D441O+ D442O)

Memorandum: Interest before
FISIM*4

Interest (D41R)*4

Income on equity and investment
fund shares

Reserve assets*4

2.3.1 FISIM

2.3.2 Other interest (partly)

Equity income (not available in BPM5)

2.3 Other investment

2.2.2.1.1 FISIM

Memorandum: Interest before
FISIM

Interest (D410)

Withdrawals from income of quasicorporations (D42O)

Other investment

2.2.2.1 Bonds and notes

Long-term
2.2.2.1.2 Other interest

2.2.2.2 Money market instruments

Short-term

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)
2.2.2 Income on debt (interest) (partly)

RemappingInterest (D41P)

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)* See Primary income, general comments: interest; fees on securities lending and goldloans; and reserve assets.

* In BPM6, premium supplements are taken into account in deriving insurance
services; see BPM6, paragraph 10.111 and Appendix 6c. Thus, the total amount ofinvestment income attributable to policyholders is classiﬁed as premium supplements;
see BPM6, Appendix 6c.26. BPM5 accepts ignoring these ﬂows on practical grounds;
see BPM5, paragraph 257.

* In BPM6, 'actual interest', i.e. interest including FISIM, is a memorandum item; see
BPM6, paragraph 11.74. This item corresponds with interest reported under BPM5.

* In BPM6, income from equity not included in direct investment and not in the formof securities (i.e. D42O) is separately distinguished in income from other investment;
see BPM6, paragraphs 5.26 -5.27. BPM5 does not specify this kind of equity.

* See Primary income, general comments: interest, and reserve assets.

* Unlike in BPM6, BPM5 does not recognize FISIM; see BPM5, paragraph 258, note 7.
Nonetheless, it is included as additional detail in BPM5, Table 7 to allow reconciliation with the SNA. BPM6 does not recognize FISIM on portfolio investment.

* See Primary income, general comments: interest, and fees on securities lending andgold loans.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

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Balance of Payments and International Investment Position Compilation Guide

Remapping

2.2.3 Other subsidies on

2.2.2 Other taxes on production

2.2 Other transfers (partly)

2. Other sectors

1.3 Other subsidies on production

1.2 Other taxes on production

1. General government (partly)

C. Current transfers (partly)

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)* In BPM5, rent (D45) is not separately identiﬁed.

* In BPM6, taxes and subsidies on products and production are classiﬁed as primary
income, not as secondary income (current transfers) as in BPM5; see BPM6, paragraphs 11.91 - 11.94.

Comments on Change in Treatment or Clariﬁcation

Of which: payable by border, seasonal, and other short-term workers

Current taxes on income, wealth, etc.
(D5)

General government

Secondary income

1.1 Current taxes on income, wealth etc.

1. General government

C. Current transfers* Supplementary data related to cross-border employment is used to compile personal remittances; see BPM6, paragraph 12.51.

Secondary income : General Comments* The term Secondary income is introduced to be consistent with the SNA and is clariﬁed in BPM6, paragraphs 12.1 - 12.4. More detailed types of current transfers are introduced on a supplementarybasis; see BPM6, paragraphs 12.21 - 12.24. Refunds of taxes to taxpayers are treated as negative taxes, i.e., the amount of taxes is reduced by tax refunds; see BPM6, paragraph 12.21. In BPM5, tax
refunds are recorded under government transfers; see BPM5, paragraph 299. The delineation between taxes and services is clariﬁed. Business licenses to ﬁsh, hunt, etc. are no longer automaticallytreated as taxes as in BPM5, but as services, rent, taxes, or acquisition of a license asset, depending on what is supplied in return; see BPM6, paragraphs10.179-180, 12.23; BPM5, paragraph 300.

Rent (D45)

Taxes on production andimports (D2)
Subsidies (D3)

Other primary income

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6
281

Financial corporations, nonﬁnancial
corporations, households, and NPISHs

Current international cooperation(D74)
Miscellaneous current transfers ofgeneral government (D75)
Of which: Current transfers to
NPISHsSocial beneﬁts (D62+D63)

Of which: payable by border, seasonal,
and other short-term workers

Social contributions (D61)

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Remapping

2. Other sectors

1.6 Other current transfers ofgeneral government

1.5 social beneﬁts

1.4 Social contributions

1.3 Other subsidies on production

1.2 Other taxes on production

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)* Supplementary data on current transfers to NPISHs is used to compile total remittances to NPISHs; see BPM6, paragraph 12.51.

* Supplementary data related to cross-border employment is used to compile personal remittances; see BPM, paragraph 12.51.

* In BPM6, taxes and subsidies on products and production are classiﬁed as primary
income; not as secondary income (current transfers) as in BPM5; see BPM6, paragraphs 11.90 - 11.93.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

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Balance of Payments and International Investment Position Compilation Guide

Miscellaneous current transfers (D75)
Of which: Current transfers to
NPISHsCurrent international cooperation(D74)

Net nonlife insurance premiums (D71)
Nonlife insurance claims (D72)

Social contributions (D61)
Social beneﬁts (D62+D63)

Current taxes on income, wealth,etc. (D5)

Other current transfers

Of which: Workers' remittances

Personal transfers (Current transfers
between resident and nonresident
households)

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Remapping

2.2.6 Other current transfers of othersectors

2.2.4 Social contributions
2.2.5 Social beneﬁts

2.2.3 Other subsidies on

2.2.2 Other taxes on production

2.2.1 Current taxes on income,wealth, etc

2.2 Other transfers

2.1 Workers’ remittances

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)* Supplementary data on current transfers to NPISHs is used to compile
total remittances to NPISHs; see BPM6, paragraph 12.51.

* Technical assistance that is part of or tied to capital projects (item not explicitly discussed in BPM5) is recorded as capital transfers; see BPM6, paragraph 12.43. Transfers of equipment in the form of weapons or equipmentthat are classiﬁed as ﬁxed assets are considered as investment grants andthus recorded in the capital account; see BPM6, paragraph 13.26. In BPM5,
these transfers are treated as current transfers; see BPM5, paragraph 349.

* In BPM6, premium supplements are taken into account in deriving insurance services;
see BPM6, paragraph 10.111 and Appendix 6c. BPM5 accepts ignoring these ﬂows onpractical grounds; see BPM5, paragraph 257. In BPM6, reinsurance and direct insurance
are treated consistently; see BPM6, paragraph 10.111, whereas BPM5 recommends
recording the balance of all ﬂows between resident insurers and nonresident reinsurers(and vice versa) in services; see BPM5, paragraph 257. Unlike in BPM5, the estimate of
insurance claims used to derive the value of insurance services may be adjusted to takeaccount of claim volatility; see BPM6, paragraph 10.114 (c). Unlike in BPM5, insurance
claims may be treated as capital transfers in exceptional cases of catastrophic losses tobe consistent with the SNA; see BPM6, paragraph 13.24.

* In BPM6, taxes and subsidies on products and production are classiﬁed as primary
income; not as secondary income (current transfers) as in BPM5; see BPM6, paragraphs 11.91 - 11.94).

* BPM6 introduces the concept of Personal transfers, which is broader than workers' remittances (in both BPM5 and BPM6) because it includes all transfers between
individuals, not just those of migrants who are employed in new economies andconsidered residents there; see BPM6, paragraphs 12.47 - 12.51 and Appendix 5.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6283

Remapping

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)* The treatment of pension contributions / receipts is aligned with the SNA
2008 and the adjustment item for the change in pension entitlements is
introduced; see BPM6, paragraph 12.31. When crossborder ﬂows are minor,
the adjustment item may be omitted; see BPM6, paragraph 12.32.

Comments on Change in Treatment or Clariﬁcation

1.1.2 Other
1.2. Other sectors

Other capital transfers
Of which: Capital taxes (D91)

Financial corporations, nonﬁnancial
corporations, households, and NPISHs

Debt forgiveness1.1.1 Debt forgiveness

Debt forgiveness1.2.2 Debt forgiveness1.2.1 Migrants’ transfers

1. 1 General government

1. Capital transfers

Capital transfers (D9)General government

2. Acquisition/disposal of nonproduced, nonﬁnancial assets

A. Capital accountGross acquisitions (DR.) / disposals(CR.) of nonproduced nonﬁnancial
assets (N2 )Capital account* A convention for distinction between write-offs and debt forgiveness isintroduced; see BPM6, paragraph 9.10.

* The personal effects, ﬁnancial assets, and liabilities of persons changing
residence are no longer recorded as capital transfers; BPM6, paragraphs
13.30, 9.21-9.22 and 10.22(b); BPM5, paragraphs 352-353.

* A convention for distinction between write-offs and debt forgiveness isintroduced; see BPM6,* Unlike in BPM5, insurance claims may be treated as capital transfers in exceptional cases of catastrophic losses to be consistent with the SNA; see BPM6, paragraph 13.24.

* Large inheritances are treated as capital transfers, instead of current transfers as in BPM5; see BPM6, paragraph 13.30.

* Capital transfers associated with the activation of one-off guarantees and other debt assumption are speciﬁed; see BPM6, paragraphs 8.42 - 8.45, 13.19, and Box 8.1. One-off
guarantees are not discussed in BPM5.

* In BPM6, the results of R&D, such as patents and copyrights, are no longer treated as nonproduced assets. Outright purchases and sales of these products no longer appear
in the capital account (as in BPM5, see paragraphs 312 and 358), but are classiﬁed as produced assets with transactions recorded in services (R&D services for patents and copyrights); see BPM6, Table 10.4 and BPM5, paragraph 358.

* Unlike in BPM5, emission rights and internet domain names are identiﬁed as possible economic assets; see BPM6, paragraphs 13.14 and 13.18, respectively.

* Debits and credits for the acquisition/disposal of nonproduced nonﬁnancial assets are to be recorded separately, not netted as in BPM5; see BPM6, paragraphs 13.7 and3.113.

Capital account: General Comments

Adjustment for change in pension
entitlements

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)

284
Balance of Payments and International Investment Position Compilation Guide

Remapping

1.2.3 OtherBPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

The sum of the balances of the current and capital account, i.e., the sum of
all credits minus the sum of all debits in these accounts, represents the net
lending (surplus) or net borrowing (deﬁcit) by the economy with the restof the world. This is conceptually equal to the net balance of the ﬁnancial
account; see BPM6, paragraph 2.18 and Table 2.1.

* Supplementary data on capital transfers to NPISHs is needed tocompile total remittances to NPISHs; see BPM6, paragraph 12.51(c) andAppendix 5.

This supplementary item is used to compile personal remittances; see BPM6,
Paragraph 12.51.

Comments on Change in Treatment or Clariﬁcation* Data on the directional basis are also recognized as essential for many purposes; see BPM6, paragraphs 6.44 - 6.45. The details needed to compile these data are shown inBPM6, Box 6.4.

* In BPM6, direct investment is presented on an assets and liabilities basis, unlike on the directional principle in BPM5. In the standard components, direct investment isclassiﬁed according to the relationship between the investor and the entity receiving the investment; see BPM6, paragraphs 6.37- 6.41. Thus, under ‘Direct investor in direct
investment enterprises’ the reporting economy of the direct investor records the assets of the direct investor, and the reporting economy of the direct investment enterprises
records the (mirror) liabilities of the direct investment enterprises (whether in an immediate or indirect relationship); see BPM6, paragraphs 6.37.(a). Under ‘Direct investment
enterprises in direct investor’ (reverse investment) the reporting economy of the direct investment enterprises records the assets of the direct investment enterprises, and thereporting economy of the direct investor records the liabilities of the direct investor (whether in an immediate or indirect relationship); see BPM6, paragraphs 6.37.(b). Under
the item ‘Between fellows’ the reporting economy reports assets and /or liabilities as appropriate; see BPM6, paragraphs 6.17.

Direct investment: General Comments* The content of the Financial Derivatives Supplement 2000 is incorporated. As a consequence, the coding of the BPM5 Balance of Payments: Standard Components and Additional Detail in this conversion table is not corresponding to BPM5 1993 but rather to the revised coding of the Financial Derivatives Supplement 2000.

* Financial assets and liabilities of entities (migrants) changing residence are included as Other changes in volume; see BPM6, paragraphs 9.21 - 9.23, unlike as transactions in
BPM5; see BPM5, paragraph 354.

* A convention for distinction between write-offs and debt forgiveness is introduced; see BPM6, paragraph 9.10.

* In BPM6, arrears are retained in the original asset/liability and identiﬁed as a memorandum item if related to exceptional ﬁnancing (otherwise supplementary item). In
BPM5, arrears are reclassiﬁed from the original asset/liability to short-term other assets / liabilities and requested as a supplementary item; see BPM6, paragraphs 5.99 - 5.102,
BPM6, paragraphs 8.58 - 8.59, and BPM5, paragraphs 453, 528 - 529.

* In BPM6, the detailed classiﬁcation of ﬁnancial assets and liabilities is harmonized with the SNA and Monetary and Financial Statistics Manual 2000 in terms of detail andterminology; see BPM6, Table 5.3. In the BPM5 standard components, instruments are combined and different names for them are used in different places.

* In BPM6, central bank replaces monetary authorities as an institutional subsector, whereas monetary authorities remains an essential concept for deﬁning reserve assets anda supplementary subsector where relevant; see BPM6, paragraphs 4.70 and 6.66. BPM6 introduces a breakdown of other sectors into 'other ﬁnancial and nonﬁnancial corporations, households and NPISHs'; see BPM6, Chapter 4, Table 4.2.

Financial account: General Comments

Net lending (+) / net borrowing (–)(balance from current and capital
account) (B9)Of which: for each item in capitaltransfers: Transfers to NPISHs

Other capital transfers
Of which: Capital taxes (D91)
Of which: Between households

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6285

Remapping

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

Comments on Change in Treatment or Clariﬁcation

if ultimate controlling parent
is resident
if ultimate controlling parent is
if ultimate controlling parent
is unknown

Between fellow enterprises

Direct investment enterprises in
direct investor (reverse investment)

Direct investor in direct investment enterprises

Equity other than reinvestment of
earnings

Equity and investment fund shares(F5D)

Net acquisition of ﬁnancial assets

Direct investment (FD)Net lending (+) / net borrowing (–)(balance from ﬁnancial account) (B9)Financial account

1.2.1.1 Claims on direct investors

1.2.1 Equity capital

1.2 In reporting economy

1.1.1.1 Claims on afﬁliatedenterprises

1.1.1 Equity capital

1.1 Abroad

1. Direct investment

B. Financial account* In BPM5, fellow enterprises are not explicitly mentioned.

The net balance of the ﬁnancial account is equal to the net increase of assets minus the net increase in liabilities. This concept is conceptually equal
to the net balance of the current and capital account; see BPM6, paragraphs 2.17 - 2.18 and Table 2.1.

* In BPM6, all debt between selected types of afﬁliated ﬁnancial corporations is excluded from direct investment, unlike in BPM5, where so-called Permanent debt was included in direct investment. The ﬁnancial corporations to whom this applies are central banks, deposit-taking corporations other than the central bank, investment funds, andother ﬁnancial intermediaries except insurance companies and pension funds; see BPM6, paragraph 6.28.

* The concept of pass-through funds is introduced; see BPM6, paragraphs 6.33 - 6.34. It is encouraged that compilers in economies that have large values of pass-through funds
consider the compilation of supplementary data on funds in transit, based on national deﬁnitions.

* Insurance technical reserves are potentially included in direct investment; see BPM6, paragraph 6.27. In BPM5, technical reserves of insurance enterprises are excluded fromthe stock of direct investment; see BPM5, paragraph 379.

* Superdividends are treated as a withdrawals of equity; see BPM6, paragraph 8.23. The term 'superdividends' is not used in BPM5, but the treatment in BPM6 is in line withthe general principals of BPM5 (notably liquidating dividends; see BPM5, paragraph 290).

* In BPM6, the Framework for Direct Investment Relationships (FDIR) is adopted for identifying direct investment relationships; see BPM6, paragraphs 6.8 - 6.18 and BPM6 Box
6.1. Ownership of ordinary shares is removed from the operational deﬁnition of direct investment; see BPM6, paragraphs 6.12 and 6.19. In BPM6, the separate category ofinvestment in fellow enterprises is included, see BPM6, paragraph 6.17 (c). The coverage of direct investment relationships due to indirect voting power and fellow enterprises
is elaborated; see BPM6, paragraph 6.14.

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)
286
Balance of Payments and International Investment Position Compilation Guide

1.2.3.1.1 Debt securities issued
by direct investors
1.2.3.1.2 Other claims on
direct investors

Direct investment enterprises in
direct (reverse investment)

Between fellow enterprises

if ultimate controlling parent
is resident
if ultimate controlling parent
is nonresident
if ultimate controlling parent
is unknown

1.2.3.1 Claims on direct investors

1.2.3 Other capital

1.2 In reporting economy

Direct investor in direct investment

Of which: Debt securities (F3D)

if ultimate controlling parent isresident
if ultimate controlling parent isnonresident
if ultimate controlling parent is
unknown

1.1.3.1.2 Other claims on afﬁliated enterprises

Between fellow enterprises

1.1.3.1 Claims on afﬁliatedenterprises

1.1.3 Other capital

1.1.2 Reinvested earnings

1.1 Abroad

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

1.1.3.1.1 Debt securities issued
by afﬁliated enterprises

RemappingDirect investment enterprises in
direct investor (reverse investment)

Direct investor in direct investment
enterprises

Debt instruments

Reinvestment of earnings
Of which: Investment fundshares or units
Of which: Money market fundshares or units (F521D)

Net acquisition of ﬁnancial assets

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)* In BPM5, fellow enterprises are not explicitly mentioned.

* In BPM6, the item Other claims (as used in BPM5 ) is not classiﬁed
separately.

* As discussed above, in BPM6, all debt between selected types of afﬁliatedﬁnancial corporations is excluded from direct investment.

* In BPM5, fellow enterprises are not explicitly mentioned.

* In BPM6, the item Other claims (as used in BPM5 ) is not classiﬁed
separately.

* As discussed above, in BPM6, all debt between selected types of afﬁliatedﬁnancial corporations is excluded from direct investment.

* In BPM6, the term Debt instruments replaces Other capital.

* In BPM6, the terminology for the ﬁnancial account entry is 'reinvestmentof earnings', to distinguish it from 'reinvested earnings', which is continued
to be used for the counterpart item in Primary income; see BPM6, paragraph 8.15.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6
287

Reinvestment of earnings
Of which: Investment fundshares or units (F52.
Of which: Money market fundshares or units (F521D)

if ultimate controlling parent isresident
if ultimate controlling parent is
if ultimate controlling parent is
unknown

Between fellow enterprises

Direct investment enterprises in
direct investor (reverse investment)

Direct investor in direct investment
enterprises

Equity other than reinvestment of
earnings

Equity and investment fund shares(F5D)

Net incurrence of liabilities

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Remapping

1.2.2 Reinvested earnings

1.1.1.2 Liabilities to afﬁliatedenterprises

1.1.1 Equity capital

1.1 Abroad

1.2.1.2 Liabilities to direct
investors

1.2.1 Equity capital

1.2 In reporting economy

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)* In BPM6, the terminology for the ﬁnancial account entry is 'reinvestmentof earnings', to distinguish it from 'reinvested earnings', which is continued
to be used for the counterpart item in Primary income; see BPM6, paragraphs 8.15.

* In BPM5, fellow enterprises are not explicitly mentioned.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

288
Balance of Payments and International Investment Position Compilation Guide2.1.1.2 General government

General government

Monetary authorities (where
relevant)

2.1.1.1 Monetary authorities

2.1.1 Equity securities

2.1 Assets

2. Portfolio investment

Central bank

Equity and investment fund shares(F5P)

Net acquisition of ﬁnancial assets

Portfolio investment (FP)if ultimate controlling parent
is unknown

if ultimate controlling parent
is resident
if ultimate controlling parent
is nonresident

1.1.3.2.2 Other liabilities of
direct investors

Between fellow enterprises

1.1.3.2 Liabilities to afﬁliatedenterprises

1.1.3 Other capital* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets. Where monetary authorities are supplementary, their transactions and positions need to be recorded as standard
components under either central bank or general government, dependingon the entity that holds the instrument on its books.

* In BPM6, the item Other liabilities (as used in BPM5 ) is not classiﬁed
separately.

* In BPM5, fellow enterprises are not explicitly mentioned.

* As discussed above, in BPM6, all debt between selected types of afﬁliatedﬁnancial corporations is excluded from direct investment.

* In BPM6, the item Other claims (as used in BPM5 ) is not classiﬁed
separately.

1.2.3.2.2 Other liabilities todirect investors

1.1 Abroad* In BPM5, fellow enterprises are not explicitly mentioned.

* As discussed above, in BPM6, all debt between selected types of afﬁliatedﬁnancial corporations is excluded from direct investment.

* In BPM6, the term Debt instruments replaces Other capital.

Comments on Change in Treatment or Clariﬁcation

1.2.3.2.1 Debt securities issued by afﬁliatedenterprises

1.2.3.2 Liabilities to direct
investors

1.2.3 Other capital

1.2 In reporting economy

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

1.1.3.2.1 Debt securities issued
by direct investors

RemappingDirect investment enterprises in
direct (reverse investment)

Direct investor in direct investment

Of which: Debt securities (F3D)

Between fellow enterprises
if ultimate controlling parent isresident
if ultimate controlling parent isnonresident
if ultimate controlling parent is
unknown

Direct investment enterprises in
direct investor (reverse investment)

Direct investor in direct investment
enterprises

Debt instruments

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6289

2.2.1.1 Banks
2.2.1.2 Other sectors

Other sectors

2.2.1 Equity securities

2.2 Liabilities

Deposit-taking corporations,
except central bank

Net incurrence of liabilities

Equity and investment fund shares(F5P)

Portfolio investment (FP)Of which: Reinvestment of earnings
Of which: Money market fundshares or units

Investment fund shares or units (F52P)

Unlisted (F512P)

Listed (F511P)

Equity securities other than investment fund shares (F51P)

Nonﬁnancial corporations,households, and NPISHs

Other ﬁnancial corporations

2.1.1.4 Other sectors

Other sectors

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)
2.1.1.3 Banks

Remapping

Deposit-taking corporations, except central bank

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)* Investment fund shares and money market fund shares are separately
identiﬁed as supplementary items; see BPM6, paragraphs 5.28 - 5.30.

* A supplementary breakdown of equity securities other than investment
fund shares (of which listed / nonlisted) is included unlike in BPM5; see
BPM6, paragraphs 5.24 - 5.27.

* In BPM6, unlike BPM5, Reinvestment of earnings in investment funds isincluded in the ﬁnancial account via the item Equity and investment fundshares, Other ﬁnancial corporations. The item is not classiﬁed as a separate
standard component. The counter-entry is in the Primary income account;see BPM6, paragraphs 8.28 and 11.37 - 11.39.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

290
Balance of Payments and International Investment Position Compilation Guide

Short-termLong-term

Monetary authorities (where
relevant)

Long-term

Short-term

General governmentLong-term

Short-term

Central bank

Net acquisition of ﬁnancial assets

Debt securities (F3P)

2.1.2.1.2 General government

2.1.2.1 Bonds and notes

2.1.2.2.2 General government

2.1.2.2 Money market
instruments

2.1.2.1.1 Monetary authorities

2.1.2.1 Bonds and notes

2.1.2.2.1 Monetary authorities

2.1.2.2 Money market
instruments

2.1.2 Debt securities* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets. Where monetary authorities are supplementary, their transactions and positions need to be recorded as standard
components under either central bank or general government, dependingon the entity that holds the instrument on its books.

*Debt instruments with both the amount to be paid at maturity and periodic payments indexed to a foreign currency are classiﬁed and treated as if they are denominatedin foreign currency. Also, the treatment of index-linked debt instruments is clariﬁed and modiﬁed; see BPM6, paragraphs 11.50(a) - (c) and 11.59 - 11.65. BPM5 is less explicit
about the treatment of this type of securities; see BPM5, paragraphs 397.

* The conditions to reclassify traded loans as securities are clariﬁed; see BPM6, paragraph 5.45. However, the impact is likely to be small.

* The BPM5 titels Bonds and notes and Money market instruments are replaced by Long-term and Short-term debt securities in BPM6; see BPM6, paragraphs 5.44 and 5.103- 105.

Debt securities: General Comments

Listed (F511P)
Unlisted (F512P) ,* Investment fund shares and money market fund shares are separately
identiﬁed as supplementary items; see BPM6, paragraphs 5.28 - 5.30.

* In BPM6, unlike BPM5, Reinvestment of earnings in investment funds isincluded in the ﬁnancial account via the item Equity and investment fundshares, Other ﬁnancial corporations. The item is not classiﬁed as a separate
standard component. The counter-entry is in the Primary income account;see BPM6, paragraphs 8.28 and 11.37 - 11.39.

Comments on Change in Treatment or Clariﬁcation

Investment fund shares or units (F52P)
Of which: Reinvestment of earnings
Of which: Money market fundshares or units (F521P)

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)* A supplementary breakdown of equity securities other than investment
fund shares (of which listed / nonlisted) is included unlike in BPM5; see
BPM6, paragraphs 5.24 - 5.27.

Remapping

Equity securities other than investment fund shares (F51P)

Nonﬁnancial corporations,households, and NPISHs

Other ﬁnancial corporations

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6291

Short-termLong-term

Monetary authorities (where
relevant)

Long-term

Short-term

General governmentLong-term

2.2.2.1.2 General government

2.2.2.1 Bonds and notes

2.2.2.2.2 General government

2.2.2.2 Money market instruments

2.2.2.1.1 Monetary authorities

2.2.2.1 Bonds and notes

2.2.2.2.1 Monetary authorities

Short-term

2.2.2 Debt securities

2.1.2.1.4 Other sectors

2.1.2.1 Bonds and notes

2.1.2.2.4 Other sectors

2.1.2.2 Money market instruments

2.1.2.1.3 Banks

2.1.2.1 Bonds and notes

2.1.2.2.3 Banks

2.1.2.2 Money market instruments

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

2.2.2.2 Money market instruments

Remapping

Central bank

Net incurrence of liabilities

Debt securities (F3P)

Long-term

Short-term

Nonﬁnancial corporations, households, and NPISHs

Long-term

Short-term

Other ﬁnancial corporations

Long-term

Short-term

Other sectors

Long-term

Short-term

Deposit-taking corporations, except
central bank

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets. Where monetary authorities are supplementary, their transactions and positions need to be recorded as standard
components under either central bank or general government, dependingon the entity that holds the instrument on its books.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

292
Balance of Payments and International Investment Position Compilation Guide

Remapping

2.2.2.1.4 Other sectors

2.2.2.1 Bonds and notes

2.2.2.2.4 Other sectors

2.2.2.2 Money market instruments

2.2.2.1.3 Banks

2.2.2.1 Bonds and notes

2.2.2.2.3 Banks

2.2.2.2 Money market instruments

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

Comments on Change in Treatment or Clariﬁcation

3.1.2 General government

General government

Monetary authorities (where
relevant)

3.1.1 Monetary authorities

3.1 Assets

3. Financial derivatives

Central bank

Net acquisition of ﬁnancial assets

Financial derivatives (other thanreserves) and employee stock options(F7F)*5* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets. Where monetary authorities are supplementary, their transactions and positions need to be recorded as standard
components under either central bank or general government, dependingon the entity that holds the instrument on its books.

* The functional category is renamed to distinguish it from the instrument classiﬁcation Financial derivatives and Employee stock options; see BPM6 6.58 - 6.60.

* The content of the 2000 Financial Derivatives Supplement is incorporated. As a consequence, the coding of the BPM5 Standard Components and Additional Detail in thisconversion table is not corresponding to BPM5, but rather to the revised coding of the 2000 Financial Derivatives Supplement.

Financial derivatives (other than reserves) and employee stock options: General Comments

Long-term

Short-term

Nonﬁnancial corporations, households, and NPISHs

Long-term

Short-term

Other ﬁnancial corporations

Long-term

Short-term

Other sectors

Long-term

Deposit-taking corporations, except
central bank
Short-term

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6293

3.2.2 General government

General government

3.2.4 Other sectors

Other sectors

Employee stock options (F72)

Options (F711F)
Forward-type contracts (F712F)

Financial derivatives (other thanreserves) (F71F)

Nonﬁnancial corporations, households, NPISHs

Other ﬁnancial corporations

3.2.3 Banks

Deposit-taking corporations, except
central bankMonetary authorities (where
relevant)

3.2.1 Monetary authorities

3.2 Liabilities

Central bank

Net incurrence of liabilities

Employee stock options (F72)

Options (F711F)
Forward-type contracts (F712F)

Financial derivatives (other thanreserves) (F71F)

Nonﬁnancial corporations, households, NPISHs

Other ﬁnancial corporations

3.1.4 Other sectors

Other sectors

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)
3.2.3 Banks

Remapping

Deposit-taking corporations, except
central bank

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)* Employee stock options (ESOs) are included with Financial derivatives in
BPM6 and recorded as a separate supplementary item if transactions in
ESOs are signiﬁcant; see BPM6 5.96 -5.98 and BPM6 6.58.

* In BPM6, supplementary additional breakdowns of ﬁnancial derivatives
are introduced; see BPM6 5.95.

* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets. Where monetary authorities are supplementary, their transactions and positions need to be recorded as standard
components under either central bank or general government, dependingon the entity that holds the instrument on its books.

* Employee stock options (ESOs) are included with Financial derivatives in
BPM6 and recorded as a separate supplementary item if transactions in
ESOs are signiﬁcant; see BPM6 5.96 -5.98 and BPM6 6.58.

* In BPM6, supplementary additional breakdowns of ﬁnancial derivatives
are introduced; see BPM6 5.95.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

294
Balance of Payments and International Investment Position Compilation Guide

Remapping

4. Other investment

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)* In BPM6, equity not included in direct investment and not in the form of
securities is separately distinguished in Other investment / other equity; see
BPM6 5.26 -5.27. BPM5 does not specify this kind of equity. In BPM6, capitalsubscriptions to international organizations is included in other equity,whereas BPM5 includes these subscriptions in other assets / liabilities (seeitems 4.1.4/4.2.4 below).

* BPM6 speciﬁes all other investment instruments and does not have aresidual item Other investment / other assets - other liabilities as in BPM5.

Comments on Change in Treatment or Clariﬁcation

Of which: Interbank positions

Long-term

Short-term

Deposit-taking corporations, except
central bank

Short-termLong-term

Monetary authorities (where
relevant)

Long-term

Short-term

General governmentLong-term

Short-term

Central banks

Net acquisition of ﬁnancial assets

Currency and deposits (F2O)

4.1.3.3 Banks

4.1.3.2 General government

4.1.3.1 Monetary authorities

4.1.3 Currency and deposits / Assets* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets. Where monetary authorities are supplementary, their transactions and positions need to be recorded as standard
components under either central bank or general government, dependingon the entity that holds the instrument on its books.

* In BPM6, interbank positions is introduced as an 'of which' item to deposits; see BPM6, paragraph 5.42.

* The treatment of overnight deposits (or sweep accounts) is discussed; see BPM6, paragraph 7.62. In view of the fact that the positions can differ substantially depending on
when these accounts are measured, it is recommended to record them consistently after the funds are moved at the end of the day and a cross-border position is created.

* In BPM6, unlike BPM5, unallocated accounts in gold and other precious metals are included in currency and deposits, except for unallocated gold accounts held by monetary
authorities for reserves purposes, for which the asset holding is included in monetary gold; see BPM6, paragraph 5.39.

Currency and Deposits: General Comments

Net incurrence of liabilities

Net acquisition of ﬁnancial assets

Other equity (F519O)

Other investment (FO)BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6295

Of which: Interbank positions

Long-term

Short-term

Deposit-taking corporations, except
the central

Long-term

Short-term

Monetary authorities (where
relevant)

Long-term

Short-term

General governmentLong-term

Short-term

Central banks

Net incurrence of liabilities

Currency and deposits (F2O)

Long-term

Short-term

Nonﬁnancial corporations, households, NPISHs

Long-term

Short-term

Other ﬁnancial corporations

Long-term

Short-term

Other sectors

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Remapping

4.2.3.2 Banks

4.2.3.1 Monetary authorities

4.2.3 Currency and deposits /Liabilities

4.1.3.4 Other sectors

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets. Where monetary authorities are supplementary, their transactions and positions need to be recorded as standard
components under either central bank or general government, dependingon the entity that holds the instrument on its books.

* Unlike BPM5, BPM6 distinguishes currency and deposits liability entries
for general government and other sectors / other ﬁnancial corporations.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

296
Balance of Payments and International Investment Position Compilation Guide

Remapping

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

Comments on Change in Treatment or Clariﬁcation

4.1.2.2.1 Long-term

Other long-term

Credit and loans with the IMF(other than reserves)
Other short-term
Other long-term

Monetary authorities (where
relevant)

4.1.2.2.2 Short-term

Other short-term

Credit and loans with the IMF(other than reserves)

4.1.2.2 General government

4.1.2.1.1 Long-term

Other long-term

General government

4.1.2.1.2 Short-term

4.1.2.1 Monetary authorities

4.1.2 Loans / Assets

Other short-term

Credit and loans with the IMF(other than reserves)

Central bank

Net acquisition of ﬁnancial assets

Loans (F4O)* In BPM6, the functional category of monetary authorities is supplementary. Credits and loans with the Fund need to be recorded as standard
components either under central bank or general government, depending on the entity that holds the asset on its books (usually central bank orministry of ﬁnance).

* Under BPM6, credit and loans / assets with the Fund can be recorded
either under general government or central bank, depending on theentity that holds the asset on its books (usually central bank or ministry ofﬁnance).

* In BPM5, only credit and loans from the Fund (i.e., liabilities of the reporting economy) are shown as standard components.

* Guidance on positions with the IMF is provided in BPM6, Chapter 7,
Annex 7.1.

* In BPM6, a convention for the treatment of the activation of one-off guarantees and other debt assumption is included; see BPM6, paragraphs 8.42 - 8.45, 13.12, and Box 8.1.

* The conditions to reclassify traded loans as securities are clariﬁed; see BPM6, paragraph 5.45. However, the impact is likely to be small.

* In BPM6, arrears are retained in the original asset / liability and identiﬁed as a memorandum item if related to exceptional ﬁnancing (otherwise supplementary item). In
BPM5, arrears are reclassiﬁed from the original asset / liability to short-term other assets / liabilities and requested as a supplementary item; see BPM6, paragraphs 5.99 - 5.102,
BPM6, paragraphs 8.58 - 8.59, and BPM5, paragraphs 453, 528 -Loans: General Comments

Long-term

Short-term

Other ﬁnancial corporations

Long-term

Short-term

Other sectors

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6297

4.2.2.1.3 Short-term
4.2.2.1.2 Other long-term
4.2.2.2 General government

Other short-term
Other long-term

General government

4.2.2.2.1 Long-term

Other long-term

Credit and loans with the IMF
Other short-term
Other long-term

Monetary authorities (where
relevant)

4.2.2.2.2 Short-term

Other short-term

Credit and loans with the IMF

4.2.2.1.1 Use of Fund credit andloans from the Fund4.2.2.1 Monetary authorities

Credit and loans with the IMF

Central bank

Net incurrence of liabilities

Long-term

Short-term

Nonﬁnancial corporations, households, and NPISHs

Long-term

Short-term

4.2.2 Loans / Liabilities

4.1.2.4.1 Long-termLong-term

Other ﬁnancial corporations

4.1.2.4.2 Short-term

4.1.2.4 Other sectors

Short-term

Other sectors

4.1.2.3.1 Long-termLong-term

4.1.2.3 Banks

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

4.1.2.3.2 Short -term

Remapping

Short-term

Deposit-taking corporations, except
the central

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)* In BPM6, the functional category of monetary authorities is supplementary. Credits and loans with the Fund need to be recorded as standard
components either under central bank or general government, dependingon the entity that holds the liability on its books (usually central bank orministry of ﬁnance).

* Credit and loans with the Fund can be recorded either under general government or central bank, depending on the entity that holds the liability
on its books (usually central bank or ministry of ﬁnance).

* Guidance on positions with the IMF is provided in BPM6, Chapter 7,
Annex 7.1.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

298
Balance of Payments and International Investment Position Compilation Guide

4.2.2.4.1 Long-termLong-term

Comments on Change in Treatment or Clariﬁcation

4.1.4.2.1.1 General
government

General government

Nonﬁnancial corporations, households, NPISHs

4.1.4.4.1.1 Net equity ofhouseholds in Ife insurance
reserves and pension funds

4.1.4.4.1.2 Other sectors

Other sectors

Other ﬁnancial corporations

4.1.4.3.1.1 Banks

Deposit-taking corporations, except
the central

Monetary authorities (where relevant)

4.1.4.1.1.1 MonetaryPrepayments of premiums andreserves against outstanding

4.1.4 Other assets (partly /additional detail)Central bank

Net acquisition of ﬁnancial assets

Insurance, pension, and standardized
guarantee schemes (F60)* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets. Where monetary authorities are supplementary, their transactions and positions need to be recorded as standard
components under either central bank or general government, dependingon the entity that holds the instrument on its books.

* In BPM 6, for nonlife insurance, changes in insurance technical reserves consist of prepayments of insurance premiums and changes in outstanding claims. Similarly, for life
insurance, pension funds, annuity funds, and standardized guarantee schemes, the changes in technical reserves due to transactions are recorded in the ﬁnancial account andconsist of amounts of the estimated obligations to beneﬁciaries and holders that were accrued during the period; see BPM6, paragraphs 8.46 - 8.49 and Appendix 6c. BPM5'sdeﬁnition of technical reserves is effectively the same as in BPM6 (see BPM5, paragraphs 257, footnote 6), with technical reserves recorded as separate additional detail inother investment / other assets/liabilities, where relevant; see BPM5, Table 7. In BPM6, provisions for calls under standardized guarantees are identiﬁed and treated similarly toinsurance technical reserves; see BPM6, paragraph 5.68. Standardized guarantees are not classiﬁed as ﬁnancial assets / liabilities in BPM5.

Insurance, pension, and standardized guarantee schemes: General Comments

Long-term

Short-term

Nonﬁnancial corporations, households, and NPISHs

Long-term

Short-term

Other ﬁnancial corporations

4.2.2.4.2 Short-term

4.2.2.4 Other sectors

Short-term

Other sectors

4.2.2.3.1 Long-termLong-term

4.2.2.3 Banks

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

4.2.2.3.2 Short-term

Remapping

Short-term

Deposit-taking corporations, except
the central bank

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6
299

Nonlife insurance technical reserves(F61O)
Life insurance and annuity entitlements (F62O)
Pension entitlements (F63O)
Claims ofpension funds on sponsors(F64O)

Nonﬁnancial corporations, households, NPISHs

Other ﬁnancial corporations

Other sectors

Deposit-taking corporations except
central bankMonetary authorities (where relevant)General government

Central bank

Net incurrence of liabilities

Provisions for calls understandardized guarantees (F66O)

Entitlement to nonpension beneﬁts(F65O)

Claims ofpension funds on sponsors(F64O)

Pension entitlements (F63O)

Life insurance and annuity entitlements (F62O)

Nonlife insurance technical reserves(F61O)

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Remapping

4.2.4.4.1.2 Prepayments ofpremiums and reservesagainst
outstanding claims

4.2.4.4.1.1 Net equity of households in life insurance reserves
and in pension funds

4.2.4 Other liabilities (partly / additional detail)BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets. Where monetary authorities are supplementary, their transactions and positions need to be recorded as standard
components under either central bank or general government, dependingon the entity that holds the instrument on its books.

* Unlike BPM6, BPM5 does not identify this item for central bank, general
government and deposit- taking corporations except central bank.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

300
Balance of Payments and International Investment Position Compilation Guide

Remapping

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

Comments on Change in Treatment or Clariﬁcation

4.1.1.2.2 Short-term
4.1.1.2.1 Long-term

Short-termLong-term

Other sectors

Long-term

Short-termLong-term

4.1.1.2 Other sectors* In BPM5, trade credits are not requested as separate items for banks.

Deposit-taking corporations, except
central bank

Short-term* In BPM5, trade credits are not requested as separate item for monetary
authorities. In BPM6, monetary authorities are requested as supplementary
data where relevant.

4.1.1.1.1 Long-termLong-term

Monetary authorities (where relevant)

4.1.1.1.2 Short-term

4.1.1.1 General government

4.1.1 Trade credits / Assets

Short-term

General governmentLong-term

Short-term

Central bank

Trade credit and advances (F81O) Net
acquisition of ﬁnancial assets* In BPM5, goods sent abroad for manufacturing services are included in Goods for processing and a simultaneous change of ownership is imputed in the ﬁnancial account,except under certain conditions; see BPM5, paragraph 199. In BPM6, these imputed entries are no longer needed; see BPM6, paragraphs 10.62 - 10.71.

* In BPM6, the term Trade credit and advances replaces Trade credits from BPM5, while the deﬁnition is unchanged; see BPM6, paragraph 5.70.

Trade credit and advances: General Comments

Entitlements to nonpension beneﬁts(F65O)
Provisions for calls under standardized guarantees (F66O)

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6301

4.2.1.2.1 Long-termLong-term

4.2.1.2 Other sectors

4.2.1.1.1 Long-term

4.2.1.1.2 Short-term

4.2.1.1 General government

4.2.1 Trade credits / Liabilities

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

4.2.1.2.2 Short-term

Remapping

Short-term

Other sectors

Long-term

Short-term

Deposit-taking corporations, except
central bankLong-term

Short-term

Monetary authorities (where relevant)Long-term

Short-term

General governmentLong-term

Short-term

Central bank

Trade credit and advances (F81O) Net
incurrence of liabilities

Long-term

Short-term

Nonﬁnancial corporations, households, and NPISHs

Long-term

Short-term

Other ﬁnancial corporations

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)* In BPM5, trade credits are not requested as separate items for banks.

* In BPM5, trade credits are not requested as separate item for monetary
authorities. In BPM6, monetary authorities are requested as supplementary
data where relevant.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

302
Balance of Payments and International Investment Position Compilation Guide

Remapping

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

Comments on Change in Treatment or Clariﬁcation

Short-termLong-term

Monetary authorities (where relevant)Long-term

Short-term

General governmentLong-term

Short-term

Central bank

Other accounts receivable (F89O) Net
acquisition of ﬁnancial assets

4.1.4.2.1.2 Other assets

4.1.4.2.1 Long-term

4.1.4.2.2 Short-term

4.1.4.2 General government

4.1.4.1.1.2 Other assets

4.1.4.1.1 Long-term

4.1.4.1.2 Short-term

4.1.4.1 Monetary authorities

4.1.4 Other investment/other assets (residual)* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets. Where monetary authorities are supplementary, their transactions and positions need to be recorded as standard
components under either central bank or general government, dependingon the entity that holds the instrument on its books.

* The BPM5 items Other investment / other assets / other liabilities (as shown in BPM5, Table 7: Standard Components and Additional Detail) is a residual category. Additionally to the BPM6 items Other investment / other accounts receivable / payable, it includes (i) Net equity of households in life insurance reserves and in pension funds andPrepayments of premiums and reserves against outstanding claims; in BPM6, these BPM5 items are classiﬁed under Insurance, pension, and standardized guarantee schemes;(ii) Other investment / other equity; and (iii) other items that could not be classiﬁed elsewhere; under BPM6 these items are to be allocated to the appropriate ﬁnancial
instrument.

Other accounts receivable / payable: General Comments

Long-term

Short-term

Nonﬁnancial corporations, households, and NPISHs

Long-term

Short-term

Other ﬁnancial corporations

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6303

4.2.4.2.2 Short-term
4.2.4.2.1 Long-term

Short-termLong-term

4.2.4.2 General government

4.2.4.1.1 Long-term

General government

4.2.4.1.2 Short-term

4.2.4.1 Monetary authorities

4.2.4 Other liabilities (residual)

4.1.4.4.1.1 Households

4.1.4 Of which Net equity ofhouseholds in life insurance
reserves and in pension funds

4.1.4.4.1.2 Other sectors

4.1.4.2.1.1 General government

4.1.4.3.1.1 Banks

4.1.4.1.1.1 Monetary authorities

4.1.4 Of which Prepayments ofpremiums and reserves
agamst outstanding claims

4.1.4.4.1.3 Other assets

4.1.4.4.1 Long-term

4.1.4.4.2 Short-term

4.1.4.4 Other sectors

4.1.4.3.1.2 Other assets

4.1.4.3.1 Long-term

4.1.4.3.2 Short-term

4.1.4.3 Banks

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

Long-term

Remapping

Short-term

Central bank

Other accounts payable (F89O) Net
incurrence of liabilities

Long-term

Short-term

Nonﬁnancial corporations, households, NPISHs

Long-term

Short-term

Other ﬁnancial corporations

Long-term

Short-term

Other sectors

Long-term

Short-term

Deposit-taking corporations, except
central bank

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets. Where monetary authorities are supplementary, their transactions and positions need to be recorded as standard
components under either central bank or general government, dependingon the entity that holds the instrument on its books.

* In BPM6, these subcomponents of BPM5, category 4.1.4, other investment / other assets are reclassiﬁed to BPM6 category insurance, pension,and standardized guarantee schemes (F6O).

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)
304
Balance of Payments and International Investment Position Compilation Guide

Special drawing rights (F12) Net incurrence of liabilities

Long-term

Short-term

Nonﬁnancial corporations, households, NPISHs

Long-term

Short-term

Other ﬁnancial corporations

Long-term

Short-term

Other sectors

4.2.4.4.1.2 Other sectors

4.2.4 Of which Prepayments ofpremiums and reserves
against outstanding claims

4.2.4.4.1.1 Households

4.2.4 Of which Net equity ofhouseholds in life insurance
reserves and in pension funds

4.2.4.4.1.3 Other liabilities

4.2.4.4.1 Long-term

4.2.4.4.2 Short-term

4.2.4.4 Other sectors

4.2.4.3.1 Long-termLong-term

4.2.4.3 Banks

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

4.2.4.3.2 Short -term

Remapping

Short-term

Deposit-taking corporations, except
central bankLong-term

Short-term

Monetary authorities (where relevant)

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)* In BPM6, the allocation of SDRs to IMF members is recorded as an incurrence of a liability; see BPM6, paragraph 8.50. In BPM5, the allocation of
SDRs is not recognized as a liability; see BPM5, paragraph 440.

* In BPM6, these subcomponents of BPM5, category 4.1.4, other investment / other liabilities are reclassiﬁed to BPM6 category insurance,
pension, and standardized guarantee schemes (F6O).

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6305

Remapping

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

Comments on Change in Treatment or Clariﬁcation

Other reserve assets

5.3 Reserve position in the FundReserve position in the IMF

5.4 Foreign exchange

5.3.2 Loans

5.3.1 Deposits

5.2 Special drawing rights

5.1 Monetary gold

5. Reserve assets

Special drawing rights (F12)

Unallocated gold accounts 6

Gold bullion*6

Monetary gold (F11)

Reserve assets (FR)* Guidance on positions with the IMF is provided in BPM6, Chapter 7, Annex 7.1.

* See Reserve assets, General comments: monetary gold.

* In BPM6, the treatment of pooled assets and assets in special purpose government funds are described consistent with the general principles of reserve assets; in BPM5 they
were not described. The treatment of pledged assets in reserve assets is clariﬁed; see BPM6, paragraphs 6.93, 6.99 and 6.107 - 6.109. BPM6, paragraph 6.110 discusses the treatment of frozen assets that do not qualify as reserve assets.

* Unlike in BPM5, working balances of government agencies are not included in reserve assets in BPM6; see BPM6, paragraphs 6.112 and BPM5 433.

* In BPM6, the conditions under which net creditor positions in regional payment agreements can be included in reserve assets have been brought in line with the generalprinciples of reserve assets and have thus become more restrictive; see BPM6, paragraphs 6.112 and BPM5, paragraph 432.

* Monetary gold. In BPM6, unlike BPM5, unallocated gold accounts held by monetary authorities with nonresidents for reserves purposes are included in monetary gold, whichis broken down in gold bullion and unallocated gold accounts. Unallocated accounts in other precious metals held with nonresidents are included in currency and deposits;
see BPM6, paragraphs 5.39 and 5.74 - 5.78. BPM6 gives an extensive explanation of the recording of gold swaps; see BPM6, paragraphs 6.82. The explanation is in line with thegeneral principles of BPM5, although the latter is more concise; see BPM5, paragraph 434.

Reserve assets: General comments

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (continued)

306
Balance of Payments and International Investment Position Compilation Guide2.1.3 Grants received from IMF
subsidy accounts

Grants received from IMF subsidy
accounts

2.2.1 Investment associated withdebt reduction
2.2.2 Other

Equity investment associated withdebt reduction

Debt instruments

2.2 Direct investment

2.1.2 Other intergovernmental

Other intergovernmental grants

Direct investment

2.1.1 Debt forgiveness2.1 Transfers

2. Exceptional ﬁnancing transactions

5.4.3 Financial derivatives

5.5.2.1 Equities

5.5.2.2 Debt securities

5.5.2 Securities

5.5.1 Currency and deposits

5.5 Other claims (partly)

Debt forgivenessCurrent and/or capital transfers

Memorandum items - Exceptional
ﬁnancing

Net errors and omissions

Financial derivatives (F7R)*7

Other claims

5.4.2.1 Equities

5.4.2.2 Bonds and notes

Long-term (F32R)

Equity and investment fund shares(F5R)

5.4.2.3 Money market instruments

Short-term (F31R)

Debt securities (F3R)

5.4.2 Securities

5.4.1.2 With banks

Securities

Claims on other entities

5.4.1 Currency and deposits

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

5.4.1.1 With monetary authorities

Remapping

Claims on monetary authorities

Currency and deposits

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Net errors and omissions are derived residually as net lending / net borrowing from the ﬁnancial account minus the same item derived from thecurrent and capital accounts; see BPM6, paragraph 2.24 and Table 2.1.

* In BPM5, Other claims is a residual that covers part of currency and deposits and securities n.i.e.; see BPM5, paragraph 443. In BPM6, Other claims
includes loans to nonresident nondeposit-taking corporations, long-termloans to IMF Trust Accounts that are readily repayable, loans arising froma reverse repo (unless classiﬁed as deposits), and other ﬁnancial assets notincluded elsewhere that fulﬁll the general principles of reserve assets; see
BPM6, paragraph 6.92.

* BPM6 explains that securities transferred under repos can either (i) be
included as reserves assets with the loan incurred (if to a nonresident)
reported as other investment / liabilities / loans (and classiﬁed as a memorandum item under reserve-related liabilities); or (ii) excluded from reserve
assets and reclassiﬁed as portfolio investment; see BPM6, paragraphs 6.88 6.90. Securities obtained as collateral under reverse repos result in legal but
not in economic ownership changing hands and so should not be includedin the reserves (or portfolio) assets of the securities borrower; see BPM6,
paragraphs 5.54 and 7.58 - 7.59. BPM5 does not discuss the treatment ofrepo transactions in reserves assets.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

Conversion Matrix from the BPM5 to the BPM6307

2.4.4 Repayment of arrears

Repayment of arrears

2.4.6.1 Principal
2.4.6.2 Interest

Principal

Interest

2.4.6 Cancellation of arrears

2.4.5.2 Interest

Interest

Cancellation of arrears

2.4.5.1 Principal

2.4.5 Rescheduling of arrears

Principal

Rescheduling of arrears

2.4.4.2 Interest

2.4.3.4 Penalty interest

Penalty interest

Interest

2.4.3.3 Original interest

Original interest

2.4.4.1 Principal

2.4.3.2 Principal on long-term

Principal on long-term debt

Principal

2.4.3.1 Principal on short-term

Principal on short-term debt

Accumulation of arrears

Arrears
2.4.3 Accumulation of arrears

2.4.2 Rescheduling of existing

Rescheduling of existing debt

*8*9

2.4.1 Drawings on new loans byauthorities or by other sectors onbehalf of authorities

Drawings on new loans byauthorities or by other sectors onbehalf of authorities

2.4 Other investment - liabilities

Other investment—liabilities*8

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)
2.3 Portfolio investment:
borrowing by authorities or by othersectors on behalf ofRemapping

Portfolio investment—liabilities*8

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)* In BPM6, arrears are retained in the original asset/liability and identiﬁed
as a memorandum item if related to exceptional ﬁnancing (otherwise supplementary item). In BPM5, arrears are reclassiﬁed from the original asset/
liability to short-term other assets / liabilities and requested as supplementary item; see BPM6, paragraphs 5.99 - 5.102, BPM6, paragraphs 8.58 - 8.59,
and BPM5, paragraphs 453, 528 - 529.

Comments on Change in Treatment or Clariﬁcation

Balance of Payments Account Items (continued)

308
Balance of Payments and International Investment Position Compilation Guide

Remapping

BPM5 Balance of Payments: Standard
Components and Additional Detail(Items in italic are supplementary)

Comments on Change in Treatment or Clariﬁcation*9 Arrears related to exceptional ﬁnancing. Not a transaction, but included in the “analytic” presentation; see BPM6, paragraph 14.17 and Appendix 1, paragraph A1.21.

*8 Specify sector involved and standard component in which the item is included.

*7 Assets and liabilities combined and reported as a net ﬁgure for assets less liabilities, included under assets.

*6 If available for publication.

*5 Preferably assets and liabilities reported separately, but otherwise a net ﬁgure for liabilities less assets, included, by convention, under assets.

*4 If available for publication. If not available for publication, include in other investment-interest.

*3 Construction abroad—Construction (CR.); Goods and services acquired (DR.). Construction in the reporting economy—(Goods and services acquired (CR.); (Construction (DR.)*2 Standard components for those countries that are unable (e.g., for reasons of conﬁdentiality) to provide the full breakdown by mode of transport; otherwise supplementary, but can be derived by summing the standard components for each mode of transport.

*1 Further detail in EBOPS, see MSITS Annex II, Extended Balance of Payments Services Classiﬁcation.

BPM6 Balance of Payments: Standard
Components and Selected Other Items(Items in italic are supplementary)

Balance of Payments Account Items (concluded)

Conversion Matrix from the BPM5 to the BPM6309

Remapping

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

Comments on Change in Treatment orClariﬁcation* Data on the directional basis are also recognized as essential for many purposes; see BPM6, paragraphs 6.44 - 6.45. The details needed to compile these data are shown inBPM6, Box 6.4.

* In BPM6, direct investment is presented on an assets and liabilities basis, unlike on the directional principle in BPM5. In the standard components, direct investment is classiﬁed according to the relationship between the investor and the entity receiving the investment; see BPM6, paragraphs 6.37 - 6.41. Thus, under ‘Direct investor in direct
investment enterprises’ the reporting economy of the direct investor records the assets of the direct investor, and the reporting economy of the direct investment enterprises
records the (mirror) liabilities of the direct investment enterprises (whether in an immediate or indirect relationship); see BPM6, paragraph 6.37.(a). Under ‘Direct investment
enterprises in direct investor’ (reverse investment) the reporting economy of the direct investment enterprises records the assets of the direct investment enterprises, andthe reporting economy of the direct investor records the liabilities of the direct investor (whether in an immediate or indirect relationship); see BPM6, paragraph 6.37.(b).
Under the item ‘Between fellows’ the reporting economy reports assets and /or liabilities as appropriate; see BPM6, paragraph 6.17.

Direct investment: General Comments* The content of the Financial Derivatives Supplement 2000 is incorporated. As a consequence, the coding of the BPM5 Balance of Payments: Standard Components and Additional Detail in this conversion table is not corresponding to BPM5 1993 but rather to the revised coding of the Financial Derivatives Supplement 2000.

* Financial assets and liabilities of entities (migrants) changing residence are included as Other changes in volume; see BPM6, paragraphs 9.21 - 9.23, unlike as transactions
in BPM5; see BPM5, paragraph 354.

* A convention for distinction between write-offs and debt forgiveness is introduced; see BPM6, paragraph 9.10.

* The Other changes in ﬁnancial assets/liabilities is explained and the distinction between exchange rate and other revaluations is elaborated; see BPM6, Chapter 9.

* In BPM6, a currency breakdown is introduced as memorandum item for debt claims, debt liabilities and ﬁnancial derivatives positions vis-à-vis nonresidents; see BPM6, Appendix 9.C, Table I. The compilation of data on remaining maturity is encouraged for selected position data; see BPM6, paragraphs 5.103 - 105.

* In BPM6, classiﬁcation, netting and ordering in IIP is consistent with the Financial account and Primary income account of the balance of payments, and with the Otherchanges of the IIP, so as to facilitate reconciliation and calculation of rates of return; see BPM6, paragraphs 7.13 and 8.5.

* In BPM6, arrears are retained in the original asset/liability and identiﬁed as a memorandum item if related to exceptional ﬁnancing (otherwise supplementary item). In
BPM5, arrears are reclassiﬁed from the original asset/liability to short-term other assets / liabilities and requested as a supplementary item; see BPM6, paragraphs 5.99 5.102, BPM6, paragraphs 8.58 - 8.59, and BPM5, paragraphs 453, 528 - 529.

* In BPM6, the detailed classiﬁcation of ﬁnancial assets and liabilities is harmonized with the SNA and Monetary and Financial Statistics Manual 2000 in terms of detail andterminology; see BPM6, Table 5.3. In the BPM5 standard components, instruments are combined and different names for them are used in different places.

* In BPM6, central bank replaces monetary authorities as an institutional subsector, whereas monetary authorities remains an essential concept for deﬁning reserve assets
and a supplementary subsector where relevant; see BPM6, paragraphs 4.70 and 6.66. BPM6 introduces a breakdown of other sectors into ‘other ﬁnancial and nonﬁnancial
corporations, households and NPISHs; see BPM6, Chapter 4, Table 4.2.

IIP: General Comments

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

International Investment Position Items

BPM6-IIP: Changes in Treatment or Classiﬁcation

310
Balance of Payments and International Investment Position Compilation Guide

Remapping

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

Comments on Change in Treatment orClariﬁcation

Of which: Investment fund shares or units (AF52D)
Of which: Money market fund shares or units (AF521D)

if ultimate controlling parent is resident
if ultimate controlling parent is nonresident
if ultimate controlling parent is unknown

Between fellow enterprises

Direct investment enterprises in direct investor(reverse investment)

Direct investor in direct investment enterprises

Equity and investment fund shares (AF5D)

Direct investment (AFD)

International investment Position / Assets

1.1.1 Claims on direct investors

1.1 Equity capital and reinvested earnings

1. Direct investment in reporting
economy1.1.1 Claims on afﬁliatedenterprises

1.1 Equity capital and reinvested earnings

1. Direct investment abroad* In BPM5, fellow enterprises are not explicitly
mentioned.

* In BPM6, the title Equity capital and reinvested earnings of BPM5 is replaced by Equity and investment fundshares.

* In BPM6, all debt between selected types of afﬁliated ﬁnancial corporations is excluded from direct investment, unlike in BPM5, where so-called Permanent debt was
included in direct investment. The ﬁnancial corporations to whom this applies are central banks, deposit-taking corporations other than the central bank, investment funds,
and other ﬁnancial intermediaries except insurance companies and pension funds; see BPM6, paragraph 6.28.

* The concept of pass-through funds is introduced; see BPM6, paragraphs 6.33 - 6.34. It is encouraged that compilers in economies that have large values of pass-throughfunds consider the compilation of supplementary data on funds in transit, based on national deﬁnitions.

* Insurance technical reserves are potentially included in direct investment; see BPM6, paragraph 6.27. In BPM5, technical reserves of insurance enterprises are excluded
from the stock of direct investment; see BPM5, paragraph 379.

* Superdividends are treated as a withdrawals of equity; see BPM6, paragraph 8.23. The term ‘superdividends’ is not used in BPM5, but the treatment in BPM6 is in line withthe general principals of BPM5 (notably liquidating dividends; see BPM5, paragraph 290).

* Direct investment is valued at the best indicator of market prices. For approximating market value for equity that is not regularly traded, see BPM6, paragraph 7.15 (etseq.). In BPM5, market valuation was adopted in principle, while noting that book values ‘are generally utilized’ in practice; see BPM5, paragraph 467.

* In BPM6, the Framework for Direct Investment Relationships (FDIR) is adopted for identifying direct investment relationships; see BPM6, paragraphs 6.8 - 6.18 and BPM6,
Box 6.1. Ownership of ordinary shares is removed from the operational deﬁnition of direct investment; see BPM6, paragraphs 6.12 and 6.19. In BPM6, the separate categoryof investment in fellow enterprises is included, see BPM6, paragraph 6.17 (c). The coverage of direct investment relationships due to indirect voting power and fellow enterprises is elaborated; see BPM6, paragraph 6.14.

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

International Investment Position Items (continued)

Conversion Matrix from the BPM5 to the BPM6
311

Monetary authorities (where relevant)

2.1.2 General government

General government

2.1 Equity securities

A. Assets

2. Portfolio investment

1.2.1 Claims on direct
investors

1.2 Other capital

1. Direct investment in reporting
economy1.2.1 Claims on afﬁliatedenterprises

1.2 Other capital

1. Direct investment abroad

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

2.1.1 Monetary authorities

Remapping

Central bank

Equity and investment fund shares (AF5P)

Portfolio investment (AFP)

if ultimate controlling parent is resident
if ultimate controlling parent is nonresident
if ultimate controlling parent is unknown

Between fellow enterprises

Direct investment enterprises in direct investor(reverse investment)

Direct investor in direct investment enterprises

Of which: Debt securities (AF3D):

if ultimate controlling parent is resident
if ultimate controlling parent is nonresident
if ultimate controlling parent is unknown

Between fellow enterprises

Direct investment enterprises in direct investor(reverse investment)

Direct investor in direct investment enterprises

Debt instruments

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

Comments on Change in Treatment orClariﬁcation* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets.
Where monetary authorities are supplementary, theirtransactions and positions need to be recorded as standard components under either central bank or general
government, depending on the entity that holds the
instrument on its books.

* A treatment for short positions due to the onsellingof borrowed securities is provided, unlike in BPM5; see
BPM6 7.28.

* In BPM5, fellow enterprises are not explicitly
mentioned.

* As discussed above, in BPM6 all debt between
selected types of afﬁliated ﬁnancial corporations is
excluded from direct investment.

* In BPM5, fellow enterprises are not explicitly mentioned.

* As discussed above, in BPM6 all debt between
selected types of afﬁliated ﬁnancial corporations is
excluded from direct investment.

* In BPM6, the term Debt instruments replaces Other capitalInternational Investment Position Items (continued)

312
Balance of Payments and International Investment Position Compilation Guide2.1.4 Other sectors* Investment fund shares and money market fundshares are separately identiﬁed as supplementary items;
see BPM6, paragraphs 5.28 - 5.30.

Investment fund shares or units (AF52P) Of which:Money market fund shares / units (AF521P)

Long-term

Short-term

Deposit-taking corporations, except central bankMonetary authorities (where relevant)Short-termLong-termLong-term

Short-term

General governmentLong-term

2.2.2.1 Monetary authorities

Short-term

2.2.1.3 Banks

2.2.1 Bonds and notes

2.2.2.3 Banks

2.2.2 Money market instruments

2.2.1.2 General government

2.2.1 Bonds and notes

2.2.2.2 General government

2.2.2 Money market instruments

2.2.1. 1 Monetary authorities

2.2.1 Bonds and notes

2.2.2 Money market instruments

2.2 Debt securities

Central bank

Debt securities (AF3P)* In BPM6, the functional category of monetary authorities
is supplementary, except for reserves assets. Where monetary authorities are supplementary, their transactions andpositions need to be recorded as standard components
under either central bank or general government, depending on the entity that holds the instrument on its books.

*Debt instruments with both the amount to be paid at maturity and periodic payments indexed to a foreign currency are classiﬁed and treated as if they are denominatedin foreign currency. Also, the treatment of index-linked debt instruments is clariﬁed and modiﬁed; see BPM6, paragraphs 11.50(a) - (c) and 11.59 - 11.65. BPM5 is less explicit
about the treatment of this type of securities; see BPM5, paragraph 397.

* The conditions to reclassify traded loans as securities are clariﬁed; see BPM6, paragraph 5.45. However, the impact is likely to be small.

* The BPM5 titels Bonds and notes and Money market instruments are replaced by Long-term and Short-term debt securities in BPM6; see BPM6, paragraphs 5.44 and5.103 - 105.

Debt securities: General Comments

Unlisted (AF512P)

Listed (AF511P)* A supplementary breakdown of equity securities
other than investment fund shares (of which listed /nonlisted) is included unlike in BPM5; see BPM6, paragraphs 5.24 - 5.27.

Comments on Change in Treatment orClariﬁcation

Equity securities other than investment fundshares or units (AF51P)

Nonﬁnancial corporations, households, and NPISHs

Other ﬁnancial corporations

2.1.3 Banks

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

Other sectors

Remapping

Deposit-taking corporations, except the central bank

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

International Investment Position Items (continued)

Conversion Matrix from the BPM5 to the BPM6313

Remapping

2.2.1.4 Other sectors

2.2.1 Bonds and notes

2.2.2.4 Other sectors

2.2.2 Money market instruments

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

Comments on Change in Treatment orClariﬁcation

3.2 General government

General government

3.4 Other sectors

Other sectors* In BPM6, supplementary additional breakdowns ofﬁnancial derivatives are introduced; see BPM6, paragraph 5.95.
* Employee stock options (ESOs) are included withFinancial derivatives in BPM6 and recorded as a separate supplementary item if transactions in ESOs are
signiﬁcant; see BPM6, paragraphs 5.96 -5.98 and BPM6,
paragraph 6.58.

Employee stock options (AF72)* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets.
Where monetary authorities are supplementary, theirtransactions and positions need to be recorded as standard components under either central bank or general
government, depending on the entity that holds the
instrument on its books.

Financial derivatives (other than reserves) (AF71F)
Options (AF711F)
Forward-type contracts (AF712F)

Nonﬁnancial corporations, households, and NPISHs

Other ﬁnancial corporations

3.3 Banks

Deposit-taking corporations, except the central bankMonetary authorities (where relevant)

3.1 Monetary authorities

3. Financial derivatives
A. Assets

Central bankFinancial derivatives (other than reserves) andemployee stock options (AF7F)*5* The functional category is renamed to distinguish it from the instrument classiﬁcation Financial derivatives and Employee stock options; see BPM6, paragraphs 6.58 - 6.60.

* The content of the 2000 Financial Derivatives Supplement is incorporated. As a consequence, the coding of the BPM5 Standard Components and Additional Detail in thisconversion table is not corresponding to BPM5, but rather to the revised coding of the 2000 Financial Derivatives Supplement.

Financial derivatives (other than reserves) and employee stock options: General Comments

Nonﬁnancial corporations, households, and NPISHs
Short-termLong-term

Other ﬁnancial corporations
Short-termLong-termLong-term

Short-term

Other sectors

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

International Investment Position Items (continued)

314
Balance of Payments and International Investment Position Compilation Guide

Remapping

4. Other investment

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)* In BPM6, equity not included in direct investment andnot in the form of securities is separately distinguishedin Other investment / other equity; see BPM6, paragraphs 5.26 - 5.27. BPM5 does not specify this kind of
equity. In BPM6, capital subscriptions to internationalorganizations is included in other equity, whereas BPM5
includes these subscriptions in other assets / liabilities(see item 4.4 below).

* BPM6 speciﬁes all Other investment instruments anddoes not have a residual item other investment / otherassets as in BPM5.

Comments on Change in Treatment orClariﬁcation

4.3.2 General government

General government
Short-termLong-term

Monetary authorities (where relevant)Short-termLong-term

4.3.1 Monetary authorities

4.3 Currency and deposits
A. Assets

Central bank
Short-termLong-term

Currency and deposits (AF2O)* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets.
Where monetary authorities are supplementary, theirtransactions and positions need to be recorded as standard components under either central bank or general
government, depending on the entity that holds the
instrument on its books.

* In BPM6, unlike BPM5, unallocated accounts in gold and other precious metals are included in currency and deposits, except for unallocated gold accounts held by monetary authorities for reserves purposes, for which the asset holding is included in monetary gold; see BPM6, paragraph 5.39.
* The treatment of overnight deposits (or sweep accounts) is discussed; see BPM6, paragraph 7.62. In view of the fact that the positions can differ substantially depending on when these accounts are measured, it is recommended to record them consistently after the funds are moved at the end of the day and a cross-border position iscreated.
* In BPM6, interbank positions is introduced as an 'of which' item to deposits; see BPM6, paragraph 5.42.

Currency and Deposits: General Comments

Other equity (AF511O)

Other investment (AFO)

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

International Investment Position Items (continued)

Conversion Matrix from the BPM5 to the BPM6315

Remapping

4.3.4 Other sectors

4.3.3 Banks

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

Comments on Change in Treatment orClariﬁcation

General government
Credit and loans with the IMF (other than reserves)
Other short-term
Other long-term

Other short-term
Other long-term

Central bank
Credit and loans with the IMF (other thanreserves)

Loans (AF4O)

4.2.2.2 Short-term
4.2.2.1 Long-term

4.2.2 General government

4.2.1.2 Short-term
4.2.1.1 Long-term

4.2.1 Monetary authorities

4.2 Loans /Assets* Guidance on positions with the IMF is provided in
BPM6, Chapter 7, Annex 7.1.
* In BPM5, only credit and loans from the Fund (i.e.,
liabilities of the reporting economy) are shown as standard components.
* Under BPM6, credit and loans / assets with the Fund
can be recorded either under general government or
central bank, depending on the entity that holds theasset on its books (usually central bank or ministry ofﬁnance).

* In BPM6, a convention for the treatment of the activation of one-off guarantees and other debt assumption is included; see BPM6, paragraphs 8.42 - 8.45, 13.20, andBox 8.1.

* The conditions to reclassify traded loans as securities are clariﬁed; see BPM6, paragraph 5.45. However, the impact is likely to be small. In BPM6, traded loans are valued
at nominal value in the IIP, like other loans; see BPM6, paragraph 7.40. In BPM5, they are recorded at transaction value by the creditor; see BPM5, paragraph 471. Whilenominal value is the primary valuation method for nonnegotiable instruments in BPM6, memorandum and supplementary items are recorded to measure impaired loan
assets; see BPM6, paragraphs 7.45 and 7.48-7.53.

* In BPM6, arrears are retained in the original asset / liability and identiﬁed as a memorandum item if related to exceptional ﬁnancing (otherwise supplementary item).
In BPM5, arrears are reclassiﬁed from the original asset / liability to short-term other assets / liabilities and requested as a supplementary item; see BPM6, paragraphs
5.99 - 5.102, BPM6, paragraphs 8.58 - 8.59, and BPM5, paragraphs 453, 528 - 529.

Loans: General Comments

Nonﬁnancial corporations, households, and NPISHs
Short-termLong-term

Other ﬁnancial corporations
Short-termLong-term

Other sectors
Short-termLong-term

Deposit-taking corporations, except the central bank
Short-termLong-term
Of which: Interbank positions (AF221O)

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

International Investment Position Items (continued)
316
Balance of Payments and International Investment Position Compilation Guide* In BPM6, the functional category of monetary authorities is supplementary. Credits and loans with the Fundneed to be recorded as standard components either
under central bank or general government, dependingon the entity that holds the asset on its books (usuallycentral bank or ministry of ﬁnance).

Comments on Change in Treatment orClariﬁcation* In BPM 6, for nonlife insurance, changes in insurance technical reserves consist of prepayments of insurance premiums and changes in outstanding claims. Similarly,
for life insurance, pension funds, annuity funds, and standardized guarantee schemes, the changes in technical reserves due to transactions are recorded in the ﬁnancial
account and consist of amounts of the estimated obligations to beneﬁciaries and holders that were accrued during the period; see BPM6, paragraphs 8.46 - 8.49 andAppendix 6c. BPM5's deﬁnition of technical reserves is effectively the same as in BPM6 (see BPM5, paragraph 257, footnote 6), with technical reserves recorded as separate
additional detail in other investment / other assets/liabilities, where relevant; see BPM5, Table 7. In BPM6, provisions for calls under standardized guarantees are identiﬁed
and treated similarly to insurance technical reserves; see BPM6, paragraph 5.68. Standardized guarantees are not classiﬁed as ﬁnancial assets / liabilities in BPM5.

Insurance, pension, and standardized guarantee schemes: General Comments

Nonﬁnancial corporations, households, and NPISHs
Short-termLong-term

Other ﬁnancial corporations
Short-termLong-term

4.2.4 Other sectors
4.2.4.2 Short-term
4.2.4.1 Long-term

Other sectors
Short-termLong-term

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

4.2.3 Banks
4.2.3.2 Short-term
4.2.3.1 Long-term

Remapping

Deposit-taking corporations, except the central bank
Short-termLong-term

Monetary authorities (where relevant)Credit and loans with the IMF (other than reserves)
Other short-term
Other long-term

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

International Investment Position Items (continued)

Conversion Matrix from the BPM5 to the BPM6
317

Remapping

4.4.4.1 Long-term

4.4.4.2 Short-term

4.4.4 Other sectors

4.4.3.1 Long-term

4.4.3.2 Short-term

4.4.3 Banks

4.4.2.1 Long-term

4.4.2.2 Short-term

4.4.2 General government

4.4.1.1 Long-term

4.4.1.2 Short-term

4.4.1 Monetary authorities

4.4 Other assets (partly)

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)* In BPM6, the functional category of monetary authorities is supplementary. Credits and loans with the Fundneed to be recorded as standard components either
under central bank or general government, dependingon the entity that holds the asset on its books (usuallycentral bank or ministry of ﬁnance).

* In BPM5, positions arising from insurance, pension,and standardized guarantee schemes are not recorded
separately in the IIP, but implicitly included in item 4.4.
Other investment / other assets.

Comments on Change in Treatment orClariﬁcation* In BPM5, goods sent abroad for manufacturing services are included in Goods for processing and a simultaneous change of ownership is imputed in the ﬁnancial account,except under certain conditions; see BPM5, paragraph 199. In BPM6, these imputed entries are no longer needed; see BPM6, paragraphs 10.62 - 10.71.

* In BPM6, the term Trade credit and advances replaces Trade credits from BPM5, while the deﬁnition is unchanged; see BPM6, paragraph 5.70.

Trade credit and advances: General Comments

Nonlife insurance technical reserves (AF61O)
Life insurance and annuity entitlements (AF62O)
Pension entitlements (AF63O)
Claims of pension funds on sponsors (AF64O)
Entitlements to nonpension beneﬁts (AF65O)
Provisions for calls under standardized guarantees(AF66O)

Other ﬁnancial corporations
Nonﬁnancial corporations, households, and NPISHs

Other sectors

Deposit-taking corporations, except central bankMonetary authorities (where relevant)General government

Central bankInsurance, pension, and standardized guarantee
schemes (AF6O)

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

International Investment Position Items (continued)

318
Balance of Payments and International Investment Position Compilation Guide

4.1.2.1 Long-termLong-term* In BPM5, trade credits are not requested as separate
items for banks.

In BPM6, monetary authorities are requested as supplementary data where relevant.

* In BPM5, trade credits are not requested as separate
item for monetary authorities.

Comments on Change in Treatment orClariﬁcation* The BPM5 items Other investment / other assets / other liabilities (as shown in BPM5 Table 9: Standard Components and Additional Detail) is a residual category. Additionally to the BPM6 items Other investment / other accounts receivable / payable, it includes (i) Net equity of households in life insurance reserves and in pension funds andPrepayments of premiums and reserves against outstanding claims; in BPM6, these BPM5 items are classiﬁed under Insurance, pension, and standardized guarantee schemes;(ii) Other investment / other equity; and (iii) other items that could not be classiﬁed elsewhere; under BPM6 these items are to be allocated to the appropriate ﬁnancial
instrument.

Other accounts receivable / payable: General Comments

Long-term

Short-term

Nonﬁnancial corporations, households, NPISHs

Long-term

Short-term

Other ﬁnancial corporations

4.1.2.2 Short-term

4.1.2 Other sectors

Short-term

Other sectors

Long-term

Short-term

Deposit-taking corporations, except central bankLong-term

Short-term

Monetary authorities (where relevant)

4.1.1.1 Long-termLong-term

4.1.1 General government

4.1 Trade credits
A. Assets

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

4.1.1.2 Short-term

Remapping

Short-term

General governmentLong-term

Short-term

Central bank

Trade credit and advances (AF81O)

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

International Investment Position Items (continued)

Conversion Matrix from the BPM5 to the BPM6
319

4.4.4.1 Long-termLong-termLong-term

Short-term

Nonﬁnancial corporations, households, and
NPISHsLong-term

Short-term

Other ﬁnancial corporations

4.4.4.2 Short-term

Short-term

4.4.4 Other sectors

4.4.3.1 Long-termLong-term

Other sectors

4.4.3.2 Short-term

4.4.3 Banks

4.4.2.1 Long-term

4.4.2.2 Short-term

4.4.2 General government

Short-term

Deposit-taking corporations, except central bankLong-term

Short-term

Monetary authorities (where relevant)Long-term

Short-term

General government

4.4.1.1 Long-termLong-term

4.4.1 Monetary authorities

4.4 Other assets (partly)

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

4.4.1.2 Short-term

Remapping

Short-term

Central bank

Other accounts receivable (AF89O) - other

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

Comments on Change in Treatment orClariﬁcation* In BPM6, the functional category of monetary authorities is supplementary. Credits and loans with the Fundneed to be recorded as standard components either
under central bank or general government, dependingon the entity that holds the asset on its books (usuallycentral bank or ministry of ﬁnance).

International Investment Position Items (continued)
320
Balance of Payments and International Investment Position Compilation Guide

Remapping

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

Comments on Change in Treatment orClariﬁcation

5.4 Foreign exchange

Other reserve assets

Claims on monetary authorities

5.4.1.1 With monetary
authorities

5.4.1 Currency and deposits

5.3 Reserve position in the FundReserve position in the IMF

Currency and deposits

5.2 Special drawing rights

5.1 Monetary gold

5. Reserve assets

Special drawing rights (AF12)

Of which: Monetary gold under swap for cash
collateral

Unallocated gold accounts*6

Gold bullion*6

Monetary gold (AF11)

Reserve assets (AFR)* Guidance on positions with the IMF is provided in BPM6, Chapter 7, Annex 7.1.

* See Reserve assets, General comments: monetarygold.

* In BPM6, the treatment of pooled assets and assets in special purpose government funds are described consistent with the general principles of reserve assets; in BPM5
they are not described. The treatment of pledged assets in reserve assets is clariﬁed; see BPM6, paragraphs 6.93, 6.99 and 6.107 - 6.109. BPM6, paragraph 6.110 discusses thetreatment of frozen assets that do not qualify as* Unlike BPM5, working balances of government agencies are not included in reserve assets in BPM6; see BPM6, paragraph 6.112 and BPM5, paragraph 433.

* In BPM6, the conditions under which net creditor positions in regional payment agreements can be included in reserve assets have been brought in line with the generalprinciples of reserve assets and have thus become more restrictive; see BPM6, paragraph 6.112 and BPM5, paragraph 432.

* Monetary gold. In BPM6, unlike BPM5, unallocated gold accounts held by monetary authorities with nonresidents for reserves purposes are included in monetary gold,
which is broken down in gold bullion and unallocated gold accounts. Unallocated accounts in other precious metals held with nonresidents are included in currency anddeposits; see BPM6, paragraphs 5.39 and 5.74 - 5.78. BPM6 gives an extensive explanation of the recording of gold swaps; see BPM6, paragraph 6.82. The explanation is inline with the general principles of BPM5, although the latter is more concise; see

Reserve assets: General comments

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

International Investment Position Items (continued)

Conversion Matrix from the BPM5 to the BPM6321

Other claims

Financial derivatives (AF7R)*7

Of which: Securities under repo for cash collateral

Equity and investment fund shares (AF5R)

5.5 Other claims (partly)

5.4.3 Financial derivatives (net)

5.4.2.1 Equities

5.4.2.2 Bonds and notes

Short-term (AF31R)

Long-term (AF32R)

5.4.2 Securities

5.4.1.2 With banks

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

5.4.2.3 Money market
instruments

Remapping

Debt securities (AF3R)

Securities

Claims on other entities

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

Comments on Change in Treatment orClariﬁcation* In BPM5, Other claims is a residual that covers part ofcurrency and deposits and securities n.i.e.; see BPM5,
paragraph 443. In BPM6, Other claims includes loans tononresident nondeposit-taking corporations, long-termloans to IMF Trust Accounts that are readily repayable,loans arising from a reverse repo (unless classiﬁed
as deposits), and other ﬁnancial assets not included
elsewhere that fulﬁll the general principles of reserve
assets; see BPM6, paragraph 6.92.

* In BPM6, the value of securities included in reserve
assets and out on repo (or similar arrangements) for
cash collateral is identiﬁed in the IIP to facilitate an assessment of the level of reserves adjusted for the repo
activities; see BPM6, paragraphs 6.88 and 7.58.

* BPM6 explains that securities transferred underrepos can either (i) be included as reserves assets withthe loan incurred (if to a nonresident) reported asother investment / liabilities / loans (and classiﬁed as amemorandum item under reserve-related liabilities);or (ii) excluded from reserve assets and reclassiﬁed as
portfolio investment; see BPM6, paragraphs 6.88 - 6.90.
Securities obtained as collateral under reverse repos
result in legal, but not in economic ownership changing
hands and so should not be included in the reserves (orportfolio) assets of the securities borrower; see BPM6,
paragraphs 5.54 and 7.58 - 7.59. BPM5 does not discuss
the treatment of repo transactions in reserves assets.

International Investment Position Items (continued)

322
Balance of Payments and International Investment Position Compilation Guide

Between fellow enterprises

Of which: Debt securities (AF3D):
Direct investor in direct investment enterprises
Direct investment enterprises in direct investor(reverse investment)

if ultimate controlling parent is resident
if ultimate controlling parent is nonresident
if ultimate controlling parent is unknown

Between fellow enterprises

Direct investment enterprises in direct investor(reverse investment)

Direct investor in direct investment enterprises

Debt instruments

Of which: Money market fund shares or units(AF521D)

Of which: Investment fund shares or units (AF52D)

if ultimate controlling parent is resident
if ultimate controlling parent is nonresident
if ultimate controlling parent is unknown

Between fellow enterprises

Direct investment enterprises in direct investor(reverse investment)

Direct investor in direct investment enterprises

Equity and investment fund shares (AF5D)

Direct investment (AFD)

Direct investment General Comments: see Assets

IIP General Comments: see above

LIABILITIESBPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

1.2.2 Liabilities to afﬁliatedenterprises

1.2 Other capital

1. Direct investment abroad"

1.2.2 Liabilities to direct
investors

1.2 Other capital

1. Direct investment in reporting
economy1.1.2 Liabilities to afﬁliatedenterprises

1.1 Equity capital andreinvested Earnings

1. Direct investment abroad

1.1.2 Liabilities to direct
investors

1.1 Equity capital andreinvested earnings

1. Direct investment in reporting
economyBPM5 International
Investment Standard
Investment Position: Standard
Details(Items in italic aresupplementary)

Comments on Change in Treatment orClariﬁcation* In BPM5, fellow enterprises are not explicitly
mentioned.

* As discussed above, in BPM6, all debt between
selected types of afﬁliated ﬁnancial corporations is
excluded from direct investment.

* In BPM5, fellow enterprises are not explicitly
mentioned.

* As discussed above, in BPM6, all debt between
selected types of afﬁliated ﬁnancial corporations is
excluded from direct investment.

* In BPM6, the term Debt instruments replaces Other
capital.

* In BPM5, fellow enterprises are not explicitly
mentioned.

* In BPM6, the title Equity capital and reinvested earnings of BPM5 is replaced by Equity and investment fundshares.

International Investment Position Items (continued)
Remapping

Conversion Matrix from the BPM5 to the BPM6
323

2.2 Debt securities

Long-term

Short-term

Monetary authorities (where relevant)Long-term

Short-term

General governmentLong-term

Short-term

Central bank

Debt securities (AF3P)

Debt securities: General Comments: see above

Of which: Money market fund shares or units

2.2.1.2 General government

2.2.1 Bonds and notes

2.2.2 Money market instruments * In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets.
2.2.2.1 Monetary authorities
Where monetary authorities are supplementary, their
2.2.1 Bonds and notes
transactions and positions need to be recorded as stan2.2.1.1 Monetary authorities dard components under either central bank or general
government, depending on the entity that holds the
2.2.2 Money market instruments
instrument on its books.
2.2.2.2 General government* Investment fund shares and money market fundshares are separately identiﬁed as supplementary items;
see BPM6, paragraphs 5.28 - 5.30.

Investment fund shares or units (AF52P)

Unlisted (AF512P)

Listed (AF511P)* A supplementary breakdown of equity securities otherthan investment fund shares (of which listed/nonlisted)
is included unlike in BPM5; see BPM6, paragraphs
5.24 - 5.27.

* A treatment for short positions due to the onsellingof borrowed securities is provided, unlike in BPM5; see
BPM6 7.28.

Comments on Change in Treatment orClariﬁcation

Equity securities other than investment fund sharesor units (AF51P)

Nonﬁnancial corporations, households, NPISHs

Other ﬁnancial corporations

2.1.2 Other sectors

Other sectors

2.1 Equity securities

B. Liabilities

2. Portfolio investment

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

2.1.1 Banks

Remapping

Deposit-taking corporations, except the central
bank

Equity and investment fund shares (AF5P)

Portfolio investment (AFP)

if ultimate controlling parent is resident
if ultimate controlling parent is nonresident
if ultimate controlling parent is unknown

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

International Investment Position Items (continued)

324
Balance of Payments and International Investment Position Compilation Guide

Remapping

2.2.1.4 Other sectors

2.2.1 Bonds and notes

2.2.2.4 Other sectors

2.2.2 Money market instruments

2.2.1.3 Banks

2.2.1 Bonds and notes

2.2.2.3 Banks

2.2.2 Money market instruments

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

3.2 General government

General government

Nonﬁnancial corporations, households, NPISHs

Other investment (AFO)

Financial derivatives (other than reserves) (AF71F)
Options (AF711F)
Forward-type contracts (AF712F)
Employee stock options (AF72)
4. Other investment

3.4 Other sectors

Other sectors

Other ﬁnancial corporations

3.3 Banks

Deposit-taking corporations, except the central
bank

Monetary authorities (where relevant)

3.1 Monetary authorities

B. Liabilities

3. Financial derivatives

Central bankFinancial derivatives (other than reserves) andemployee stock options (AF7F)*5

Financial derivatives (other than reserves) and employee stock options General Comments: see Assets

Nonﬁnancial corporations, households, and
NPISHsOther ﬁnancial corporations

Long-term

Short-term

Other sectors

Long-term

Deposit-taking corporations, except the central
bank
Short-term

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

Comments on Change in Treatment orClariﬁcation* BPM6 speciﬁes all other investment instruments anddoes not have a residual item other investment / otherliabilities as in BPM5.

* In BPM6, supplementary additional breakdowns ofﬁnancial derivatives are introduced; see BPM6, paragraph 5.95.

* Employee stock options (ESOs) are included withFinancial derivatives in BPM6 and recorded as a separate supplementary item if transactions in ESOs are
signiﬁcant; see BPM6, paragraphs 5.96 - 5.98 and BPM6,
paragraph 6.58.

* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets.
Where monetary authorities are supplementary, theirtransactions and positions need to be recorded as standard components under either central bank or general
government, depending on the entity that holds the
instrument on its books.

International Investment Position Items (continued)

Conversion Matrix from the BPM5 to the BPM6
325

Remapping

Long-term

Short-term

Other sectors

Of which: Interbank positions (AF221O)

Long-term

Short-term

Deposit-taking corporations, except the centralbankLong-term

Short-term

Monetary authorities (where relevant)Long-term

Short-term

General governmentLong-term

Short-term

Central bank

Currency and deposits (AF2O)

Currency and Deposits General Comments: see Currency and Deosits Assets

Other equity (AF511O)

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

4.3.2 Banks

4.3.1 Monetary authorities

B. Liabilities

4.3 Currency and deposits

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

Comments on Change in Treatment orClariﬁcation* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets.
Where monetary authorities are supplementary, theirtransactions and positions need to be recorded as standard components under either central bank or general
government, depending on the entity that holds the
instrument on its books.

* Unlike BPM5, BPM6 distinguishes currency and deposits liability entries for general government and othersectors / other ﬁnancial corporations.

* In BPM6, equity not included in direct investment andnot in the form of securities is separately distinguishedin Other investment / other equity; see BPM6, paragraphs 5.26 - 5.27. BPM5 does not specify this kind of
equity. InBPM6, capital subscriptions to internationalorganizations is included in other equity, whereas BPM5
includes these subscriptions in other assets / liabilities(see item 4.4 below).

International Investment Position Items (continued)
326
Balance of Payments and International Investment Position Compilation Guide

4.2.2 General government

General government

4.2.4.2 Short-term
4.2.4.1 Long-term

Short-termLong-term

4.2.4 Other sectors

4.2.3.1 Long-termLong-term

Other sectors

4.2.3.2 Short-term

4.2.3 Banks

4.2.2.1 Long-term

Short-term

Deposit-taking corporations, except the central
bank

Monetary authorities (where relevant)Credit and loans with the IMF
Other short-term
Other long-term

Other long-term

Other short-term

4.2.2.2 Short-term

4.2.1.2 Other long-term

Other long-term

Credit and loans with the IMF

4.2.1.3 Short-term

Other short-term

4.2.1 Monetary authorities

B . Liabilities

4.2 Loans

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

4.2.1.1 Use of Fund credit andloans from the Fund

Remapping

Credit and loans with the IMF

Central bank

Loans (AF4O)

Loans General Comments: see Loans Assets

Long-term

Short-term

Other ﬁnancial corporations

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

Comments on Change in Treatment orClariﬁcation* In BPM6, the functional category of monetary authorities is supplementary. Credits and loans with theFund need to be recorded either under central bankor general government depending on the entity that
holds the liability on its books(usually central bank orministry of ﬁnance)* Credit and loans with the Fund can be recorded either
under general government or central bank, dependingon the entity that holds the liability on its books (usually central bank or ministry of ﬁnance).

* Guidance on positions with the IMF is provided in
BPM6, Chapter 7, Annex 7.1.

International Investment Position Items (continued)

Conversion Matrix from the BPM5 to the BPM6
327

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

4.4.4.1 Long-term

Nonﬁnancial corporations, households, NPISHs

Nonlife insurance technical reserves (AF61O)
Life insurance and annuity entitlements (AF62O)
Pension entitlements (AF63O)
Claims of pension funds on sponsors (AF64O)
Entitlements to nonpension beneﬁts (AF65O)
Provisions for calls under standardized guarantees(AF66O)

4.4.4.2 Short-term

4.4.4 Other sectors

4.4.3.1 Long-term

4.4.3.2 Short-term

4.4.3 Banks

4.4.2.1 Long-term

4.4.2.2 Short-term

4.4.2 General government

4.4.1.1 Long-term

4.4.1.2 Short-term

4.4.1 Monetary authorities

4.4 Other liabilities (partly)

Other ﬁnancial corporations

Other sectors

Deposit-taking corporations, except the central
bank

Monetary authorities (where relevant)General government

Central bankInsurance, pension, and standardized guarantee
schemes (AF6O)

Comments on Change in Treatment orClariﬁcation* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets.
Where monetary authorities are supplementary, theirtransactions and positions need to be recorded as standard components under either central bank or general
government, depending on the entity that holds the
instrument on its books.

* In BPM5, positions arising from insurance, pension,and standardized guarantee schemes are not recorded
separately in the IIP, but implicitly included in item 4.4.
Other investment / other liabilities.

International Investment Position Items (continued)
Remapping

Insurance, pension, and standardized guarantee schemes General Comments: see Assets

Long-term

Short-term

Nonﬁnancial corporations, households, and NPISHs

Long-term

Short-term

Other ﬁnancial corporations

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)328
Balance of Payments and International Investment Position Compilation Guide

4.4.2.2 Short-term
4.4.2.1 Long-term

Short-termLong-term

4.4.2 General government

4.4.1.1 Long-term

General government

4.4.1.2 Short-termLong-term

4.4.1 Monetary authorities

4.4 Other liabilities (partly)

Short-term

Central bank

Other accounts payable (AF89O) - other liabilities

Other accounts payable - other liabilities General Comments : see Assets

Long-term

Short-term

Nonﬁnancial corporations, households, and NPISHs

Long-term

Short-term

Other ﬁnancial corporations

4.1.2.1 Long-termLong-term

4.1.2 Other sectors

4.1.1.1 Long-term

4.1.1.2 Short-term

4.1.1 General government

B. Liabilities

4.1 Trade credits

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

4.1.2.2 Short-term

Remapping

Short-term

Other sectors

Long-term

Short-term

Deposit-taking corporations, except central bankLong-term

Short-term

Monetary authorities (where relevant)Long-term

Short-term

General governmentLong-term

Short-term

Central bank

Trade credit and advances (AF81O)

Trade credit and advances General Comments: see Assets

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)

Comments on Change in Treatment orClariﬁcation* In BPM6, the functional category of monetary authorities is supplementary, except for reserves assets.
Where monetary authorities are supplementary, theirtransactions and positions need to be recorded as standard components under either central bank or general
government, depending on the entity that holds the
instrument on its books.

* In BPM5, trade credits are not requested as separate
items for banks.

In BPM6, monetary authorities are requested as supplementary data where relevant.

* In BPM5, trade credits are not requested as separate
item for monetary authorities.

* In BPM5, trade credits are not requested as separate
items for the central bank. In BPM6, Monetary authorities are requested as supplementary data where
relevant.

International Investment Position Items (continued)

Conversion Matrix from the BPM5 to the BPM6
329

4.4.4.1 Long-termLong-term* In BPM6, reserve-related liabilities are introduced as
memorandum items to the IIP; see BPM6, paragraphs
6.115 - 6.116 and Box 6.5.

Reserve-related liabilities (memorandum item)*7 Assets and liabilities combined and reported as a net ﬁgure for assets less liabilities, included under assets.

*6 If available for publication.

*5 Preferably assets and liabilities reported separately, but otherwise a net ﬁgure for liabilities less assets, included, by convention, under assets.

* In BPM6, the allocation of SDRs to IMF members
is recorded as an incurrence of a liability; see BPM6,
paragraph 8.50. In BPM5, the allocation of SDRs is notrecognized as a liability; see BPM5, paragraph 440.

Comments on Change in Treatment orClariﬁcation

Special drawing rights (AF12)

Long-term

Short-term

Nonﬁnancial corporations, households, and NPISHs

Long-term

Short-term

Other ﬁnancial corporations

4.4.4.2 Short-term

Short-term

4.4.4 Other sectors

4.4.3.1 Long-term

Other sectors

4.4.3.2 Short-termLong-term

4.4.3 Banks

BPM5 International
Investment Position: Standard
Components and Additional
Details(Items in italic aresupplementary)

International Investment Position Items (concluded)
Remapping

Short-term

Deposit-taking corporations, except the centralbankLong-term

Short-term

Monetary authorities (where relevant)

BPM6 International Investment Position:
Standard Components and Selected Other
Items(Items in italic are supplementary)330
Balance of Payments and International Investment Position Compilation GuideAPPENDIX

2Appendix 2

Insurance Transactions and Positions,and Pension Schemes

Insurance Transactions and Positions
Introduction
A2.1 Over the lifetime of insurance contracts, insurance companies produce services to their policyholders
for which they do not charge explicitly. These services
include financial protection against risk and financial
intermediation services that arise when funds collectedfrom policyholders and held as technical reserves areinvested. These services are an undifferentiated component of premiums, and need to be derived fromamounts accruing to the insurers and amounts accruing to the policyholders. These amounts are reflected invarious accounts of the balance of payments depending on the type of the activity—that is, the primary
income account, secondary income account, financial
account, and, in some cases, the capital account. Service fees explicitly charged by insurance companies(e.g., for agents’ commissions, salvage, claims adjustment, actuarial services) are recorded in the goods andservices account as auxiliary insurance services. Compilers wishing to improve insurance data first need tounderstand the current situation regarding crossborderinsurance transactions in order to assess their relative
importance. The compiler should get acquainted withthe situation and gain an understanding by means ofinterviewing domestic insurance companies, or, in caseof resident policyholders and beneficiaries, of assessing
the relevance regarding transactions with insurancecompanies abroad.
A2.2 Two types of insurance schemes are distinguished in the international standards—social insurance and other insurance. Social insurance schemes
differ from other insurance in that they are often
linked to public insurance programs that provide protection against various social risks (e.g., loss of income
due to sickness, old age, or unemployment), and inwhich participation is often compulsory. Other insur-

ance includes freight insurance on goods imports andexports, life insurance, other types of direct insurance(i.e., nonlife insurance), and reinsurance. Here, thepolicies are taken out by an institutional unit on its
initiative and for its own benefit, independent of anysocial insurance scheme. The Insurance Transactions
and Positions part of the appendix deals with estimating other insurance services.
A2.3 Within other insurance, nonlife insurance andreinsurance are treated similarly, which is a change toprevious international standards. However, there aredifferences between life and nonlife policies leading todifferent types of entries in the international accounts.
For life insurance, the prebenefits period generally
extends throughout the entire life of the contract andthere is little or no uncertainty about the payment. The
payments made over the years are regarded as a financial investment (or saving), which will be returned tothe policyholder in later years. Thus the recording ofpremiums and benefits is made in the financial account.
A2.4 The balance of payments compiler is confronted with different situations regarding the availability of data on cross border insurance activities. The
data for estimating exports of insurance services will
be best obtained by surveying resident insurance companies. The data collected through this survey should
cover data on the nonresident policyholders’ share in
net premiums, claims, and reserves. This will enable
the conceptual adjustments necessary for the recording of these operations in the balance of payments andinternational investment position (IIP) statistics.
A2.5 The same will not be possible for the imports
of insurance services with the provider of the insurance
services being nonresident to the compiler’s economy.
Thus estimates have to be either based on ratios available from the domestic insurance sector, information
derived from an international transactions report-

332

Balance of Payments and International Investment Position Compilation Guide

ing system (ITRS), partner economy data, or froma survey that can be used to collect premiums paid
and claims recovered from the domestic policyholder.
Imports of reinsurance services could be covered by
the same survey of domestic insurance companies
discussed in the foregoing paragraph. Model form 12
in Appendix 8 is designed for collecting data on insurance services and other related transactions.

Overview of Insurance Accounting:Nonlife Insurance
A2.6 In nonlife insurance, policyholders make regular premium payments to an insurance company. In
return, the company guarantees financial protection
against the occurrence of events, such as accidents,
sickness, and fire. “Term-life insurance” (as opposed
to “life insurance”) is also treated as nonlife insurance
in external accounts, because it only provides a statedbenefit upon the death of the policy holder, provided
that the death occurs within a specific time period.
However, the policy does not provide any returns beyond the stated benefit, unlike life insurance policies,
which have a savings component that can be used for
wealth accumulation.
A2.7 The chief function of nonlife insurers lies in
the proper redistribution of premiums earned andother income to individuals of homogeneous groups
that have incurred losses. A special form of financial
intermediation is also involved, in which funds at thedisposal of the insurance unit, called (nonlife) insurance technical reserves, are invested in financial andother assets to generate income. Nonlife insurance
technical reserves cover unearned premiums, reserves
for unexpired risks, and claims outstanding at the endof the reporting period. For the purpose of financial
reporting, these funds and the corresponding investment income, called premium supplements, are assetsof the policyholders and liabilities of the insurancecompanies.
Premiums
Written, unearned, and earned premiums

A2.8 An insurance premium represents the pricethe insurance company charges for the policy and theservice it renders to the policyholder. The concept ofunearned premiums is important to the insurance
business, as it deals with the recognition of revenue
for the time period in which the policy is in force.
In the jargon of an insurance company, at the time a

policy is first written, the total of the premium may beunearned, as premiums are often fully prepaid at the
inception of the policy. Direct written premiums are
the amounts charged to and actually paid over the lifeof a contract by the policyholders for insurance coverage. Each day thereafter, the premium amount accrues to the insurance unit until the end of the policy.
At the end of the reporting period, the insurance unit
assesses the premium reserves representing the unexpired terms of the policy. The earned premium plus
the unearned premium for a policy equals the written
premium. The recognition of premiums earned versus
premiums received and estimates of claims incurred
but not yet reported or resolved can be seen as the application of usual accrual accounting principles.

Earnedpremiums
x% of the risk

Unearnedpremiums(100-x) %of the risk

Written premiums

Reporting period

Net written premiums and reinsurance
premiums

A2.9 In most of the cases the direct written premiums constitute the basis for the compiler to determine
the amounts of premiums related to direct businessand to derive earned premiums at the end of the period. However, an intermediate step may be necessary in case the premium amounts in the accounts of
insurers are already further adjusted for reinsurance
premiums. Insurance companies purchase reinsurance
to protect themselves against the risks of losses abovecertain thresholds. If a risk is reinsured, the insurancecompany will cede to a reinsurer (i.e., another insurance company) a part of the premiums in proportion
to the risk assumed. The other part is used by the insurance company to finance the risk that remains.1
1

There are multiple reinsurance types and, hence, methods forceding business to a reinsurer.

Insurance Transactions and Positions, and Pension Schemes

333

A2.10 On the other hand, insurance companies
themselves may act as a reinsurer and accept indirectbusiness from another insurance company in form ofassumed premiums. Thus gross written premiums ininsurers’ accounts could include both written premiums charged to policyholders (also called direct written premiums)2 and assumed reinsurance premiums
from insurance companies. Net written premiums
then constitute gross written premiums minus ceded
reinsurance premiums.3

Plus Loss reserves outstanding (at the end of theaccounting period)
Equals Claims incurred

ClaimsInsurance claims4 incurred and paid

A2.14 An insurance company must apply soundmethods to estimate potential claim liabilities on its
balance sheet to cover all expected and unexpectedclaims and expenses, as there is always a delay between
the times the insured events occur and the times theclaims are reported and settled. The insurance company has incurred a potential liability at the time thepolicy becomes effective. Until the insured incident
occurs, the potential liability is reflected in unearned
premiums and the other components of insurance
technical reserves.

A2.11 At the time the policy becomes effective,
the policyholder has transferred the uncertain lossof assets to the insurance company in form of potential claims in exchange for the premium paid. Claims
incurred refer to the expected financial obligations
that cover the insured risks as provided by the policy.
Claims may be known or unknown by the company,
reported or unreported. Paid claims occur when actual payments of cash have been made to claimants for
insured events of the current or previous periods. To
properly match the income earned (premiums) of theinsurance company with the expenses incurred in therelevant period, provisions are made in the insurers’
accounts as of the accounting date for claims incurredthat will be settled after the current accounting period.
Claim associated expenses (also called claim/loss adjustment expenses, incurred to investigate and settle
losses) are generally considered part of the claim cost
for an insurance company.
A2.12 In insurance accounting, claims incurred forthe accounting period are calculated as follows:
Claims/losses paid during the accounting period for
nonlife insurance contracts
Minus Loss reserves outstanding (at the beginning of
the accounting period)

2

Direct written premiums are the premiums received from policies issued directly by the primary insurance company to its
policyholders.
3
The different meaning of “net” in the context of the BPM6 should
be noted: “Net” as applied to premiums implies that the service
charge for the insurance services has been deducted from actual
premiums to record the premiums in the secondary income
account, whereas here net written premiums are net of ceded
reinsurance premiums. See the BPM6, paragraph 12.42.
4
Claims incurred are also called losses incurred in insurance
accounting.

A2.13 Loss reserves are the unpaid part of claims
incurred as of the accounting date, as explained aheadin Insurance technical reserves and expected income
attributable to policyholders.
Insurance technical reserves and expected
income attributable to policyholders
Insurance technical reserves

A2.15 Unearned premiums are established as a liability becauseinsurance companies receive premiumsin advance of some or all of the policy period that iscovered by the policy. Following the accrual principle, these premiums cannot be recognized as revenue
until they are earned. Also, insurance companies mayneed to refund these premiums to policyholders if thepolicy is cancelled before its stated ending date.
A2.16 The nonlife insurance technical reserves
set aside on the balance sheet (see Example A2.2
ahead) for future commitments that arise out of insurance contracts (including any related administration expenses, taxes, etc.) consist of mainly two
components:
a. Unearned premium reserves are that part of premiums written that apply to the unexpired partof the policy period. These reserves are to be
carried forward to the following accounting period. The insurance policy period for which thepremium is paid in advance and during which
the insurance company bears the risk does (usually) not correspond with the reporting period.
If an insurance company expects its unearned
premium reserves to be insufficient to coverestimated claims and expenses in the following
accounting period from contracts concluded by334

Balance of Payments and International Investment Position Compilation Guide

Example A2.1. Illustration of insurance company proﬁt and loss accountIn million U.S. dollars

2012

2011

Gross premium written

5,488.9

5,255.7

Reinsurance premium ceded–288.7–272.0Net premium written

INCOME

5,200.2

4,983.7

Premium assumed

300.0

250.0

Net changes in unearned premium
reserves

–35.6

–24.6

5,164.6

4,959.1

Interest and dividend income

793.8

704.4

Gains and losses on investments (net)

130.2

291.4

Income on investment property

194.4

186.4

Other income

89.1

89.4

6,672.1

6,480.7

Claims incurred including claims
handling costs (nonlife)–1,610.9–1,465.8

Claims and beneﬁts paid (life)–2,369.8–2,226.3

Change in actuarial reserve–591.1–738.0Net earned premium

Total operating income
EXPENSES

Reinsurers’ share of beneﬁts and claims

205.9

160.8

Policyholder dividends and bonuses–173.4–166.7

Insurance beneﬁts and claims (net)–4,539.3–4,436.0

Acquisition costs–692.4–647.4

Operating and administrative expenses–534.2–509.8Interest payable

–44.6

–41.8

Other expenses

–51.7

–29.3

–5,862.2–5,664.3

Proﬁt or loss from operating activities

809.9

816.4

Finance costs

–7.2

–6.0

Total operating expenses

Share of proﬁt or loss of associates

2.8

1.8

Proﬁt or loss before taxes

805.5

812.2

Income taxes–103.5–138.4

Proﬁt or loss for the period

702.0

673.8

the end of the accounting period, it may create
so-called unexpired risk provisions. Some insurance companies also separately disclose provisions to meet costs of discounts to be granted
to certain policyholders.
b. Estimated loss reserves and reserves for claims incurred but not reported are provisions set aside
to meet the estimated costs of settling claims
that have occurred up to the end of the accounting period from policies currently in force andpolicies written in the past, after the deductionof amounts already paid. This amount includes

funds for unpaid claims, claims adjustment andhandling expenses known but not yet settled,
and estimates for claims incurred but not yet
notified (so called incurred but not reported)by the balance sheet date. Insurance companies
may also set aside funds for preventing cash-flow
depletion for significant unforeseen events orcatastrophes, when many policyholders may beaffected at about the same time. These kinds ofreserves should, however, be taken into accountonly if there has been an event that triggered theincrease of liabilities vis-à-vis the policyholders.

Insurance Transactions and Positions, and Pension Schemes

335

Example A2.2. Excerpt from an insurance company balance sheet
Insurance company X: Insurance liabilities at year end
In million U.S. dollars

Life

General

Total

Participating contracts

12,383.7–

12,383.7

Unit-linked nonparticipating
contracts

9,998.4–

9,998.4

Other nonparticipating
contracts

9,359.1–

9,359.1

Outstanding claims
provisions–

1,111.8

1,111.8

Provisions for claims
handling expenses

–

78.4

78.4

Provisions for claims incurred
but not reported

–

480.6

480.6

Provisions for unearned
premiums

–

396.4

396.4

Provisions for unexpired risks

–

3.0

3.0

2,070.3

33,811.5

Total

31,741.2

Otherwise these amounts are seen as internal reserves set aside for saving purposes and should
not be included in nonlife technical reserves ofthe balance of payments and IIP.
Expected income (attributable topolicyholders)A2.17 Insurance companies generally distinguish
two sources of income, from investing shareholder(equity) capital and from investing policyholders’funds (also referred to as holdings of own assets andtechnical reserves, respectively). The investment ofpolicyholders’ funds is a distinct feature of insurancecompanies and made possible because of the time span
between the collection of premiums and the eventual
loss settlements.

Using the Insurance Companies’
Accounting Data to Derive Balanceof Payments and IIP Components
A2.18 Box A2.1 summarizes the BPM6 methodology as described in Annex 6c of the BPM6 regarding
the balance of payments data on nonlife insurance. Although the terms used to describe transactions of theinsurance sector in the BPM6 and the 2008 SNA are
based on and in strong accordance with the accounting
terminology that insurance companies use to set up
their accounts (as explained in Employment-Related
Pension Schemes and Social Security Schemes of thisappendix), the compiler may need to make certain adjustments before data can be used to derive relevantbalance of payments entries according to the BPM6.
These adjustments are necessary, for instance, to determine and differentiate the amounts of premiums
related to direct business with policyholders, and theamounts related to reinsurance (both ceded and assumed), as further explained ahead.
A2.19 The paragraphs ahead aim at identifying
the terms and the necessary adjustments needed tocompile balance of payments data. All entries relate tononresident policyholders.
Secondary income account:
Net premiums earned

A2.20 Net premium earned equals premiums earned
plus premium supplement minus service charge. For thecompilation of balance of payments purposes according
to the BPM6, there is no netting between direct insurance and reinsurance. Therefore, the compiler should
distinguish between the amounts related to direct business, and the amounts related to reinsurance (bothceded and assumed). This means that direct written premiums received from policyholders should not be netted for any premiums ceded to reinsurers, and should
exclude premiums assumed from other insurance companies. The rationale is that the direct insurance company is fully liable vis-à-vis the policyholder, regardless336

Balance of Payments and International Investment Position Compilation Guide

Box A2.1 BPM6 Entries in the Balance of Payments Related to Nonlife Insurance Transactions
Services account
The insurance service charge is derived implicitly with the following formula (see BPM6, Appendix 6c):
Insurance services = gross premiums earned
plus
premium supplements (investment income attributable to policyholders in insurance)minus
claims due/incurred (adjusted for claims volatility, if needed)
Primary income accountInvestment income attributable to policyholders in insurance (equal to premium supplements)
Secondary income accountNet premiums earned = gross premiums earned
plus
premium supplements
minus
insurance services
Claims payable/due
Financial account
Changes in nonlife insurance technical reserves (e.g., for policyholders’ funds invested)
Currency and deposits (for actual premiums written and claims paid)of whether part of the risks are reinsured (see 2008 SNA,
paragraph 17.57).
A2.21 The written premiums from direct businessare used to determine the earned premiums from theinsurers’ accounts of the reporting period.5 From thebusiness with nonresident policyholders:
Written premiums (for direct business only)
Plus

Unearned premium reserve (at the beginningof the reporting period)
Minus Unearned premium reserve (at the end of thereporting period)
Equals Premiums earned (from direct business)

A2.22 The adjusted written premiums and derived
earned premiums constitute the first two components
for the compilation of the insurance accounts according to international standards. Written premiums
correspond to premiums received in the BPM6, andare recorded in other investment—for example, as anincrease in the insurance companies’ deposits abroad.
A2.23 In Example A2.1 (Illustration of insurancecompany profit and loss account), to determine theearned premiums, the compiler would have to use thegross premiums written (not taking into account thereinsurance premiums ceded) excluding premiums
assumed, and the net change in unearned premium
reserves, and inquire about the share of nonresident
5

The results are measured on an accounting period basis, which
could be the calendar or fiscal year, as opposed to the policy period.

policyholders. Benefits are payments to life insurance
policyholders and would need to be separated from
nonlife claims paid.
Secondary income account: Claims payable/due

A2.24 Claims incurred in insurance accounts
correspond to claims payable in the BPM6, and arerecorded in the secondary income account of the balance of payments (see BPM6, paragraph 12.44), while
claims paid are recorded in other investment—for
example, as a decrease in the insurance companies’
deposits abroad. The calculation for claims incurred is
set out in paragraph A2.12.
A2.25 For insurance companies to accurately estimate future loss payments, especially for claims unknown, predictions are in general based on historical
data of settlement and reporting patterns of homogenous groups of policyholders, and actuarial methods that take account of uncertainties to determine
the amount of reserves. Certain lines of business withexpected individual large risks involved, with highfrequency of losses, or with cumulative risks (such as
natural disasters) are likely to be hedged by insurancecompanies through customized reinsurance.
A2.26 In case of a significant unforeseeable event
during the accounting period, the derived insurance
services rendered by the insurance company to the policyholders should not turn into a negative figure—that
is, neither the volume nor the price of insurance services should be affected by the volatility of claims. The

Insurance Transactions and Positions, and Pension Schemes

2008 SNA therefore recommends the use of adjusted
claims incurred when measuring the output of insurance companies. The adjustment would be negative inperiods when large values of claims are incurred, thusincreasing the value of the service by reducing the difference between actual claims in a particular period
and a normally expected level of claims.
A2.27 There are three different accounting methods to help estimate the expected level of claims (seeBPM6, paragraph A6c.22): (1) the expectations approach is based on expected claims using smoothed
past figures of gross claims incurred or ratios of grossclaims over premiums, applied to current premiums;
it replicates the ex-ante model of insurance companies
when pricing the premiums based on expectations ofloss; (2) the accounting approach uses ex-post dataof observed claims incurred and is based on changes
in insurance companies’ equalization reserves andchanges in own funds; and (3) the sum of costs plus
“normal” profit approach measures output by taking the sum of costs plus an estimate of normal profit
based on smoothed past actual profits.
A2.28 According to international standards, exceptionally high claims following a natural disasteror catastrophe are recorded as secondary income ora capital transfer provided by the insurance company
to the policyholders. The rationale for treating certain
claims as capital transfers is that these claims do notaffect the level of disposable income of the claimants.
The net worth of policyholders will thus show the effects of the destruction of assets and an offsetting increase in financial assets from the capital transfers (see2008 SNA, paragraph 17.40, and BPM6, paragraph13.24). The entries in the secondary income accountrecognize the intermediation effect of direct insuranceby transferring a pool of relatively small premiums
from many policyholders to a small number of large
claims from some of these policyholders.
Primary income account: Premium supplements

A2.29 When a policy is written, insurance companies receive cash, which is at their disposal to invest until
claims are later reported and settled. Distinguishing between technical reserves and own assets is relevant forderiving the insurance services according to the BPM6.
A2.30 In international standards, the income
earned from the investment of insurance technical reserves are called premium supplements (see337

BPM6, paragraph 11.83) and are imputed as primary
income receivable by policyholders, as the technicalreserves are assets of the policyholders. This income
is retained by the insurance companies in practice.
The same amount is then shown within the equationas payable to the insurance company by the policyholder as premium supplements in the services
account.
A2.31 In Example A2.1, the income retained frominvesting policyholders’ funds is called policyholder
dividends (and bonuses). Bonuses are amounts inlife insurance policies that are explicitly attributed topolicyholders each year. The compiler would need toinquire about the estimated (prorated) share of income payable to nonresident policyholders for nonlife
business.
Financial account: Insurance technical reserves

A2.32 Reserves are increased or reduced whenpremiums are earned and claims are paid from outstanding loss reserves. In the accounting system of thecompany, the payment is matched to the loss reserve
and a corresponding entry is made to reduce the reserve for the payment made to the policyholder. At
the end of the accounting period, insurance technicalreserves can decrease in net terms when claims paidout of reserves exceed amounts added to respective
reserves.
A2.33 These reserves for unearned premiums andagainst outstanding insurance claims are recorded in
the other investment category of the financial accountunder Insurance, pension, and standardized guarantee
schemes (see BPM6, paragraphs 5.64, and 7.63–7.64).
The split of these reserves between liabilities to residents and nonresidents may have to be undertaken
according to a suitable indicator such as premiums
earned or written.
A2.34 For the recording of insurance technical reserves in the IIP, flows that result from exposure to theeffect of exchange rates will have to be taken into account (see Chapter 9 for more details on other changes
in financial positions).
Goods and services account:
Deriving insurance services

A2.35 All components are now available to thecompiler to derive the insurance service charge according to the BPM6, paragraph 10.111.

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Balance of Payments and International Investment Position Compilation Guide

A2.36 The implicit insurance service the insurancecompany renders is a measurement of the output of
the insurance industry. The service provided to residents and nonresidents is derived by determining theoutput of the insurance in a way that mimics the accounting practices based on premiums earned andlosses incurred pertaining to the accounting period:
Gross premiums earned (from direct business)
Plus
Minus
Equals

Net income from investments attributable topolicyholders (premium supplements)
Estimated claims incurred (adjusted for claim
volatility, if necessary)
Insurance service charge

Data sources
Conducting a survey of domestic
insurance companies

A2.37 The compiler can obtain most comprehensive data for exports of insurance services from surveying resident insurance companies. To enable anappropriate coverage of the domestic insurance sector,
a survey frame should be available, including a list of
insurance companies, which may be provided by theauthority issuing the licenses for insurance business.
Insurance agents and brokers are usually required toregister with insurance authorities; therefore, a list ofthese businesses should be readily available from official sources (see also Box A2.2).

from the ITRS) or administrative data, for estimating
an interim (moving) measure for the distinction between national and international business.
A2.41 Insurance terms may differ due to different
accounting practices that are being applied in worldwide insurance accounting.6
A2.42 A model form for insurance survey is presented in Appendix 8.
Box A2.2 Insurance Sales Agents and Brokers
Insurance sales agents or brokers commonly sell one ormore types of insurance, such as property and casualty,
life, health, disability, and long-term care. They either
work exclusively for one insurance company based ona contractual agreement, or work independently andrepresent several companies at the same time. As facilitators, agents help match insurance policies for theirclients with the company, and help policyholders settle
their insurance claims. Insurance agents and brokers areusually required to register with insurance authorities;
therefore, a list of these businesses should be readily
available from ofﬁcial sources. An exploratory survey
could be undertaken to identify agents and brokers
placing insurance abroad.

A2.39 Resident insurance companies should reportdetails of premiums and claims in respect of businessobtained from abroad and in respect of international
reinsurance flows. In addition, these companies may
be asked to report details of premiums and claims in
respect of insurance written by them on imports.

The agent’s commission is generally a percentage ofeach premium. If the insurance company that is surveyed collects premiums directly from its policyholders,the premiums balance receivable would include the fullamount of premiums due from policyholders. If agentsact as intermediary between insurance company andpolicyholder, there are generally two possibilities. If theinsurance company uses an agent but charges directly
the policyholders for premiums due, the commissions
payable to the agent will not reduce the amount thatis received and recorded for premiums. If the agent
collects premiums on behalf of the insurance company,
the premium shown in the insurance accounts would
normally be recorded net of commissions. The compiler
should be aware of the possibility that premiums could
be collected by agents but not yet transferred to theinsurance company (uncollected premium balances), orthat commissions have been deducted (premiums generally should be recorded gross of agent commissions, andcommissions for agent services should be separately recorded). Insurance companies keep periodic statementsof the sums due and owed to an agent, sometimes
referred to as agents’ balances.

A2.40 Supervisory institutions may be a source for
qualitative aggregate information. Although balance
sheets and profit and loss account information fromthose institutions may have the caveat of long timeliness, they may be combined with information available from shorter-term external sector statistics (e.g.,

6
A joint International Accounting Standards Board and Financial Accounting Standards Board project on the accounting of
insurance contracts currently focuses on the recognition andmeasurement of insurance contracts, and the presentation of income and expenses arising from those contracts; see http://www.
ifrs.org/Current+Projects/IASB+Projects/Insurance+Contracts/
About+Insurance.htm.

A2.38 Through surveying domestic insurancecompanies, the compiler is able to request information
on a conceptually correct basis as explained in previous paragraphs—that is, premiums earned and claims
due—as well as insurance technical reserves and theincome earned on those reserves.

Insurance Transactions and Positions, and Pension Schemes

Insurance technical reserves for life and nonlife
insurance policies derived from standardized
reporting forms (SRFs) in monetary andﬁnancial statistics (MFS)

A2.43 The MFS can be a data source for compilinginsurance technical reserves. In MFS, insurance technical reserves receive separate treatment and appear as
liabilities in the accounts of insurance corporations andpension funds in the other financial corporations’ subsector (see Example A2.3).7 In many economies suchreserves constitute a significant contribution to thetotal liabilities of the financial corporations’ sector. The
separate identification therefore supports the analysisof activities of this particular subsector, which is reflected in their specialized treatment in national financial reporting and international statistical standards.
A2.44 Technical reserves have three components.
The first component is the liabilities account for obligations for prepaid insurance premiums received fromall resident and nonresident policyholders. Included
are prepayments for both life insurance and nonlife
insurance policies, as well as premium prepayments
for reinsurance (see Monetary and Financial Statistics
Manual and Compilation Guide (MFSM-CG)). The
second component of insurance technical reserves
comprises changes in reserves for claims outstanding,which insurance companies hold in order to cover theamounts for (valid) claims that are not yet settled or
claims that may be disputed. The third component
covers the obligation from net equity of households

Example A2.3 Excerpt from the sectoral
balance sheet for the ﬁnancial corporations
subsector (liability side)
Insurance technical reserves
Net equity of households in life insurance reserves
Residents
Nonresidents
Net equity of households in pension funds
Residents
Nonresidents
Prepayment of premiums and reserves against
outstanding claims

7

Other financial corporations are part of other sectors in the
BPM6 classification of institutional sectors (see BPM6, Table 4.2).

339

in life insurance corporations and pension funds reserves, which reflect the present value of the insurance
corporation’s estimated (actuarial value of) liabilities
for future claims by life insurance policyholders.
A2.45 The assets account in the sectoral balance
sheet is used to record the amount of financial corporations’ prepayments of premiums to insurance corporations. It also includes prepayments that insurance
corporations have made to other insurance corporations (i.e., to reinsurance companies abroad). In general, the asset category is relatively minor comparedto the liability account. Prepayment of insurance
premiums is the only category of insurance technicalreserves for which there are both asset and liability accounts in the sectoral balance sheet. Report 4SR of themonetary statistics is the report form used to compile
the data on all resident insurance corporations andpension funds.
A2.46 MFS do not contain income statements (seeMFSM-CG). Data on the investment income from insurance reserve assets could be estimated by applying
an appropriate return rate calculated as a specified
percentage of the amount of the outstanding balances.
Nonlife insurance services—Deriving insurance
services payable from incomplete information

A2.47 The compiler may not always be able tocompile a comprehensive set of accounts in order toapproximate insurances services exports in a given
reporting period, especially for shorter time periods(e.g., quarterly data). Therefore, in conjunction with
the national accounts compiler, the insurances services
provided to the rest of the world could be estimatedfrom the total estimated output8 of the insurance sector and the average ratio of total premiums earned
from abroad to total premiums earned (see Example
A2.4). Premiums are a better indicator than claims fordetermining the share of insurance services attributable to the rest of the world. The reason is that claims
are contingent on events incurred to trigger payments,
and there may be periods without claims or withirregularly large claims. From the ITRS, there may bedata available on a cash basis of premiums received
from abroad, and claims paid.
8
See 2008 SNA, paragraph 6.185, on the calculation of output for
the insurance industry (total premiums earned plus premium
supplements less adjusted claims incurred).

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Balance of Payments and International Investment Position Compilation Guide

which premiums are paid and from where claims
are received. The compiler could contact the balanceof payments compilers in those economies to obtainappropriate ratios for their services estimates.

Example A2.4 Estimation of insurance
services provided to nonresidents
Estimated domestic insurance output
in period x (could also be based on
period x–1)
Total premiums writtenof which premiums received/writtenfrom abroad
Estimated insurance service
provided to nonresidents

50
200
70
17.5 = 50*70/200

Import of insurance services with andwithout an insurance company resident
in the reporting economy

A2.48 Insurance services receivable (imported)are much more difficult to capture, as the compiler
is not able to request information directly from insurance corporations. Data from an ITRS will be
on a cash basis and capture premiums paid andclaims received. An appropriate ratio derived fromthe domestic insurance industry can be applied topremiums paid. If this ratio cannot be obtained, thecompiler should estimate the ratio by using the longterm relationship between premiums and claims.
The ITRS provides information on economies to

Overview of insurance accounting:
Reinsurance
A2.49 Reinsurance is the primary vehicle used byinsurance companies to diversify, mitigate, and manage their risk. Reinsurance is the acceptance by the reinsurance company of all or part of the risk of loss ofthe primary insurance company (also called the ceding company). There are different types of reinsurers—
those whose basic business is reinsurance, and thosethat conduct reinsurance business in addition to theirprimary business. Reinsurance companies either use
direct negotiation channels, or contact primary insurance companies through brokers or intermediaries towhom they pay commissions as a percentage of thereinsurance premium.
A2.50 There are two principal forms of reinsurance, pro rata and excess of loss reinsurance, which
increase the primary insurance company’s capacity
to accept larger exposures than normal. In a pro rata
reinsurance contract, the reinsurers and reinsured
company share a proportional part of the premiums

Example A2.5 Deriving transactions related to nonlife insuranceThis example presents how to calculate/estimate balance of payments entries related to nonlife insurance. It is assumed
that the balance of payment compilers received the following information on nonlife insurance from resident insurancecompanies:
Total premiums received from abroad

170

Total claims paid to abroad

160

Net increase in technical reserves due to prepayments

30

Net increase in technical reserves due to claims not yet paid until end of year

20

Adjustment for volatility for claims payable during the year

–50

Total investment income earned from investment of assets

40

of which ratio of attributable to nonresident policyholders

30 %Based on the foregoing information:(1)

The following calculation should be executed:
Gross premiums receivable from abroad = Total premiums received from abroad—Net increase in technical reserves
due to prepayments = 170 – 30 = 140
Claims payable to abroad = Total claims paid to abroad + Net increase in technical reserves due to claims not yet paid =160 + 20 = 180
Expected long-term level of claims = Claims payable + Adjustment for volatility in claims payable = 180 + (–50) = 130
Premium supplements (investment attributable to policyholders) (debits) = Ratio of attributable to nonresident
policyholders*Total investment income = 30%*40 = 12

Insurance Transactions and Positions, and Pension Schemes

341

Example A2.5 Deriving transactions related to nonlife insurance (concluded )(2)

The following balance of payments transactions should be derived:
Current Account:
Goods and services—Insurance services (credits)
Gross premiums receivable from abroad + premium supplements—expected long-term level of claims = 140 + 12 – 130 = 22
Primary income – Other investment—Investment income attributable to policyholders in insurance (nonlife
insurance—premium supplements) (debits) = 12
Secondary income—Other current transfers—Net nonlife insurance premiums (credits)
Gross premiums receivable + premium supplements—insurance services = 140 + 12 – 22 = 130
Secondary income—Other current transfers—Nonlife insurance claims (debits)
Claims payable to abroad = 180
Financial Account:
Other investment—Insurance, pension, and standardized guarantee schemes—Nonlife insurance technical reserves(increase in liabilities to policyholders)
Net increases in technical reserves due to prepayments of premiums + net increase in technical reserves due claims not
yet paid (incurred claims not yet paid) = 30 + 20 = 50
Other investment—Currency and deposits (increase in assets)
Premiums received from abroad—claims paid to abroad = 170 – 160 = 10

Recording of transactions for nonlife insurance in the balance of payments statistics (economy of insurance companies)

Year

CreditCurrent accountServices
Insurance and pension services
Primary income
Other investment
Investment income attributable topolicyholders in insurance, pension schemes, andstandardized guarantee schemes

Debit

22

12

Secondary income
Financial corporations, nonﬁnancial corporations,households, and NPISHs
Other current transfers
Net nonlife insurance premiums1
Nonlife insurance claims1

130
Net acquisition of ﬁnancial assets

Financial account
Other investment
Deposit-taking corporations, except the central bank
Currency and deposits
Insurance, pension, and standardized guarantee
schemesNonlife insurance technical reserves1

180
Net incurrence of liabilities

+10

+50

1

Supplementary item

and losses of the primary insurance company’s pro
rata reinsured business. In an excess of loss contract,
the primary insurance company pays the amount ofeach claim up to a limit determined in advance, andthe reinsurer pays the amount of the claim abovethat limit either per risk, per occurrence, or if reinsured losses incurred in aggregate exceed an agreed
amount. A reinsurer can cede all or part of the reinsurance it has previously assumed to another reinsurance company. This transaction is called retrocession.

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Balance of Payments and International Investment Position Compilation Guide

A2.51 International standards measure transactions of reinsurance companies in a way similar totransactions of direct nonlife insurance companies(see Overview of insurance accounting: Nonlife insurance). However, there are some peculiar payments
in reinsurance. The primary insurance company remits to the reinsurer the net premium after deducting
the so-called agreed upon ceding commission. This
commission is paid by the reinsurer to reimburse theceding company for its acquisition expenses and othercosts incurred to place the business with the reinsurer.
A2.52 Another commission often found in reinsurance agreements provides for profit sharing. The reinsurer and the ceding company generally agree to apredetermined percentage of the profit realized by thereinsurer on the contracts ceded by the primary insurance companies and the cedants’ share of such profits,called profit commission.
A2.53 As is the case for the primary insurancecompany, the premiums for the reinsurer are generally not fully earned when received, so provisions are
made for the unearned part of the written premiums.
Earned premiums are calculated by the sum of premiums written plus the unearned premium reserve at the
beginning of the reporting period, less the unearned
premium reserve at the end of the reporting period.
The amount of the unearned premium reserve less theceding commission is the amount the reinsurer would
have to pay back, in case the contract was canceled.
A2.54 Reinsurers are also required to establish reserves for claims outstanding and for expenses associated with settling and adjusting these claims. Claims
or losses incurred are calculated as claims incurredand paid during the current period, plus claims incurred during the current period that are unpaid atthe end of the period.
A2.55 The management of the reserves may differ
from those of primary insurance companies due tothe longer duration of contracts and the magnitude oflosses. Conceptually, the income reinsurers earn frominvesting the reserves is treated similar to that of primary insurers, as investment income payable to theprimary insurance company and returned as premium
supplement. A primary insurance company thus pays
investment income to its policyholders based on thewhole of the premiums earned, and receives investment income from the reinsurer corresponding to theamount of the premiums it has ceded to the reinsurer.

A2.56 The value of output of the reinsurer can be
expressed with the following formula:
Gross premiums earned less commission payable
Plus

Net income from investments (premium supplements)
Minus Claims due (adjusted for claim volatility, if necessary) and profit commission payable
Equals (Re-) insurance services

A2.57 International accounting standards prohibit
the offsetting of reinsurance assets against related liabilities and require transactions between the direct
insurer and its clients on the one hand and the holder
of a policy and reinsurer on the other to be recorded
as entirely separate sets of transactions. In insurance companies’ accounts of ceding companies net
premiums written (received) generally refer to grosspremiums written (including direct and reinsurance
assumed) less the premiums ceded proportionally toreinsurers. Indirect business accepted from anotherinsurance company is included in gross premiums
written as reinsurance assumed.
A2.58 As with direct insurance, in exceptional
cases, some part of reinsurance claims may be recorded as capital transfers rather than as current
transfers. All other entries in the international accounts are derived and recorded similarly to nonlife
insurances (see Example A2.6).
A2.59 Services receivable from reinsurance companies abroad9 can be best captured through surveying
the domestic recipient insurance company, as described in paragraphs A2.37–A2.42.

Example A2.6 Estimation of insurance
services in indirect insurance
Premiums residents pay tononresident insurance companies
Claims received from nonresident
insurance companies
Average long-term ratio between
insurance service charge andpremiums paid
Estimated insurance services

80
50

15 %
12 (= 80*15%)

Net premiums

68 (= 80–12)

Claims received

50

9Reinsurance is often placed with reinsurance companies abroad
and therefore is often cross border.

Insurance Transactions and Positions, and Pension Schemes

343

Overview of insurance accounting:Life insurance

Minus
Equals

A2.60 There are three distinguishing features forlife insurance contracts: the relationship between premiums and claims/benefits over time, the length oftime for which the contract is written, and the certainty
that a claim/benefit will occur. Practically, the insurance company determines the relationship between
premium and benefit by combining the saving element of a single policy with actuarial calculations of an
insured population.

A2.65 Policyholders with life insurance policies
may be eligible for additional bonuses in each year
distributed to the policyholders by means of increasing the future insurance benefits in addition to aminimum guaranteed amount. Generally, life insurance products mentioning “with profit policy” or“participating policy” means the policy and thereby
the policyholder is eligible to receive these bonuses.
They are included in investment income attributable
to life insurance policyholders and recorded as premium supplements in the income account (see BPM6,
paragraph 11.81).

A2.61 Actuarial calculations are based on valuation
assumptions with regard to mortality, disablement,
and morbidity, taking into account the premiums to bereceived in the future, the investment earnings potential, and all the future liabilities under the conditions ofeach current insurance contract. A policyholder whocancels the policy before the agreed expiration date is
generally entitled to partial benefits from the insurer.
Benefits are thus always paid to the policyholder or tohis or her beneficiary. For these reasons, part of thepremiums paid by the policyholders may be regarded
as savings and part of the benefits received by the beneficiaries as withdrawals from savings. The recording,therefore, of premiums and payments of benefits takes
place in the financial account rather than in the secondary income account (see BPM6, paragraph 5.65).
A2.62 The actuarial reserves represent the present
value of the future cash flows payable at the end of the insurance policy, rather than claims in the current period.
Actuarial reserves accrue to particular policyholders depending on amounts guaranteed in their policies. Thus
the total liability of the insurer is the sum of the actuarial
reserves for every individual policy (see Example A2.1).
A2.63 Premium supplements are more significant
for life insurance than for nonlife insurance (see 2008
SNA, paragraphs 6.193 and 6.197). Part of the total income earned on the reserves for policyholders—that
is, the income allocated to actuarial reserves—is allocated to the (individual) policyholder and added tothe insurance technical reserves.
A2.64 Changes in life insurance actuarial reserves
are derived as follows:
Plus

Gross premiums earned
Part of premium supplements allocated to actuarial reserves

Benefits due
Changes in life insurance actuarial reserves

A2.66 The value of output of life insurance can be
expressed with the following formula:

Plus
Minus
Minus
EqualsGross premiums earned
Bonuses (premium supplements)
Benefits due
Net increases in life insurance actuarial reserves
Life insurance services10

A2.67 Similar to nonlife insurance, reserves for unearned premiums and against outstanding insurance
claims are recorded in the other investment categoryof the financial account under Insurance, pension andstandardized guarantee schemes; but in addition there
are the actuarial reserves for life insurance and withprofit insurance that represent amounts set aside forpayments of benefits in future:11

Plus
Plus

Unearned premiums in accounting period
Increase in reserves for benefits outstanding
Changes in life insurance reserves (actuarial
reserves and reserves for with-profit insurance)

A2.68 Box A2.3 summarizes the BPM6 methodology as described in Annex 6c of the BPM6 manual,
regarding the balance of payments data on life insurance.
10
Alternatively, the service can be calculated as follows: total
investment income earned on the life insurance technical reserves
less the part of this investment income actually allocated to thepolicyholders and added to the insurance reserves (see 2008 SNA,
paragraph 6.199).
11
In the commercial accounts of insurance corporations, some ofthem may be described as provisions for bonuses (and rebates).
These comprise amounts intended for policyholders but not yet credited to policyholders, because these are often used by the insurer forsmoothing benefits over time (see also 2008 SNA, paragraph 13.77).

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Balance of Payments and International Investment Position Compilation Guide

Box A2.3 BPM6 Entries in the Balance of Payments Related to Life Insurance Transactions
Services account
The insurance service charge is derived implicitly with the following formula (see BPM6, Appendix 6c):
Insurance services = gross premiums earned
plus
bonuses (investment income attributable to life insurance policyholders)minus
beneﬁts due/incurredminus
net increases (plus net decreases) in life insurance actuarial reserves
Primary income accountInvestment income attributable to policyholders in insurance (equal to premium supplements)
Financial account
Changes in life insurance reserves
Currency and deposits (for actual premiums written and beneﬁts paid)

Example A2.7 Excerpt from an insurance company proﬁt and loss accounts
Insurance company X: Gross premiums by life insurance business line and region (in million U.S. dollars)
Economy A

Economy B

Economy C

Economy D

Other

Total

Individual
insurance

545.4

123.0

81.8

72.5

133.0

955.7

Group
insurance

1,586.4

78.8

36.0

40.4

–

1,741.6

74.9

96.1

–

14.1

4.6

189.7

2012

Unit-linked life
insurance
Reinsurance

–

–

–

–

6.9

6.9

2,206.7

297.9

117.8

127.0

144.5

2,893.9

Individual
insurance

577.1

118.6

137.4

65.3

133.5

1,031.9Group
insurance

1,555.3

28.6

20.4

34.6

–

1,638.9

84.6

64.1

–

8.4

–

157.1

Gross premiums
life insurance
2011

Unit-linked life
insurance
Reinsurance
Gross premiums
life insurance

–

–

–

–

4.5

4.5

2,217.0

211.3

157.8

108.3

138.0

2,832.4

A2.69 Insurance companies offer different typesof life insurance products. Insurance companies may
offer group insurance contracts concluded for companies’ employees, or insurance contracts for individuals (see Example A2.7). Group insurance has thedistinctive feature that the premium is determined by
the group of people eligible to purchase insurances
as a whole for reasons such as working for a particu-

lar employer, rather than related to cover a specific(high-) risk factor. Claims, however, are due individually. With regard to the type of investment, so-called
unit-linked life insurance policies are fund-linked
products where policyholders can determine the typeof investment by choosing a particular fund and thus
carrying the investment risk. A life insurance benefit may be paid as a lump sum or as an annuity. The

Insurance Transactions and Positions, and Pension Schemes

claim may be fixed or may vary to reflect the income
earned from the investment of premiums during theperiod for which the policy operates (with-profit policies). The unit-linked policy is a special kind of withprofit policies, because the claim varies according to
the value of the chosen fund. Accruing profits may
be paid out in part to the policyholder in the formof dividends. Other policies offer a guaranteed returnnot dependent on the company’s underlying investment performance.

Insurance on imports
A2.70 The point of uniform valuation is the freeon-board (f.o.b.) statistical value of exports at the customs frontier of the exporting economy (see BPM6,
paragraph 10.30). Imports are normally valued atcost, insurance, freight (c.i.f.), at the domestic custom
frontier by customs. To convert imports of goods tothe f.o.b. valuation, the value of freight and insurance
premiums incurred from the frontier of the exporting economy to the border of the importing economy
should be deducted (BPM6, paragraph 10.34), andincluded in balance of payments transport and insurance transactions in case a nonresident transporter orinsurer is involved.
A2.71 Insurance premiums are often estimated by
the compiler together with freight services on imports by345

sampling importers and agents of foreign transport operators, or extracting data from customs import documentation.12 In order to avoid overstating insurance services,a ratio can be used to estimate services from the reported
insurance premiums recorded in the secondary income
account. The ratio may be derived from the domestic
nonlife insurance industry and applied to premiums paid.
A2.72 It is often the case that freight insurance costs
are based on single events (the shipment of a good)
and are of short-term nature. They may be determinedby the insurance company based on the value of thespecific good being shipped (e.g., replacement costvalue, or invoice value), and the category of good thatis being shipped (e.g., fragile goods, hazardous materials). In those cases, advance payments for insurance
coverage can be recorded as current expense by thepolicyholder and as current revenue by the insurancecompany, rather than spreading the payments overtime. The claims are recorded when paid in the secondary income account. In cases where traders take out
insurance policies to cover their freight on a lump-sum
and long-term basis, insurance on imports is treatedthe same way as other nonlife insurance policies.

12

See in Chapter 11 more details on c.i.f.-f.o.b. conversion of
good’s value.

Box A2.4 Implementation of the BPM6: Insurance, Pension Schemes, and Standardized Guarantee
Schemes in the Case of Austria
Background
This example covers the implementation of insurances, pension schemes, and standardized guarantee schemes in accordance with the BPM6 in the case of Austria. Since the calculation of insurance transactions under the BPM6 has become
more sophisticated compared to the BPM5 (see BPM6, Appendix 6C), the Oesterreichische Nationalbank (OeNB) adapted
the collection and compilation of insurance data for the balance of payments and IIP statistics. Prior to the implementationof this new data collection system, the OeNB used less detailed administrative data from the Financial Market Authority(FMA) for insurance exports and mirror data from other economies of the European Union (EU) for imports. For the compilation of the insurance data, information from the national accounts was used—for example, the ratio of the long-term
relationship between net premiums and claims. Life/nonlife insurances position information was compiled from ﬂows only;
there were no data on claims, and the database differed between balance of payments statistics and national accounts. For
the coverage of reinsurance, primarily highly aggregated balance sheet data were available and the cross border / domestic distinction was based on the assumption that active reinsurance is predominantly a domestic business in Austria.
New data collection
In 2015, the EU will introduce the new Solvency II regulation for insurances to enhance consumer protection. The new
regulation allows the FMA to collect more detailed data. The new quarterly reports include data on cross border premiums and claims on a gross basis for direct insurance and reinsurance (best estimates) on an accrual and cash basis, broken
down by insurance division and by economy, including domestic business in Austria. The new annual report includes cross346

Balance of Payments and International Investment Position Compilation Guide

Box A2.4 Implementation of the BPM6: Insurance, Pension Schemes, and Standardized Guarantee
Schemes in the Case of Austria (continued)
border premiums and claims for reinsurance on an accrual and cash basis, broken down by economy. Additionally, theannual report includes ﬁnancial assets and liabilities from reinsurance by economy, and insurance technical reserves forindex linked and other life insurance. These data were used by the OeNB to adapt the compilation of insurance and pension schemes data to the BPM6 requirements.
New data compilation
Some adjustments were necessary to compile insurance, pension schemes, and standardized guarantee schemes for balance of payments and IIP statistics. Therefore, the OeNB implemented several calculations and derivations, which aredescribed ahead, to meet all needs for the compilation.
In order to receive more accurate results, the OeNB decided to adjust the general formula for the calculation of the insurance service charge for all types of insurances asdescribed in the BPM6. The adjustment—which is referred to in the BPM6
as the volatility of claims adjustments—was necessary as high claims could have led to a negative value for the service
charge. Therefore, the OeNB used the long-term spread ratio for the calculation:
BPM6 approach

OeNB approach

Insurance services = gross premiums earned

Insurance services = gross premiums earned

Pluspremium supplements

multiplied bylong-term “spread” between premiums andclaims (“ratio”)

Minusclaims due/incurredPluspremium supplements

The next step was the recording of net premiums and claims.Thenet premiumswere calculated as described in the BPM6:
Net premiums = gross premiums earned
plus
premium supplement
minus
service charge
For nonlife insurances, net premiums and claims were recorded in the secondary income, on different sides: if the insurance taker was a nonresident, premiums were recorded as credits and claims as debits, and vice versa if the insurancetaker was a resident.
For life insurances, the net premiums and claims were recorded as a transaction in other investment insurance technicalreserves,which covers net premiums increase (assets or liabilities) and claims decrease (assets or liabilities). The following
adjustments needed to be done for the compilation:
Transactions (+):
Financial transaction (increase) in insurance technical reserves by economy = gross premiums (accrual basis) for index
linked and other life insurance exports and imports by economy
plus
premium supplements (income)minus
service charge
Transactions (–):
Claims (accrual basis) vs. insurance companies per economy = ﬁnancial transaction (decrease) in insurance technicalreserves
Annual position reports on technical reserves were distinguished between index linked and other life insurances. However, there was no geographical breakdown. Therefore the geographical information received for the premiums was used
to derive a geographical breakdown of the positions. The differences between the annual positions and the sum of thequarterly transactions were recorded as other valuation adjustments, which were evenly distributed over the year.
Positions (annually including breakdown indexed linked and other)—recorded in the IIP:
Share by economy = premiums earned per economy
divided bytotal premiums

Insurance Transactions and Positions, and Pension Schemes

347

Box A2.4 Implementation of the BPM6: Insurance, Pension Schemes, and Standardized Guarantee
Schemes in the Case of Austria (continued)
Position in insurance service technical reserves per economy = total position in insurance technical reserves
multiplied byshare per economy
Other valuation adjustments = difference between opening position, transactions, and closing position
Financial assets and liabilities from reinsurance:
For ﬁnancial assets and liabilities from reinsurance the transactions by economy were derived from new quarterly(estimates by insurance companies) and annual balance sheet data (revisions were evenly distributed over quarters).
The positions by economy were reported annually together with the revised annual ﬂows. Quarterly (intra-annual) positions were estimated based on provisional quarterly transactions by economy. The annual difference between opening
position, transaction, and closing position were recorded as other valuation adjustments and evenly distributed over thequarters.

Active reinsurance = insurer

premiums paid
minus premiums earned

if + = increase in liabilities
if − = decrease in liabilities

Passive reinsurance = insurance takerclaims incurred
minus claims paid

if + = increase in liabilities
if − = decrease in liabilities

premiums paid
minus premiums earned

if + = increase in assets
if − = decrease in assets

claims incurred
minus claims paid

if + = increase in assets
if − = decrease in assets

Investment income attributable to policy holders (= premium supplements):
The premium supplements were recorded in the primary income receivable by policyholders. The same amount wasalso shown as payable to the insurance company by the policyholder as premium supplements in the secondary income
account.
Debits (liabilities vis-à-vis nonresident insurance takers):
Income ratio for rest of the world by economy = position in insurance technical reserves vis-à-vis rest of the world byeconomydivided bytotal position in insurance technical reserves
Income from insurance technical reserves per economy = income ratio by economy
multiplied byincome from ﬁnancial assets held by insurance sector(from direct and other investment according to balance of payments, from portfolio investment total)
Plausibility check = total income
dividedby position in insurance technical reserves vis-à-vis rest of the world
Credits (assets vis-à-vis nonresident insurance companies):
The average rate from debits/liabilities was applied on the position of technical reserves. The rate was still based on
cumulated ﬂows and mirror data, however, including beneﬁts.
Pension schemes and standardized guarantees:
The principal logic of the BPM6 for pension schemes and standardized guarantees is similar to life insurance claims andliabilities.
Service charge = gross contributions
plus
supplements
minus
beneﬁts payable
plus/minus
adjustments

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Balance of Payments and International Investment Position Compilation Guide

Box A2.4 Implementation of the BPM6: Insurance, Pension Schemes, and Standardized Guarantee
Schemes in the Case of Austria (concluded)
The market valuation of positions depends on the nature of the pension scheme. The deﬁned contribution schemes (function like mutual funds) are assets of the “fund”; the deﬁned beneﬁt schemes, which were based on “promised” beneﬁts,
both funded and unfunded, are equal to the present value of the “promised” beneﬁts.
Standardized guarantees are recorded as equal to the present value of expected calls under outstanding guarantees, netof any recoveries the guarantor expects to receive from the default parties.
Position-taking with Austrian insurance companies and Austrian pension funds resulted in the conclusion that cross borderpension entitlements and cross border provisions of standardized guarantees are not existing or rather insigniﬁcant. There
were no immediate actions taken for balance of payments compilation in these areas for the changeover to the BPM6. A
new stock-taking exercise will be carried out within the next years.
Difﬁculties encountered• Insurance companies are not able to deliver data for technical reserves positions by economy. Because these data
are necessary for the compilation of balance of payments and IIP statistics, the OeNB decided to estimate the
distribution by economy.
• The differentiation between accrual and cash data can be difﬁcult.
• Concerning data delivery, the OeNB relies on the supervisory data as well as the infrastructure and resources ofthe supervisory authority. This additional link between the insurance and pension fund companies and the OeNB
can add complexity and make communication more challenging. In addition, the OeNB depends to a large extent
on the developments in supervision regarding quality and details available.
Tables A2.2–A2.4 in the annex to this appendix show the collection and compilation of the insurance transactions in detail.

Employment-Related Pension Schemes
and Social Security Schemes
Introduction
A2.73 The availability, coverage, and mechanismsof pension systems benefitting individuals vary widelyfrom economy to economy. In the 2008 SNA the distinction of so-called social insurance schemes is madebetween social security and employment-related
schemes, based on the provider of these social insurance pensions. The part provided by general government is called social security if it meets certain criteria,
and the part by employers is called employmentrelated schemes other than social security (see 2008
SNA, paragraph 17.118).
A2.74 The estimation of pension services in theinternational accounts may be important in economies with high percentages of border workers, guest
workers, and international organizations that hire staff
from the host economy.
A2.75 There are two forms of employment-related
pension schemes, the defined benefit scheme and thedefined contribution scheme. Both schemes are financed
by contributions normally shared between the em-

ployer and the employee, which accumulate in special
funds, and from which benefits are paid and surplus
funds are invested to earn further income. The difference between these schemes lies in the determinationof the benefits payable to an employee on retirement,
which in turn is determined by who is bearing therisk of the scheme to provide an adequate income inretirement.
A2.76 Conceptually, these two schemes trigger
transactions in accounts similar to the ones in insurance accounting (see Insurance Transactions
and Positions); namely, the derivation of an outputof the pension fund is recorded in the services account, the net contributions made to the pension
fund are recorded in the secondary income account, the change in pension entitlements due totransactions is recorded in the financial accountas well as an adjustment item in the secondary income account, and the investment income earnedon existing entitlements is recorded in the primary
income account. However, the different featureswith regard to the benefits payable upon retirement
result in differences in the accounting concepts ofthese pension schemes and, consequently, in how

Insurance Transactions and Positions, and Pension Schemes

the compiler will design the reporting forms to
obtain the relevant information. This is further explained ahead.
A2.77 In general, the data for exports of cross border pension services are best captured by obtaining
information from resident pension funds. This enables
the compiler to undertake conceptual adjustmentsthat are necessary for the recording of these operationsin the balance of payments statistics.
A2.78 The same comprehensive approach will not
be feasible for obtaining imports of pension services
because the pension funds are nonresident of thecompiler’s economy. Thus when estimating pension
services the compiler should take into account dataon compensation of employees derived from the ITRS
and ratios available from domestic pension funds, orfrom a combination of estimates and assumptions,such as estimates of the portion of the population receiving pension services combined with estimates ofrates of pension compensation.
A2.79 Some social insurance is provided by thegovernment under a social security scheme. Accounting for social security funds is less complex, because
there are no funds invested on behalf of the beneficiaries, and instead, current workers’ contributions areused by the government entity operating the scheme
to pay out current benefits (the system is also known
as “pay-as-you-go”).
A2.80 In the absence of detailed international standards for accounting for cross border positions andtransactions of defined benefit and defined contribution pension funds, the compilation guidance contained in the following paragraphs is one acceptable
way of accounting for these pension plans in balanceof payments statistics.

deliver a pension at retirement, regardless of the return on investment. Making contributions to the pension plan alone usually does not satisfy the employer’s
obligation; rather, the employer remains obligated to
pay the defined retirement benefit, and has to decideon how much and where to invest, as well as monitor the progress of the investments.13 Thus the benefit
to the employee in the current period is determinedin terms of the undertakings made by the employer
about the level of pension ultimately receivable (see2008 SNA, paragraph 17.144).
A2.82 Under the accrual approach, the employer’s
contribution to the employee’s compensation is nolonger confined to the employer’s actual contributions
to the plan. Instead, it is the present value of the benefits to which employees become entitled as a resultof their service to the employer, and thus additional
contributions need to be imputed.
How do pension funds account under a deﬁned
beneﬁt scheme?

A2.83 The pension benefit is part of the compensation paid to an employee in future years after theemployee retires or terminates service. Generally, theamount of benefit to be paid depends on estimatesof relevant future events. Many of such events theemployer cannot control, and thus the benefit canbe estimated using only a pension plan’s benefit formula. In order to properly account for the liability,
many assumptions need to be made: (1) how many
more years the employee will work; (2) what the employee’s ending salary will be; (3) how many years theemployee will collect a pension in retirement; and (4)what the appropriate rate is to discount the liability
to present value. A simplified example of a formulathat determines the employee’s retirement benefits is
as follows:

Deﬁned beneﬁt scheme
Overview of deﬁned beneﬁt accounting

A2.81 In a defined benefit scheme the amount ofpension benefits accrues usually according to a function of one or more factors, such as age and length ofservice within the company, and will take into accountthe final salary, or the average of the last few years ofearnings. The distinctive difference to the defined contribution scheme is that the risk of the defined benefit
scheme lies with the employer in its commitment to349

multiplied bymultiplied by

Employee’s retirement benefits =Contract percentage
Number of years of service
Average salary on which benefits are
based

13
An employer may contract another unit to administer thepension fund and arrange disbursement to the beneficiaries. The
operator may simply act as the employer’s agent. A second option
is for a single unit to contract with several employers to manage
their pension funds as a multiemployer pension fund and assume
responsibility for meeting the pension obligations (see 2008 SNA,
paragraphs 17.163–17.166).

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Balance of Payments and International Investment Position Compilation Guide

A2.84 The accounting for a defined benefit plan iscomplex. The pension accounting rules in a defined
benefit scheme require recognizing the cost of benefits before the benefits are paid to retirees—that is, thecosts are recognized over the employees’ working period. Actuaries of pension funds have to build in theirestimation methods assumptions about economic developments (interest rates, salary increases, inflation)and demography (retirement age, life expectancy) inorder to determine the amount and timing of the future
benefit payments and their attribution to each year of
employment according to the pension benefit formula.

ing point is the so-called projected benefit obligation(PBO), the pension liability or the employee’s pension
entitlement, which determines the actuarial present
value of benefits attributed to an employee by the plan’sbenefit formula. It takes into account the employee’s
service to-date (assuming that the plan continues),
and assumptions on future compensation levels.15
A2.87 The PBO is affected by so-called service
costs,16 interest costs, actuarial gains/losses, contributions, and payment of benefits in the current period.
These are relevant terms for the compiler in order toderive from the pension funds’ books the entries forthe macroeconomic accounts:

A2.85 The application of this accrual accounting
method implies that recording of the actual cash flows
in the employer’s financial statement does not suffice;instead, the employer needs to compute the periodic(mostly calculated annually) pension cost incurred,
which comprises components that reflect different
aspects of the employer’s financial arrangements aswell as the cost of benefits earned by employees (seeExample A2.8). Pension costs are recognized in thecompany’s income statement and reduce reported
earnings.14 The cash payments are referred to as pension contributions a company makes to fund its designated pension plan (also called plan assets), which
comprises investments in positions, bonds, and otherinvestments to provide solely for pension benefits. The
assets in the pension plan and the earnings on thoseassets are available only for paying pension benefits.
These assets do not belong to shareholders, and earnings are not included in the company’s net income.

a. Service cost is the additional liability createdbecause another year has elapsed, for which all
current employees get another year’s credit for
their service; it is estimated as the actuarial present value of the benefits attributed by the pension benefit formula to services rendered by theemployees during the current period. In otherwords, it constitutes the value of benefits earned
by employees during the period.17
b. Interest cost is the additional liability createdbecause these employees are one year nearer to15

Another actuarial measure is the accrued benefit obligation(ABO), which is the present value of the future benefits to which
the employee has actually become entitled. The ABO is often used
to estimate the present value of an employee’s pension assumingthat the employee ceases to work for the company at the timethe estimation is made. The PBO is the ABO increased to reflect
expected future compensation and increases in the number ofyears of service.
16
The term “service” is a synonym for labor, work, employment,
and should not be confused with the term “services” in balance of
payments/IIP statistics.
17
Companies might also incur so-called prior service costs, which
are amortized changes in benefits resulting from a change in thepension contract.

A2.86 Several components are relevant to calculate the employer’s periodic pension costs. The start14
Based on prevailing accounting rules, companies may berequired to record certain accounts of pension plans directly intheir financial statements and make notes of other accounts inmemo records attached to the main financial statements.

Example A2.8 Excerpt of notes to a company’s ﬁnancial statement on plan asset allocation
Plan Asset Allocation
Principal pension plans
December 31

Target allocation (%)

2010 Actual allocation (%)

2011 Actual allocation (%)

Equity securities

51–63

69

60

Debt securities

21–27

19

20

Real estate

4–8

6

7

Private equities

5–11

6

7

Other

3–7

Total

6

6

100

100

Insurance Transactions and Positions, and Pension Schemes

351

Example A2.9 Excerpt of notes to a company’s ﬁnancial statement, projected beneﬁt obligation
Projected beneﬁt obligation (in million dollars)

Balance at January 1

2012

2011

37,82733,266

Service cost for beneﬁts earned

1,178

1,213

Interest cost on beneﬁts obligations

2,199

2,180

Participant contributions

163

169

Plan amendments–

654

Actual loss

1

969

2,754

Beneﬁts paid

–2,367–2,409Acquired plans––

Exchange rate and other adjustments––

39,96937,827

Balance at December 31
1

Principally associated with discount rate changes for principal pension plans.

their benefit payouts; the interest/discount rateis used to adjust for the time value of money.
c. Actuarial gains and losses arise from the difference between expected values (estimates) andactual values in a company’s pension plan. They
can result from changes in actuarial estimateswhen assumptions are adjusted concerning thefuture rate of salary increases, the length of employee service, the discount rate for the plan
obligations, and the expected rate of return onplan assets.
A2.88 The periodic cost of the pension plan, whichis recognized as part of the employer’s income statement under most widely followed financial accounting
rules, takes into account the difference between the expected return on plan assets and the service cost, interest cost, amortization of prior service cost, and net
actuarial losses or gains.

Example A2.10 Excerpt of notes to a company’s
ﬁnancial statement, cost of pension plan
Cost of Pension Plan (in million dollars)
2012

2011

Expected return on plan assets–4,258–4,245Service cost for beneﬁts earned

1,438

1,375

Interest cost on beneﬁt
obligation

2,516

2,390

Prior service cost

317

252

Net actuarial loss (gain)
recognized

242

–544

Total cost

255

–772

A2.89 The measure of the pension entitlement of adefined benefit plan participant is the present value ofthe benefits to which they are expected to become entitled, and not the actual assets of the plan. If the assets of adefined benefit plan are insufficient to pay the promised
benefits, the plan sponsor must cover the funding gap.
Accounting for a deﬁned beneﬁt scheme inbalance of payments statistics18

A2.90 The following paragraphs explain step-bystep which components are needed for capturing thecross border pension fund activities comprehensively
in the balance of payments statistics according to international standards, and how the compiler should
derive these from the information provided by pension funds. Although the entries are similar to theones in insurance accounting, the approach to manipulate the data in order to derive the balance of payments and IIP components are somewhat different.
Employer’s total contribution (actual andimputed contributions) and pension services

A2.91 In the defined benefit scheme, the costs associated with operating the scheme are borne by theemployer, and regarded as “a form of income in kind”
included with the employer’s contributions (see 2008
SNA, paragraph 17.149) to the employee’s compen-

18

The proposed approach to measure pension fund activities
largely reflects existing accounting practices in both private andpublic sectors. In many of the accounting standards, actuarial
amounts are used to measure the “current service cost” to business(i.e., labor cost). Information should therefore be observable in thebooks of the employers, and/or in pension funds’ own accounts.

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Balance of Payments and International Investment Position Compilation Guide

sation. Based on this, the total contribution of theemployer in one period is calculated in a way that, together with any actual contribution by the employee
and excluding the administrative cost, it matches theincrease in the PBO due to the service costs (see paragraph A2.88a)—that is, the pension earned by the employee during the year.19

Actuarial calculations determining
the increase of the PBO due to service
costs

A2.92 In Examples A2.11a–11c, the following assumptions are imputed for calculations:
Increase in pension entitlement, due tocurrent year’s employment20
Actual payments made by the employer
Actual payments made by the employee
Costs incurred in the current period to
run the pension fund

Example A2.11a Calculation of data for adeﬁned beneﬁt scheme1

Employer’s actual contribution

(–)

10.0

Employee’s actual contribution

(–)

1.5

Administrative costs of operating thescheme—estimated

(+)

0.6

Employer’s imputed
contribution—residual

15
10
1.5
0.6

It is assumed also that actual payments made by
the employer and employee are not sufficient to meetthe estimated increase in the benefits accruing from thepension earned during the year.
A2.93 The costs incurred to run the pension
fund are initially borne by the employer,21 and sothey should be included in the calculation of theemployer’s contribution (conceptually, they should
also be regarded as compensation in kind provided
to the employee). These administrative costs need
to be imputed by the compiler—for instance, as apercentage of the employer’s and employee’s actual
contributions in the current period (assumed equal
to around 5 percent). They constitute the pension
service that the balance of payments compiler needs
to record in the services account. An additional contribution from the employer of 4.1 is imputed tolevel the contributions with the increase in current
service costs.
A2.94 Thus, under the accrual approach, the measure of (cross border) compensation of employees
for participants in the defined benefit plan includes

19
Contributions to defined contribution schemes (explained
ahead) are recorded as the amounts actually paid in, because
these do not determine the net equity of households on an actuarial basis.
20
These actuarial estimates are carried out by the pension fund’s
actuary; they constitute the increase in the PBO due to service
cost.
21
The pension manager could be either the employer itself or aunit that has assumed the risk of meeting the pension obligations(see also 2008 SNA, paragraphs 17.149 and 17.151).

15.0

4.1

In the example, the employer mustoverall contribute 14.1 (= 10 + 4.1).
1

See 2008 SNA, paragraph 17.167.

the employer’s actual and imputed contributions to
the plans as payable by the employer and receivableby the employee (see BPM6, paragraph 11.22). It is
the present value of the benefits to which employees become entitled as a result of their service to theemployer, and adequately reflects the true cost to theemployer.
Investment income attributable to beneﬁciaries
in pension schemes

A2.95 As a next step, the investment income attributable to the employee is derived using the so-calledinterest costs of pension funds,22—that is, the increasein pension entitlements because the employee is one
year nearer to its benefit payouts. Conceptually, thismeans that the beneficiary earns imputed interest on
his or her actuarial entitlements, rather than the actualinterest and dividends earned by the pension fund on
its pension fund plan assets. Because the discount period becomes shorter, the net present value of defined
pension benefits grows the closer the employee is toretirement age.
A2.96 In pension accounting, the interest costs areusually calculated by pension fund actuaries as interest
rate multiplied by the PBO at the beginning of the financial year. Prevailing accounting standards advise on theinterest rates that are supposed to be used by pension
funds. The interest rate could be an estimated discountrate reflecting the market rate currently used to settle
benefits due, or a rate based on the expected return on
high-quality fixed income securities (e.g., long-term
22

In the 2008 SNA also called past service.

Insurance Transactions and Positions, and Pension Schemes

353

Example A2.11b Transactions for a deﬁned beneﬁt scheme
For recording the investment income attributable to beneﬁciaries in pension schemes in the primary income account:
Current year pension fund’s interest cost4

For recording net contributions receivable by the resident pension fund from the nonresident employee as well as the
beneﬁts payable/paid to retirees in the accounting period in the secondary income account:
Net contributions receivable by the resident pension fund from the employee
calculated as:

19 nonresident

Contributions actually paid by employer

10

Contributions actually paid by employee

(+)

1.5

Pension fund administrative costs

(–)

0.6

Employer’s imputed contribution (see Example A2.11a)

(+)

4.1

Investment income attributable to policyholders in pension schemes1(interest costs)
Beneﬁts payable/paid to retirees in accounting period
1

(+)

4
16

The term “policyholders” is used for convenience to assure consistency with the balance of payments standard component.

government bonds). Different plans will have different
valuation interest rates. The compiler needs to inquire
about the pension plans’ breakdown into its cross border components (data collection is discussed in Section
Data Collection ahead in this appendix).
A2.97 In Example A2.11b, in addition to the assumptions presented in paragraphs A2.94–2.95, theincrease in the entitlements associated with the passage of time during the year is calculated to be 4. The
remaining transactions for the defined benefit scheme
can be derived as follows.
A2.98 In cases when employers organize pension
schemes for their employees,23 the employers will
deduct the pension contributions from the employees’ compensation and pay them directly to the pension scheme; only the net compensation is paid tothe employees. The actual contributions received by
the retirement scheme from the employer (10) might
initially appear to constitute domestic transactions
in cases where the employer and the pension fundare resident in the same economy. In the international accounts, however, rerouting records a transaction as taking place in channels different fromthose observed (see BPM6, paragraph 3.16).24 In the

23
These are also called “occupational pension schemes”—that is,schemes that are established and financed voluntarily by individual employers/companies.
24
Similarly, employer pension contributions are rerouted to employee compensation for national accounts compilation purposes.

current account, therefore, the gross compensationof the nonresident employee should include the actual and the imputed contribution by the employer
to the defined benefit pension scheme, which is thendeemed to be paid in full (including the contribution
supplement and net of the administrative costs) tothe retirement scheme by the employee together withhis own contribution (see BPM6, paragraph 11.22).
In the financial account, other investment (currency
and deposits), the actual contributions payable by
the employer and the actual contributions receivableby the pension fund from the nonresident employee
are recorded in this example as increasing externalliabilities of the employer and increasing external assets of the pension fund.
Changes to pension entitlements

A2.99 In the continuation of the Example A2.11b,
the financial account transactions that are the change
in the pension fund entitlement (i.e., the change in
the PBO) are estimated by the increase of the liability
due to the service cost and the increase of the liability
due to the interest cost, less the benefits paid in the current period. This change in the pension fund’s liabilities
is recorded in the financial account under insurance,
pension, and standardized guarantee schemes as a supplementary item.25

25
The 2008 SNA adopted the approach of treating unfunded
employers’ pension schemes identically to funded employers’
pension schemes.

354

Balance of Payments and International Investment Position Compilation Guidefinancial and current accounts are reconciled (seeBPM6, paragraph12.39).

Example A2.11c Transactions for a deﬁned
beneﬁt scheme
For recording the insurance, pension, and standardized
guarantee schemes in the ﬁnancial account, otherinvestment:
Changes to pension entitlements calculated as:

3

Net contributions receivable by the resident
pension fund from the nonresident employee

191

Beneﬁts payable–16

Introducing an adjustment item: Adjustment for change
in pension entitlements
1

Net contributions receivable in this example, comprise of anincrease in PBO due to service cost of 15, and an increase in PBO
due to interest cost of 4.

Introducing an adjustment item: adjustment
for change in pension entitlements

A2.100 In the balance of payments/IIP accounts,
pension contributions and benefits are recorded as
current transfers in the secondary income account,
and as pension entitlements in the financial account.
In this respect the treatment is different from life insurance accounting, where premiums and benefits
are recorded only in the financial account, becausepart of the premiums paid by the policyholders are
regarded as savings and part of the benefits received
by the beneficiaries as withdrawals from savings (seeBPM6, paragraph 5.65).26 Policies that qualify as social insurance differ from insurance policies because
beneficiaries usually enter into the initiative by intervention of a third party, the government or the employer, who encourages or obliges the policyholder tomake provision for income in retirement (2008 SNA,
paragraph 17.51).
A2.101 When cross border transactions of pension
contributions and benefits are significant in an economy, in balance of payments/IIP statistics, an adjustment item must be recorded in order to “add back”
social contributions to and “subtract” pension receipts
from the secondary income account. As a result, thecurrent account is the same as if no current transfers
for contributions and receipts were recorded, and the26

The rationale for treating pension contributions and benefits
as current transfers is that, when looked at for the economy as awhole, the effect of pension provision can be seen as if it were a redistributive process among households (see 2008 SNA, paragraph9.23), and so it is important that disposable income of households
reflects these transactions (see BPM6, paragraph 12.37).

A2.102 From the viewpoint of compiling data froma resident pension fund, the reconciling adjustment
item would be recorded in the balance of payments
statistics of the compiler on the debit side as a deduction from the balance of the secondary income, and asa counter entry to the increase in pension entitlements(a credit entry) (see Example A2.11d).
Data collection

A2.103 Estimations regarding the pension fund interest and service costs attributable to nonresidents canbest be taken from the accounts of resident pension
funds. Through surveying domestic pension funds,
the compiler should be able to request information
on a conceptually correct basis as explained in Section
B.2—that is, actual and imputed contributions—aswell as pension entitlements and the interest earnedon actuarial entitlements.27
A2.104 Pension funds should likely be able to provide
either aggregate information on actual contributions
received from the respective companies on behalf of
their nonresident employees, or on average contribution rates relative to gross wages; information should
also be available on the benefits that are being paid toretirees abroad. The percentage points for the administrative costs (pension services) need to be imputedby the compiler—for instance, as a small percentageof the employer’s and employee’s combined estimatedcontributions in the current period. In general, thecompiler needs to inquire about the pension plans’
breakdown into its cross border components. Appendix 8 provides a model survey form for collecting datafrom pension funds.
A2.105 Due to the increasing attention in the lastfew decades to pension schemes and their role in theoverall system of retirement provision, in some economies surveys or central registrars have been established, which collect data on the domestic pension
industry. National accountants, government financestatisticians, or financial account statisticians might
already use these available sources for their own
27
The compiler can best assess the justification for the introduction of a new survey measured by the impact on cross border
employment on the balance of payments/IIP accounts.

Insurance Transactions and Positions, and Pension Schemes

355

Example A2.11d Recording of transactions for a deﬁned beneﬁt scheme in the balance of
payments statistics (economy of pension funds)
CreditServices
Insurance and pension services
Pension and standardized guarantees

Debit

0.6

Primary income
61.1 [47+10+4.1]1

Compensation of employees
Investment income attributable topolicyholders ininsurance, pension schemes,
and standardized guarantee schemes

4

Secondary income
Financial corporations, nonﬁnancial
corporations, households, and NPISHs
Other current transfers
Social contributions
Social beneﬁts

19 [10+1.5–0.6+4.1+4]
16

Adjustment for change in pension
entitlements

3
Net acquisition of ﬁnancial assets

Net incurrence of liabilities

Financial account
Other investment
Currency and deposits
Deposit-taking corporations, except
the central bank[accounts of employers]2[accounts of pension schemes]2
Insurance, pension, and standardized
guarantee schemes
Other sectors
Pension entitlements–57–4.5 [+10;+1.5;–16]+31Compensation of employees in this example consists of gross salary (47) including the actual contribution by the employees (1.5), plus actual
and imputed contribution of employers (10+4.1).
2
Entries are presented only for the purpose of showing the balancing entries; no balance of payments transactions are registered because they
are resident-to-resident transactions.

estimations. Pension funds may also be obliged tosend their monthly or annual reports on their assets,
income, and expenses together with actuarial information on their liabilities to government agencies
for auditing purposes or tax calculations. The compiler may want to focus on the actuarial information
found in the financial reports of the largest pension
plans and make estimations for smaller ones.
A2.106 Supervisory institutions may be a sourcefor qualitative aggregate information. Although balance sheets and profit and loss account informationfrom those institutions may have the caveat of longtimeliness, they may be combined with information
available from timelier external sector statistics (e.g.,
ITRS) or administrative data on cross border employment, for estimating an interim (moving) measure forthe distinction between national and international
business.
A2.107 Furthermore, in certain unionized sectors,
multiple domestic employers may agree with theirpension fund on so-called collective bargaining agreements, which may provide useful aggregate information or average shares for estimating employers’
contributions credited to nonresident beneficiaries.

356

Balance of Payments and International Investment Position Compilation Guide

A2.108 Estimations for pension transactions are
relevant for economies with high percentages of border workers, and guest workers in the domestic economy or abroad28, for economies with internationalorganizations whose staff return to retire in a different (e.g., home) economy, and for economies that are
preferred by retired people as “sunnier” locations. Information on cross border workers or “resident aliens”
can be sought from government agencies issuing work
permits and visas, or from tax authorities. The latterone may also be relevant for pension benefits paid toor received for current retirees as they may be subject
to domestic taxation or double tax treaties.
A2.109 Data from an ITRS will be on a cash basis andcapture only the compensation of employees net of contributions and benefits paid. For residents paying contributions to defined benefit pension funds abroad, thenet salary received on the domestic bank account would
need to be augmented by both employee and employer
contributions; information on average contribution rates
for employees and for employers could be used as starting point. Secondly, a small percentage thereof should
be derived as pension service payable to pension funds
abroad. The ITRS provides information on economies towhich salaries and wages are paid and from which they
are received. The compiler could contact the balance of
payments compilers in those economies respectively, toobtain appropriate ratios for their contribution rates andservices estimates. Alternatively, household surveys may
include or could be complemented to provide information on socioeconomic detail with reference to current
or past cross border employment. In case there is a pension fund in the domestic economy, information could
be available to build useful ratios on actual and imputed
contributions, and service costs.

Deﬁned contribution scheme
Overview

A2.110 Due to increasing demographic and financial pressures during the last few decades, there is a
shift from defined benefit schemes to defined contribution schemes, which means that the risk is borne
28
When guest workers return to the home economy, an entry inother changes in financial assets and liabilities account should berecorded for the reclassification of pension entitlements as incurrence of liability of pension schemes to nonresident returning
workers and an acquisition of the same asset by the economy ofreturning workers.

by the employee, because the pension solely depends
on the value of total contributions and investment
returns. Defined contribution plans have become thedominant form of plan in the private sector of many
economies.
A2.111 The defined contribution scheme defines thebenefits exclusively based on the level of the funds built
up from contributions over the employee’s working
life and on the performance of the financial assets acquired with the future pensioner’s contributions. The
pension scheme secures only a certain level of pensions, with the possibility that the returns on money
invested could be poor; the entire risk of receiving anadequate pension income in retirement lies therefore
with the employee, and not with the employer. The employer’s contribution may be established at the beginning of the contract, and the employee’s contributions
are in addition to the employer’s rate of contribution.
The pension scheme invests these contributions andprovides the employee with the accumulated sum on
retirement—for instance, in form of a lump sum or anannuity, with which the employee can secure a pension income. Defined contribution schemes, unlike
defined benefit schemes, are always funded.
How do pension funds account under a deﬁned
contribution scheme?

A2.112 The accounting for a defined contribution
plan is less complex than for a defined benefit plan.
There are no actuarial estimations applied by the fund,and there are no associated imputations. The employer’s contributions can be a fixed amount, or a percentage of the salary. The actual contributions are paid into
individual accounts and invested in financial markets;
thus the employer contributions to the account are
guaranteed, but not the success of the investments,
and thus not the future entitlements.29
Accounting for a deﬁned contribution schemein balance of payments/IIP statistics
Changes in pension entitlements

A2.113 Pension entitlements represent liabilities ofthe pension fund vis-à-vis its beneficiaries (see BPM6,
paragraph 7.65). The factors that trigger the change inpension entitlements in the current period, and thus
require recording in the international accounts, are29
Unlike in the defined benefit scheme, where the benefits areguaranteed, but the scheme itself may be funded or unfunded.

Insurance Transactions and Positions, and Pension Schemes

357

Table A2.1 International Investment Position Entries
IIP item

Opening
positionTransactions incurrent period

Other changes
in volume

Closing
position

Insurance, pension, and standardized
guarantee schemes

1,000

–20

+70

1,050

[liabilities in pension entitlementsof resident pension schemes tononresidents]

the difference between contributions receivable fromabroad less benefits payable to retirees abroad, and any
holding gains and losses earned from the investmentof the cumulated pension entitlements that contributeto the current market value of the assets of the fund(see BPM6, paragraph 7.65). The transaction for pension entitlements recorded in the financial accountunder insurance, pension, and standardized guarantee
schemes is the difference between net contributions receivable and benefits payable. Holding gains or losses
appear, however, in the revaluation account30 of the IIP.
A2.114 The change in net entitlements recorded in
the financial account can be negative, when benefits
payable exceed net contributions receivable. For example, under the assumptions ahead, the entries in the
IIP will be as presented in Table A2.1.
Liabilities in pension entitlements of resident pension
schemes vis-à-vis nonresident beneficiaries:
position at the beginning of the period
1,000
position at the end of the period
1,050
Contribution receivable during the period
120
Benefits payable during the period
140
Holdings gains and losses during the period
70
Income earned on cumulated entitlements
and the implicit service charge for running thedeﬁned contribution pension scheme

A2.115 Instead of attributing to beneficiaries theimputed investment income on their actuarial entitlements as is the case in defined benefit pension schemes
described in Insurance Transactions and Positions of
this appendix, in the defined contribution scheme, theactual value of the interest and dividends earned on
the plan assets are attributed to the participants.
30
The exact delineation between which changes in pension entitlements are treated as transactions and which changes are treated asother changes in the volume of assets is still being researched. The“Changes in pension entitlements” describes the present situation(see 2008 SNA, paragraph 12.61).

[120 – 140]

A2.116 Part of the income earned by the pension
scheme by investing the assets is used to meet the administrative costs of operating the pension fund on
behalf of the beneficiary. In macroeconomic accounting, these costs constitute the service charge payable
by the beneficiary and receivable by the pension fund
for this purpose. The remaining part of the income
is attributable to and reinvested by the beneficiaries
with the pension fund as contribution supplements(see 2008 SNA, paragraph 17.135).
Employers’ and employees’ contributions andbeneﬁts in the deﬁned contribution scheme

A2.117 The contributions and benefits are basedon actual payments and receipts during the specificperiod, of which the employer contributions are rerouted through the compensation of the employees. Social contributions payable by nonresidents toresident pension funds should be available from thepension fund, the official budget records, or from theresponsible agency (such as the ministry of social
security). Pension benefits payable to nonresidents
should be available from the pension fund, from official budget records, from the responsible agency(such as the ministry of social security), or from an
ITRS (see also Chapter 12).
A2.118 Information on the earnings on employees’
cumulated pension entitlements and the percentageof these earnings pension fund operators use to meetthe costs of operating the pension fund needs to be
estimated from the accounts of pension schemes. The
compiler should consult the funds administrators insplitting between liabilities to residents and nonresidents by using a suitable indicator, such as contributions receivable and/or benefits payable.
A2.119 With this information at hand from theresident pension fund, the compiler can derive thepension service charge due in the current period andthe corresponding net contributions as follows. In

358

Balance of Payments and International Investment Position Compilation Guide

Examples A2.12a–2.12c, the following assumptions
are imputed for calculations:
Employers’ actual contributions (onbehalf of nonresident employees)
Employees’ actual contributions
Estimated investment income attributable
to nonresident beneficiaries
of which: estimated percentage of income
attributable to beneficiaries
to meet the costs of operating the fund
Benefits paid to nonresident retirees

Example A2.12b Transactions for a deﬁned
contribution scheme (based on assumptions
and calculations presented in Example A2.12a)
Net contributions payablecalculated as:
Employers’ actual contributions (on behalf ofnonresident employees)
Employees’ actual contributions
Investment income attributable topolicyholders in pension schemes1
Pension service charge

11
11.5
17.6

8.5%
26

37.1
11
(+) 11.5(+) 16.1(–) 1.5

For recording the insurance, pension, and standardized
guarantee schemes in the ﬁnancial account, otherinvestment:
Change in pension entitlements
11.1
calculated as:

Example A2.12a Transactions for a deﬁned
contribution scheme1
For recording the pension services in the goods andservices account:
Pension services
1.5
calculated as:
8.5% of 17.6
The pension contribution supplements are calculated
based on the income distributed to households minus
the part used to meet the cost of operating the pension
fund (that represent pension services) (see 2008 SNA,
paragraph 17.135).
For recording the investment income in the primary
income account:
Pension contribution supplements

16.1

Net contributions receivable(+) 37.1

Beneﬁts payable(–) 26

1

See footnote 23.

BPM6, paragraph 3.16 for an explanation of rerouting), the contribution by the employer to the defined
contribution pension scheme is deemed to be paidin full (including the contribution supplement net ofthe administrative costs) to the retirement scheme by
the employee together with his own contribution, andthey are recorded in the example as increasing external liabilities of the pension scheme.

calculated as:
Estimated investment income attributable
to nonresident beneﬁciaries
Pension services

Adjustment for change in pension entitlements
17.6(–) 1.5

See 2008 SNA, Table 17.7.

1

A2.120 For defined contribution schemes, the net
total amount of contributions payable can be derived
as presented in Example A2.12b (see also BPM6, paragraph 12.35).
A2.121 As mentioned earlier, employers often makepension contributions directly to the pension schemeon an employee’s behalf; only the net compensationis transferred to the nonresident employees’ domesticbank account. The actual contributions received by
the retirement scheme from the employers (11 in Examples A2.12a and A2.12b) might initially appear as
a domestic transaction, in cases where the employer
and the pension fund are resident in the same economy. Through the rerouting of these transactions (seeA2.122 Similar to the defined benefit scheme, thepension contributions and benefits are recorded as
current transfers in the secondary income account,
and as pension entitlements in the financial account(see Defined benefit scheme). Therefore, when crossborder transactions of pension contributions andbenefits are significant in an economy, an adjustment item must be recorded in order to “add back”
social contributions to and “subtract” pension receipts from the secondary income account. As a result, the current account balance is the same as if nocurrent transfers for contributions and receipts wererecorded, and the financial and current account arereconciled (see BPM6, paragraph 12.39) (see Example A2.12c).
A2.123 Example A2.12c shows balance of payments
entries related to pension schemes. It is constructedbased on assumptions and calculations presented in
Examples 12a and 12b.

Insurance Transactions and Positions, and Pension Schemes

359

Example A2.12c Recording of transactions for a deﬁned contribution scheme in the balance of
payments statistics (economy of pension funds)
CreditDebit

Services
Insurance and pension services
Pension and standardized guarantees

1.4

Primary income
61 [38.5+11.5+11]1

Compensation of employees
Investment income attributable topolicyholders in insurance, pension
schemes, and standardized guarantee
schemes

16.11

Secondary income
Financial corporations, nonﬁnancial
corporations, households, and NPISHs
Other current transfers
Social contributions
Social beneﬁts

37.1 [11.1+11+16.1–1.5]
26

Adjustment for change in pension
entitlements

11.1
Net acquisition of ﬁnancial assets

Net incurrence of liabilities

Financial account
Other investment
Currency and deposits
Deposit-taking corporations, except
the central bank[accounts of employers]2[accounts of pension schemes]2–61+3.5 [+11;+11.5;–26]

Insurance, pension, and standardized
guarantee schemes
Other sectors
Pension entitlements+11.1

Compensation of employees in this example consists of net salary (38.5) plus actual contribution by the employees (11.5) plus actual contribution of employers (11).
2Entries are presented only for the purpose of showing the balancing entries; no balance of payments transactions are registered because they
are resident-to-resident transactions.
1

Data collection

A2.124 Pension funds managing defined contribution schemes should likely be able to provide to
the compiler either aggregate information on actual
contributions received from the respective companies on behalf of their nonresident employees, or on
average contribution rates relative to gross wages;
information should also be available on the benefits
that are being paid to current retirees abroad, as wellas on an estimated average of interest and dividends

earned on the beneficiaries’ plan assets and the administrative costs of operating the pension fund as
explained earlier. The compiler can also estimate itby taking a few percentage points of the employer’s
and employee’s combined estimated contributionsin the current period. In general, the compiler
should inquire about the pension plans’ breakdown
into its cross border components. Model form 13 inAppendix 8 presents a model survey form of pension funds.

360

Balance of Payments and International Investment Position Compilation Guide

A2.125 Data from an ITRS are on a cash basis andtherefore capture only the compensation of employees
net of contributions and benefits payable. For residents
paying contributions to defined contribution pension
funds abroad, the net salary received on the domesticbank account would need to be augmented by both
employee and employer contributions; information
on average contribution rates for employees and for
employers could be used as starting point. Secondly, asmall percentage thereof should be derived as pension
service payable to pension funds abroad. The ITRS
provides information on economies to which salaries
and wages are paid and from which they are received.
The compiler could contact the balance of paymentscompilers in those economies to obtain appropriate ratios for their contribution rates and services estimates.
A2.126 Household surveys may be a source of information or could be complemented to provide information on socioeconomic detail with reference tocurrent or past cross border employment. If there arepension funds in the compiling economy, informationfrom them could be used to build useful ratios for estimating imports of cross border pension services andrelated transactions.

Social security schemes
A2.127 Compared to the two employment-related
schemes discussed earlier, the statistical treatmentof social security schemes is rather simple (see 2008
SNA, paragraph 17.124). Social security funds are notinvested on behalf of the beneficiaries, and instead,current workers’ contributions and taxes are used by
the government operating the scheme to pay current
benefits (the system is also known as “pay-as-yougo”). There are no assets set aside and thus no financial account entries need to be made. There is also noneed to calculate pension services.
A2.128 Any contribution made by the employer onbehalf of nonresident employees directly to the social
security pension scheme is rerouted through compensation of employees, and is included together with thenonresident employees’ part in the secondary income
account as transferred to the social security fund (seeBPM6, paragraph 11.17).
A2.129 The social security benefits are recorded in
the secondary income account as payable in the economy of the social security fund, and as receivable in
the economy of the employee.

Earnings (debit)

Passive Reinsurance

Active Reinsurance

Travel Insurance

General Liability Insurance

Damaged Property Insurance

Fire and Other Property Insurance

Accident and Sickness InsuranceLife Insurance or Decease
Insurance

Sea, Air, and Other Transport
Insurance

Other Direct Insurance

Freight

Passive Reinsurance

Active Reinsurance

Credit and Credit Cards Insurance

Travel Insurance

General Liability Insurance

Damaged Property Insurance

Fire and Other Property Insurance

Accident and Sickness InsuranceLife Insurance or Decease
Insurance

Calculations

premiums earned * Ratio (domestic) = Service charge

Gross premiums earned * Ratio (domestic) + Premium
supplements = Service charge
Calculation of premium supplements:- Use once a year the foreign share in general provisions- Use of quarterly ratios on revenues from ﬁnancial assets of
the insurance (equity investment and security investment inforeign countries, portfolio investment in total)- Plausibility: Use the proportion of revenues calculated fromthe quarterly provisions’ stock- Breakdown by country of the revenues from the distributionof the reported gross premiums

Estimation based on stocks of life-insurance and average performance of
insurance companies portfolio investment assets

Gross premiums earned * + Premium supplements - Service charge = Net
premiums

Reinsurance

Other Direct
Insurance

Freight

Other Life Insurance

Sea, Air, and Other Transport
Insurance

Other Life
Insurance

Source: Oesterreichische Nationalbank

Estimation

Accruedbeneﬁts(actual)Premiums
earned(accrual)Funds and Index
Linked Life
Insurance

ReportFunds and Index Linked Life
Insurance

Balance of payments

Table A2.2 Data Collection and Compilation of the Insurance Transactions for the Current Account

Annex to Appendix 2

Insurance beneﬁts

Net premiums nonlife

Reinsurance (service charge)

Other direct (service charge)

Freight (service charge)

Fictive distribution of earnings from technical provisions(premium settlements)

Current transfers (debit)

Current transfers (credit)(credit)Services

Life (service charge)

Current AccountPremiums earned(accrual)

Passive Reinsurance

Active Reinsurance

Credit and Credit Cards
Insurance

Travel Insurance

General Liability Insurance

Damaged Property Insurance

Fire and Other Property
Insurance

Accident and Sickness
Insurance

Life Insurance or Decease
Insurance

Reinsurance

Other Direct
Insurance

Freight

Other Life Insurance

Other Life Insurance

Sea, Air, and Other Transport
Insurance

Funds and Index
Linked Life Insurance

ReportFunds and Index Linked Life
Insurance

Calculations

Premiums earned * Ratio(STAT domestic) = Service
ChargePremiums earned * Ratio(domestic) + Premium
supplements = Service charge
Calculation of Premium
supplements:- Use once a year the foreign
share in general provisions- Use of quarterly ratios onrevenues from ﬁnancial
assets of the insurance(equity investment andsecurity investmnet inforeign countries, portfolio
investment in total)- Plausibility: Use theproportion of revenues
calculated from thequarterly provisions’ stock- Breakdown by countryof the revenues from the
distribution of the reported
gross premiums

Other Investment - Insurance Technical
Reserves

Balance of Payments

Table A2.3 Data Collection and Compilation of the Insurance Transactions for the Financial AccountEarned premiums reported
in total (debit)+ or (credit)–

Counterpart: Other
Investment - Currency andDepositPassive Reinsurance

Active Reinsurance

Passive Reinsurance

Active Reinsurance

Source: Oesterreichische Nationalbank

Services paid

Premiums paid

Accrued beneﬁts(accrual)Sea, Air, and Other Transport
Insurance
Life Insurance or Decease
Insurance
Accident and Sickness
Insurance
Fire and Other Property
Insurance
Damaged Property Insurance
General Liability Insurance
Travel Insurance
Credit and Credit Cards
Insurance
Active Reinsurance
Passive Reinsurance

Other Life Insurance

Funds and Index Linked Life
Insurance

Other Life Insurance

ReportFunds and Index Linked Life
Insurance

Accrued beneﬁts Paid beneﬁts = + =Incresase in liabilities= – = Decrease
beneﬁts
Premiums paid Premiums earned = += Increase in claims =– = Decrease in claims
Accrued beneﬁts Paid beneﬁts = + =Incresase in liabilities= – = Decrease
beneﬁts
Accrued beneﬁts Paid beneﬁts = + =Increase in claims =– = Decrease in claims

Premiums earned - Service Charge = Net premiums

Calculations

Claims from Passive Direct/
Reinsurance (credit)+ or(credit)–Liabilities from Active
Direct/ Reinsurance (debit)+or (debit) –Increase inclaims/ Decrease
in claims

Increase inliabilities/
Decrease inliabilities

Other Investment - Insurance Technical
Reserves
Technical provisions from
Increase inFunds and Index-Linked Life liabilities
Insurance (debit) –Technical provisions from
Increase inother Life insurance (debit) liabilities+
Technical provisions from
Decrease infunds and index-linked Life liabilities
insurance (debit) +Technical provisions from
Decrease inother Life Insurance (debit) liabilities–

Balance of Payments

Table A2.3 Data Collection and Compilation of the Insurance Transactions for the Financial Account (concluded )Calculated increase/decreasein liabilities (credit)+ or(credit)–Calculated increase/decrease
in claims (debit)+ or (debit)–

Accrued beneﬁts reported
in total (credit)+ or (debit)–

Counterpart: Other
Investment - Currency andDepositSource: Oesterreichische Nationalbank

Passive
Reinsurance

Active Reinsurance

Passive
Reinsurance

Claims from passive
direct/reinsurance

Liabilities from
active direct/
reinsurance

Premiums
paidServicespaid

Liabilities fromtechnical provisions
from other life
insurance

Accrued beneﬁts (accrual)

Active Reinsurance

Liabilities fromtechnical provisions
from funds andindexlinked life
insurance

Position

Premiums earned (accrual)

ReportUpdated cumulative transactions
during the year once a year
compared with the reports

Updated cumulative transactions
during the year once a year
compared with the reports

Updated cumulative transactions
during the year once a year
compared with the reports

Updated cumulative transactions
during the year once a year
compared with the reports

Position at the beginning of theperiodIIP

Calculated
increase/decrease inclaimsCalculated
increase/decrease inliabilities

Increase in liabilities= Net premiums
Decrease in liabilities= accrued beneﬁts

Increase in liabilities= Net premiums
Decrease in liabilities= accrued beneﬁts

Transaction

Table A2.4 Data Collection and Compilation of the Insurance Positions for the IIP

Position at the end of the period- Position at the beginnig of theperiod- Transaction

Position at the end of the period- Position at the beginnig of theperiod- Transaction

Position at the end of the period- Position at the beginnig of theperiod- Transaction

Position at the end of the period- Position at the beginnig of theperiod- Transaction

Other

Position at the
beginning of theperiod + Transaction

Position at the
beginning of theperiod + Transaction

Position at the
beginning of theperiod + Transaction

Position at the
beginning of theperiod + Transaction

Position at the end of
the period

364
Balance of Payments and International Investment Position Compilation GuideAPPENDIX

3

Financial Intermediation Services
Indirectly Measured

Overview
A3.1 The 2008 SNA and BPM6 financial intermediation services indirectly measured (FISIM) comprises
financial service output for which producers do not
explicitly charge. Instead, they levy an implicit charge
in the spread between interest rates receivable on financial assets and interest rates payable on financial
liabilities. The 2008 SNA and BPM6 recognize FISIM
produced only by certain financial corporations andonly on the loan and deposit instruments on their balance sheets.
A3.2 From the financial corporations’ viewpoint,
FISIM on loans is the difference between interest receivable and the interest cost of funds calculated at areference rate on the loan balance. On deposits, FISIM
is the difference between interest payable at the reference rate on the deposit balance and actual interest
payable to depositors. Depositors receive both themonetary interest payable and financial services formaintaining a balance with a deposit-taking financial corporation. The value of the financial services
depositors receive is an implicit rather than explicit
charge. The reference rate is described in both the
BPM6 and the 2008 SNA as a rate “contain[ing] noservice element and reflect[ing] the risk and maturity
structure of deposits and loans.” In general, FISIM
on the loan assets and deposit liabilities of financial
corporations is expected to be positive and a part oftheir output.
A3.3 The focus of the BPM6 is on FISIM as a component of exported and imported services. FISIM
exports comprise the indirectly measured financial
services supplied on the loan assets and deposit liabilities of resident financial corporations for which
the counterparty is a nonresident unit. FISIM imports
comprise indirectly measured financial services purchased by resident units from all institutional sectors(mostly nonfinancial) on their loan liabilities and deposit assets with nonresident financial corporations.
A3.4 Table A3.1 shows FISIM exports in the context
of international classifications of products, activities(establishments), financial instruments, and companies (institutional units). Table A3.2 shows FISIM
imports in the context of the same internationalclassifications.
A3.5 Table A3.2 shows that FISIM imports are purchased by resident holders of deposit assets and loan
liabilities vis-à-vis nonresident financial corporations.
Notice that any resident institutional sectors may import FISIM. For FISIM exports the data collected fromthe resident financial corporations suffices, while for
FISIM imports, data should be collected from all resident institutional sectors.
A3.6 The following paragraphs briefly introduce
the concept of indirectly measured financial services
following BPM6 methodology in Box 10.5 and as described in the 2008 SNA, paragraphs 6.163–6.169 and17.249–17.257.

The Reference Rate
Note: the text in this section is indicative only, because
clarification of BPM6 and 2008 SNA language on determining the reference rate is the subject of review by international bodies.

A3.7 As noted in Overview, for loans, FISIM is thedifference between loan interest and the cost of funds
at the reference rate, and for deposits, FISIM is thedifference between the cost of funds at the reference
rate and the interest actually payable to depositors.
The 2008 SNA refers to the cost of funds at the reference rate as “SNA interest.” The reference rate thus isa key variable in compiling FISIM and in determining interest flows to and from deposit-taking and/

Financial instruments

Balance of payments institutional units

7114: Financial leasing services

71139: Other credit-granting services

71135: Non-mortgage loan services forbusiness purposes

71134: Credit card loan services

71133: Personal non-mortgage loan services
for nonbusiness

Captive ﬁnancial corporations andmoney lenders (S127)

Other ﬁnancial intermediaries, except
insurance corporations and pension
funds (S125)

Money market funds2 (S123)

Other ﬁnancial corporations

Deposit-taking corporations except thecentral bank (S122)

AF4: Loans

71131: Residential mortgage loan services
71132: Non-residential mortgage loan services

Central bank (S121)

Assets7113: Credit-granting services

AF29: Other Deposits

AF221: Interbank positions
AF229: Other transferrable
deposits

Central banking services (71110) include “services of maintaining deposit accounts for major ﬁnancial institutions and for the central government” (United Nations, CPC version 2.0 Explanatory
Notes). Loan/credit services of the central bank are not explicitly mentioned under this category.
2
Money market funds (S123) are classiﬁed as monetary and ﬁnancial institutions in monetary statistics along with the central bank (S121) and deposit-taking corporations (S122). Their investment fundshares (AF521) are generally included in the monetary position along with deposits (AF229) in monetary statistics. Like other investment funds, the service charge of money market funds is the difference between the yield on the investment portfolio and the rate paid to shareholders. Normally, investment funds publish this margin as a so-called expense ratio. As such, the calculation of their output
is similar to FISIM, except that it applies to securities assets and investment fund share liabilities rather than deposit and loan instruments and is considered an explicit service charge rather than FISIM.

1

Deposit-taking corporations except thecentral bank (S122)

AF22: Transferrable deposits

71121: Deposit services to corporate andinstitutional depositors
71122: Deposit services to other depositors

Central bank (S121)

Liabilities

7112: Deposit services

AF4: Loans

AssetsAF29: Other Deposits

AF221: Interbank positions
AF229: Other transferrable
deposits

AF22: Transferrable deposits

Financial services provided in association
with interest charges on loans and deposits(paragraph 6.160b, 6.163–6.169)

Central bank (S121)

BPM6 institutional sector (2008 SNA
sector code)

711: Central banking services1
Liabilities

2008 SNA—ﬁnancial instrumentsof resident institutional units thathave nonresident counterparties

Central bank market services (paragraphs
6.151–6.156)

Exports (SNA P62)

Central Product Classiﬁcation, version 2.0(CPC, ver. 2.0)—71—Financial services, except
investment banking, insurance services andpension services

Products

Table A3.1 Exports of Financial Intermediation Services Indirectly Measured (FISIM) in the Context of International Classiﬁcation Standards

366
Balance of Payments and International Investment Position Compilation Guide

Source: IMF Staff

General government (S13)

AF22: Transferrable
deposits

71121: Deposit services to corporate and institutional
depositors

Nonﬁnancial corporations (S11)Households (S14)NPISH (S15)71133: Personal non-mortgage loan services for nonbusiness
71134: Credit card loan services
71135: Non-mortgage loan services for business purposes

7114: Financial leasing services

71139: Other credit-granting services

Other ﬁnancial corporations (S121–S127)

General government (S13)

AF4: Loans

71131: Residential mortgage loan services
71132: Non-residential mortgage loan services

Central bank (S121)

NPISH (S15)Households (S14)

Nonﬁnancial corporations (S11)Other ﬁnancial corporations (S121–S127)

Liabilities

AF29: Other Deposits

AF221: Interbank
positions
AF229: Other
transferrable deposits

7113: Credit-granting services

71122: Deposit services to other depositors

Central bank (S121)

AssetsNonﬁnancial corporations (S11)Other ﬁnancial corporations (S121–S127)

7112: Deposit services

AF4: Loans

Liabilities

AF29: Other Deposits

AF221: Interbank
positions
AF229: Other
transferrable deposits

Financial services provided
in association with interest
charges on loans and deposits(paragraph 6.160b, 6.163–6.169)

General government (S13)

AF22: Transferrable
deposits

7111: Central banking services

Central bank (S121)

BPM6 institutional sectors

Balance of payments institutional units

Assets2008 SNA—ﬁnancial
instruments with asset/
liability status of resident
institutional units

Financial instruments

Central bank market services(paragraphs 6.151–6.156)

Imports (SNA P72)

2008 SNA—Central Product Classiﬁcation, version 2.0 (CPC,ver. 2.0)—71—Financial services, except investment banking,insurance services and pension services

Products

Table A3.2 Imports of Financial Intermediation Services Indirectly Measured (FISIM) in the Context of International Classiﬁcation Standards

Financial Intermediation Services Indirectly Measured
367

368

Balance of Payments and International Investment Position Compilation Guideor loan-making financial corporations in the income
accounts. According to the BPM6:
10.129 FISIM payable by each of the depositors
and borrowers are calculated by using the conceptof a “reference” rate of interest. The reference rateshould contain no service element and reflect therisk and maturity structure of deposits and loans.
The rate prevailing for interbank borrowing andlending may be a suitable choice as a reference
rate. A single rate should be used for transactionsin the domestic currency, whereas different rates
should be applied for loans and deposits in othercurrencies. The reference rate will change overtime with market conditions.
A3.8 This is closely similar to the language regarding the reference rate in the 2008 SNA, paragraph 6.166:
The reference rate to be used in the calculationof SNA interest is a rate between bank interest
rates on deposits and loans. However, because
there is no necessary equality between thelevel of loans and deposits, it cannot be calculated as a simple average of the rates on loans
or deposits. The reference rate should containno service element and reflect the risk andmaturity structure of deposits and loans. The
rate prevailing for inter-bank borrowing andlending may be a suitable choice as a reference
rate. However, different reference rates may beneeded for each currency in which loans anddeposits are denominated, especially when anonresident financial institution is involved.
For banks within the same economy, there isoften little if any service provided in association with banks lending to and borrowing fromother banks.1
A3.9 The 2008 SNA and BPM6, while specifying no more than one reference rate per currencyof denomination, thus allow some flexibility in determination of those rates, advising that they shouldreflect the risk and maturity structure of deposits and loans, but that the interbank rate may be
1
The qualifier “For banks within the same economy” allows
that FISIM may be significant for interbank positions whosecounterparty institutions are resident in different economic
territories, the context of this appendix.

suitable.2 If the interbank rate is deemed suitable,
the reference rate can be calculated as the interbank
rate used for calculating FISIM for domestic sectors.3 Economies have implemented or tested a few
other alternatives.
A3.10 Ideally reference rates for imported FISIM(from nonresident financial corporations with deposit liabilities to or loan claims on residents) should
be calculated for each economy of residence of the financial corporation that supplies the import services,preferably the reference rate used in the calculationsof FISIM by the statistical authorities of that economy.
If these data are not available, then reference rates
considered relevant for assets/liabilities denominatedin different currencies or groups of currencies may be
used, if data are available for each currency/group of
currencies.

Estimation of Export
and Import of FISIM
Export of FISIM
A3.11 Exports of FISIM for loans granted to nonresidents should be compiled using the reference rate
for domestically produced FISIM as interest receivableless the product of the loan position and the (domestic) reference rate, if it can be assumed that most loans
to nonresidents are in national currency. Exports of
FISIM for deposits of nonresidents (excluding financial corporations) can be estimated as the product ofthe deposit position and the domestic reference rate,
less interest payable.
A3.12 In calculating loan and deposit positions,
it is useful to obtain data on beginning and end of
period positions, so that average positions can becalculated. Thus, data needed for the estimations ofexport of FISIM could be collected in the following
format:2

The interbank rate is not suitable when it does not “reflect
the risk and maturity structure of deposits and loans.” As such,alternatives, such as the average cost of funds to the financial
corporations sector, are likely to be better choices for the reference rate.
3
There also has been some discussion that a different rate may
be needed for each currency in which loans and deposits aredenominated, but this question has not been fully resolved.

Financial Intermediation Services Indirectly Measured

Positionat thebeginningof period

Position at
the end of
periodInterest
receivableby resident
ﬁnancial
corporations

Loans tononresident
nonbanks

Positionat thebeginningof period

Position at
the end of
period369

Interest
payable byresident
ﬁnancial
corporations

Deposits ofnonresident
nonbanks

Import of FISIM
A3.13 Imports of FISIM for loans received fromnonresidents can be estimated as interest payable tononresident financial corporations less the productof the loan position and the reference rate for theapplicable funds lent. Imports of FISIM for deposits
with nonresident financial corporations can be estimated as the product of the deposit position multiplied by the reference rate for the funds deposited,
Positionat thebeginningof period

Position at
the end of
periodless the deposit interest receivable from the nonresident FISIM provider.
A3.14 The data needed for the estimations of import of FISIM could be collected for each institutional
sector in the following format:

Negative FISIM
A3.15 In cases where calculation of FISIM by financial corporations is negative, for practical reasons,the compiler may wish to assume that FISIM is zero.

Interest
payable byresident tononresident
ﬁnancial
corporations

Loans received
from nonresident
ﬁnancial
corporations(by economyof lender)(encouraged)

Balance of Payments Entries
Related to FISIM
A3.16 Box A3.1 presents entries that should be
registered in balance of payments related to FISIM.

Data Sources
Reference Rate
A3.17 For exports, the reference rate is, in principle, the cost of funds from the liability side of resident
financial corporations’ balance sheets. For imports,
the reference rate is, in principle, the cost of funds
from the liability sides of nonresident financial corporations’ balance sheets by economy of residency.
The data sources available for economies’ own financial corporations sectors and for those of their FISIM

Positionat thebeginningof period

Position at
the end of
periodInterest
receivableby resident
users fromnonresident
ﬁnancial
corporations

Deposits withnonresident
ﬁnancial
corporation (byeconomy of issuer)(encouraged)

trading partners will, however, tend to control the
specific approach to determining the relevant reference rates for international trade in FISIM.4
4
The Advisory Expert Group to the Inter-Secretariat Working
Group on National Accounts , which includes national accountants experts from a number of government statistical agencies
and central banks, recommended at its meeting in May 2013 thefollowing practical guidelines for setting the reference rate for thefinancial corporations sectors of a given economy:
The calculation (definition) of the reference rate should bedetermined according to national circumstances, using preferably
any of the following approaches:(1) A reference rate based on a single observable rate for a specific instrument, such as interbank lending rates(2) A reference rate based on a weighted average of observablerates of maturities with different terms (weighted by the positions of loans and deposits in each maturity)(3) A weighted average of the interest rates on loans and deposits.

370

Balance of Payments and International Investment Position Compilation Guide

Box A3.1 Balance of Payments Entries Related to Financial Intermediation Services Indirectly
Measured (FISIM)
Services accountFinancial services
FISIM is derived with the following formula (see BPM6 Box 10.5):
FISIM exports = interest receivable on deposits held at resident ﬁnancial corporations by nonresidents at the domestic
reference rate of interest (the product of deposits position and the domestic reference rate) − actualinterest payable on deposits held at resident ﬁnancial corporations by nonresidents + actual interest receivable on loans issued by resident ﬁnancial corporations to nonresidents − interest (property income)receivable on loans issued by resident ﬁnancial corporations to nonresidents at the domestic reference
rate of interest (the product of loan position and the domestic reference rate)
FISIM imports = interest payable on deposits held at nonresident ﬁnancial corporations by residents at the reference
rate of interest of the economy of issuer (the product of deposits position and the reference rate forthe economy of residence of the ﬁnancial corporation issuing the deposits − actual interest receivable
on deposits held at nonresident ﬁnancial corporations by residents + actual interest payable on loans
issued by nonresident ﬁnancial corporations to residents − interest (property income) payable onloans issued by nonresident ﬁnancial corporations at the reference rate of interest of the economy ofissuer to residents (the product of loan position and the reference rate for the economy of residenceof the ﬁnancial corporation that supplies the loan)
Primary income accountInterest (at the reference rate)
Secondary income accountNone
Financial accountDeposits1
Loans
1

Including interbank positions, other transferable deposits, and other deposits.

A3.18 For exports, data for directly calculating thereference rate can be the same reference rate used to calculate total domestic FISIM output, if it can be assumed
that transactions are mostly in national currency.
A3.19 For imports, in the interest of global consistency of international trade statistics, the reference
rates by supplying economy can be the respective domestic reference rates from the FISIM calculations of
those economies’ national accounts. For that reason,
it would be helpful if economies disseminate their domestic reference rates for possible use by nonresident
compilers.
A3.20 For economies where the interbank market
does not exist, considering that no internationally accepted methodological guidance exists, the compiler
may pick, for practical purposes, a reference rate froma representative government debt security.

Deposit and Loan Interest Flowsand Positions between Residents
and Nonresidents
A3.21 The data sources for interest flows can besourced from the balance of payments and for deposit
and loan positions from the international investment
position.
Financial corporations—FISIM exports
and imports

A3.22 The most comprehensive data for exports
and imports of FISIM come from surveying resident
financial corporations to identify deposits of and loans
to nonresidents. In most instances, these data will beavailable from the administrative data collections of financial supervision authorities, which are usually mostcomprehensive for deposit-taking corporations. Coverage of captive financial corporations and money lenders

Financial Intermediation Services Indirectly Measured

may require fielding a supplementary survey, depending on the regulatory and legal environment. International banking statistics (IBS) available from the Bankfor International Settlements (BIS) may also be a useful source of information on deposits and loans withnonresidents.
A3.23 The balance of payments compiler should
coordinate with the national accounts compiler, to assure that the calculation of FISIM in the balance of
payments accounts is consistent with estimates included in the national accounts.
Nonﬁnancial corporations, households,
and NPISH—FISIM imports

A3.24 Data on residents’ accounts with financial corporations resident in other economies may
be available from sample surveys. These surveys are
selected from a survey frame list built on special filings of resident individuals and corporations report-

371

ing positions with nonresident financial corporations
to the tax authorities or treasury/finance ministry.
A sample survey of units selected from this frame
can be used for routine reporting of positions withnonresidents. IBS available from the BIS may also be
a useful source of information on deposits and loans
with nonresidents by the nonbank sector.
A3.25 As for financial corporations, also here thebalance of payments compiler should coordinate
with the national accounts compiler, to assure thatthe calculation of FISIM in the balance of payments
accounts is consistent with estimates included in thenational accounts.
General government—FISIM imports

A3.26 Balances and interest flows on general government accounts with nonresident financial corporations should be available from the government
financial accounts.

APPENDIX

4

Foreign Direct Investment

Introduction
A4.1 This appendix presents additional materialon treatment of direct investment (DI)1 in international accounts. It provides further detailed discussion on some complex conceptual aspects of the DI,
as well as further discussion of the compilation of
DI profits.
A4.2 DI arises when a unit resident in one economy makes an investment that gives control or a significant degree of influence over the management of
a company that is resident in another economy. This
concept is operationalized where a direct investor
owns equity that entitles it to 10 percent or more of
the voting power (if it is incorporated, or the equivalent for an unincorporated company) in the direct
investment enterprise (DIENT). Voting power is usually equal to ownership of ordinary shares. Once thatthreshold has been reached, the entities involved aresaid to be in an immediate DI relationship when they
are residents in different economies. The equity anddebt transactions and positions between the direct
investor and the DIENT, and between all DIENTs of
the same direct investor, are included in DI, except
for debt between selected financial intermediaries.
DI also includes transactions and positions between
companies that are in indirect DI relationships (seeparagraph 10.7 in Chapter 10 for defining direct investment relationships). In summary, DI statistics
comprise cross border transactions and positions between companies that are in a DI relationship.
A4.3 The coverage of DI for analytical purposes
includes income flows and financial transactions recorded in the direct investment functional category
in the balance of payments and financial positions

1
In this appendix, the terms “direct investment” and “foreign
direct investment” are used interchangeably and have the same
meaning.

recorded in the direct investment functional category
in the IIP.
A4.4 DI tends to involve a lasting relationship of adirect investor with the DIENT to ensure a significant
degree of influence by the direct investor in the management of the DIENT, although it may be a shortterm relationship in some cases. By the very nature ofits motivation, DI tends to promote stable economic
links between economies through direct access for direct investors in home economies to production units
in host economies. Within a proper policy framework, DI assists host economies in developing local
companies, promotes international trade throughaccess to markets, and contributes to the transfer oftechnology and know-how. In addition to its direct effects, DI has an impact on the development of laborand financial markets, and influences other aspects ofeconomic performance through its other spillover effects. For these reasons, DI is of analytical and policy
interest in its own right, in addition to its contribution
to broader macroeconomic indicators.
A4.5 In addition to the discussion of DI in the various chapters of this Guide (investment income flows
in Chapter 13, financial transactions in Chapter 10,
and positions in Chapter 9), Appendix 6a of the BPM6
discusses various issues in DI. The IMF conducts the
Coordinated Direct Investment Survey (CDIS), a collection of inward and outward FDI positions, and the
CDIS Guide provides further discussion of DI.2 In addition, the Organisation for Economic Co-operation
and Development (OECD) has a leadership role in research on DI concepts, undertakes a collection of DI
positions, transactions, and income flows from member economies, and publishes the OECD Benchmark
Definition of Foreign Direct Investment, 4th edition,

2
The CDIS database as a data source is also discussed in
Chapter 7.

Foreign Direct Investment

which describes a range of analytical constructs to assist with the further analysis of DI statistics.
A4.6 This appendix deals with specific issues associated with measuring and analyzing DI.

Statistical Units
A4.7 The choice of statistical unit is one of themost important decisions that the compiler will makefor the compilation of DI statistics. The choice of statistical unit for collection and compilation purposes
can affect the classification of data and, in some cases,
may affect the extent of DI relationships that are
identified.

Company
A4.8 A company is defined as an institutional unit
engaged in production. Investment funds and othercorporations or trusts that hold assets and liabilities onbehalf of groups of owners are also companies, even if
they are engaged in little or no production. Companies
may be corporations (including quasi-corporations),
nonprofit institutions, or unincorporated companies(including households or government units in theircapacity as producers of goods and services).
A4.9 Companies usually maintain some level ofbusiness accounts that are sufficient to satisfy reporting purposes.

Global and Local Enterprise Group
A4.10 Enterprise groups may be either global or
local. A global enterprise group refers to an investor
and all the companies under that investor. A local enterprise group refers to an investor and legal entities
under that investor that are resident in the reporting
economy (see BPM6, paragraph 4.54−4.56).
A4.11 The local enterprise group may be used forcompiling and presenting DI statistics; the ownershiplinks that involve nonresidents are not recognized forthe formation of local enterprise groups. For example, two DIENTs located in the same economy, witha common nonresident direct investor but no links
directly between them, are not recognized as belonging to the same local enterprise group (although
they would belong to the same global enterprisegroup).
A4.12 Local enterprise groups usually maintainand have available consolidated accounts. The level of373

consolidation is often governed by domestic reporting
requirements and the organizational structure, andthese may not align well with DI concepts.
A4.13 Unless instructions to survey respondents
are clear and the compiler is careful, consolidationof companies into local enterprise groups may resultin the incorrect inclusion of influencing links within
an economy that should break a DI ownership chain
when there is an influencing link from abroad (seeBPM6, paragraph 6.35).

Notional Units
A4.14 When land located in a territory is owned
by a nonresident company (with the exception of land
owned by foreign governments or international institutions for diplomatic enclaves or military bases), a
notional unit is identified for statistical purposes as
being the owner of the land. Because land and buildings produce rental services, the notional unit is usually a company. A notional unit is also identified fora long-term lease by a nonresident lessee of land, orbuildings, or land and buildings together.
A4.15 The nonresident is treated as owning theresident notional unit rather than the land and structures directly. The notional resident unit is nearly always a DIENT (the exception being for land where
an individual nonresident’s voting power is below 10
percent) and consequently the nonresident is nearly
always a direct investor with an equity investment in
the notional unit.
A4.16 The notional unit is created with an injection of equity from the nonresident direct investor. A
detailed discussion of notional units is presented in
the BPM6, paragraphs 4.34–4.40. Information on notional units and, in particular, the income flows andinjections of equity after the initial injection should
only be compiled where they are significant for either
the host economy or the economy of the nonresident
investor.
A4.17 Individuals who have migrated to a new
economy and become residents there frequently own
land or buildings in their economy of origin. These
properties should be added to direct investment assets
in the IIP of the host economy (and to direct investment liabilities of the originating economy consistently), through a reclassification (other changes involume), not by imputing transactions in the balance374

Balance of Payments and International Investment Position Compilation Guideof payments. Notional units should be created as a result of this change in the residence status of an owner.
A4.18 When a migrant’s relatives occupy theseproperties (real estate) without paying rents (or below
market prices), the compiler of the host economy of
the migrant should record these rents at market prices
through the following imputed transactions: direct
investment income, credit and an offsetting entry inthe secondary income account, personal transfers,
debit (BPM6, paragraph A5.18). The compiler of theeconomy of origin should record these imputed transactions with the corresponding opposite entries. The
value of these transactions would be calculated as thedifference between actual transactions and market
equivalent values. In practice, it is difficult to identify
such transactions and calculate their value. The compiler should assess the magnitude of such phenomenain the economy, and if it is deemed to be significant,the collection of data could be organized using thehousehold surveys, or surveys of bodies/agencies(e.g., rental offices) that are identified as possible data
sources.
A4.19 When a migrant uses the rent receipts tomaintain and repair his/her property, several transactions should be recorded in the host economy; particularly direct investment income, credit, and an
offsetting entry in the financial account under direct
investment, net acquisition of financial assets. The latter reflects the increase in the value of the property.
The compiler of the economy of origin of the migrantshould record these transactions through two opposite entries, accordingly.

Entities Established Abroad
for Fiscal Purposes
A4.20 In some instances, a government can establish entities in the economic territory of anothergovernment for the purpose of carrying out general government activities (i.e., fiscal activities). Fiscal purposes can be distinguished from commercial
purposes because fiscal purposes are always oriented
to serving the objectives for the government’s hometerritory.
A4.21 Such entities are considered residents in theeconomy of their incorporation; however, they are notconsidered as part of the general government in either
the economy of residence or the economy of governmentthat uses the entities. Also, such entities are not treatedas territorial enclaves (e.g., embassies or other diplomatic establishments) when they operate under the lawof the host economy (BPM6, paragraph 4.93).
A4.22 To avoid misleading understanding of government expenditures, a special approach is appliedin treating transactions and positions of such government entities because, unlike in the private sector, such nonresident entities undertake functions at
the request of general government for public policy
purposes in another economy and not for commercial
purposes. The special treatment refers to the borrowing by such entities on behalf of the government that
results in entries under the DI category that are presented in Table A4.1.
A4.23 Due to their specific features and activity,
the best data sources on transactions of fiscal entities
are government administrative records (in economy
of residence of government) or enterprise surveys (ineconomy of residence of fiscal entity).

Special Purpose Entities3
A4.24 Although there is no internationally agreed
definition of special purpose entities (SPE), it is generally agreed that they display the following characteristics: their owners are not residents of the territoryof incorporation, main parts of their balance sheets
are claims on or liabilities to nonresidents, they arecompanies with little or no physical presence in their
host economy, little or no employment, little or no
significant production, and few (if any) nonfinancial assets, and many SPEs have bank accounts in thehost economy (although they may be of a temporary
nature). SPEs are often used to channel funds to andborrow funds from third economies; these funds
may include equity investments where the SPE isused to route an ownership change through anothereconomy. SPEs may offer taxation, regulatory, or confidentiality benefits due to the regulatory regime in
the host economy. SPEs are often associated with offshore financial centers but may be located elsewhere.
Examples of SPEs (and alternative terminology used
for SPEs) include financing subsidiaries, conduits,
holding companies, shell companies, shelf companies,
and brass-plate companies.

3

See the BPM6, paragraphs 4.50–4.52.

Foreign Direct Investment

375

Table A4.1 Treatment of Borrowing on Behalf of the Government of Another Economy
Economy of direct investor (government)
At the time of borrowing (transactions equal to the amount of the borrowing)
Increase: Direct investment—equity—assets (direct investor
in direct investment enterprise)

Increase: Direct investment—debt instruments—liabilities(direct investment enterprise in direct investor)

At the time the borrowed funds are passed to the government (transactions equal to the amount of the fund passed to
the government)
Increase: Reserve assets or other investment—assets—
currency and deposits—general government

Decrease: Direct investment—equity—assets (direct investor
in direct investment enterprise)If funds are not passed to the government: At the time the borrowed funds are spent or provided by the borrowing
entity to a third party (transactions equal to the amount of the funds spent or provided)
Secondary income—general government—debit or capital
account—capital transfers—general government—othercapital transfers—debit

A4.25 As companies incorporated within their
host economy, SPEs are recognized as separate institutional units. SPEs are recorded as DIENTs and direct investors, where appropriate.
A4.26 For some analytical purposes, it may be desirable to “look through” SPEs in the DI ownershipchange to the first “non-SPE” and to allocate positions
and transactions to the economy of the first non-SPE.
There is no agreed method of looking through SPEs tothe first non-SPE.
A4.27 By their very nature, the compiler mightfind it difficult to obtain data from SPEs. Nonetheless nearly all their assets and liabilities are likely to bewith nonresidents (apart from any deposits or loans
they may have with resident banks); it is importantthat such corporate structures are identified and that
their data be collected for international accounts
statistics.
A4.28 Data can be collected through different
sources; the compiler should assess which data sources
are available, and also which of them possess the mostcomprehensive information. Also, the legal regulationin place guiding the activity of SPEs should allow forcollection of data for statistical purposes. The data
sources that should be considered by the compiler forcollecting data on SPEs activity are presented ahead.
A4.29 Surveys of SPEs could be an efficient approach to data collection; however, some SPEs haveno offices in the host economy and act through representatives such as law firms and/or accounting
firms. In these cases, the compiler should request

Decrease: Direct investment—equity—assets (direct investor
in direct investment enterprise)the legal representatives, if resident in the hosteconomy, to provide from their principals’ accounts
the necessary information for the compilation of thebalance of payments and IIP. The compiler should
consider the size of the SPEs’ assets; sometimes avery small number of SPEs cover a high percentage of total DI. In this manner, a small sample could
provide a very good basis for providing estimates forthe total.
A4.30 Financial statements—in some cases, SPEs
are required to report annual financial statements togovernment agencies and the compiler may obtain
SPEs’ data from those agencies.
A4.31 Tax records could be an alternative avenue for the collection of data; however, by theirnature many SPEs are exempted of taxes. Whensuch tax records are collected by the tax agency, thecompiler should correspond with the tax agency
to obtain the information required for balance of
payments and IIP purposes as part of the tax filing
requirements.
A4.32 Other data sources such as an ITRS, approvals of foreign investments, and the financialpress could be used to identify SPEs and to verify
collected information. The compiler should be awareof the limitations and coverage of each of these listed
sources. For instance, because the SPEs by their nature and regulatory acts guiding their activity aremeant to deal mainly with nonresidents, if not totally,
they may not have financial transactions conducted
through domestic banks that would be captured by
an ITRS.

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Balance of Payments and International Investment Position Compilation Guide

Speciﬁc Direct Investment Flows andPositionsPass-through capital4A4.33 As with SPEs, there is no internationallyagreed definition of pass-through capital. The term isused to refer to funds that pass through a company(usually an SPE) in an economy to a third economy
with little or no impact on the economy throughwhich the capital passes.

Figure A4.1 A Case of Round-Tripping with
Many Companies in Routing
EconomiesA
Source and destination economy
Routing or pass-through economies

B1

A4.34 Pass-through capital is to be recorded in direct investment as assets and liabilities of the economy
through which the funds pass.
A4.35 Pass-through capital has the impact of increasing the gross direct investment flows and positions into and out of an economy. Some analyses use
the gross flows as a scaling factor for the size of certain
types of transactions or positions, and the inclusionof pass-through capital in the gross flows may distortthese analyses. On the other hand, the inflow andoutflow of pass-through capital often involve different economies, or the inflow has a number of different
attributes than the outflow (e.g., debt vis-à-vis equity,
domestic currency vis-à-vis foreign currency, fixedvis-à-vis floating interest rate on debt, short-term visà-vis long-term debt). For these reasons, it is important to keep track of the gross flows and positions forcompiling the balance of payments and IIP accounts,and for financial surveillance purposes.
A4.36 The recording of these funds are connectedwith the activities of SPEs. Therefore, the same main
data sources as noted earlier (see paragraphs A4.29−
A4.33) can be used to capture information on passthrough capital.
Round tripping5

A4.37 Round tripping is a specific case of passthrough funds where funds invested in a SPE in a second economy are to be invested back into the source
economy. Round tripping is usually associated withsource economies where there are incentives (tax orotherwise) for outward or inward DI. Round tripping
can pass through more than one link and more than
one economy before it returns to the source economy.
4
5

See the BPM6, paragraphs 6.33–6.34.
See the BPM6, paragraph 6.46.

C

B2

B3

A4.38 Round tripping is to be recorded in DI in
the accounts of each of the economies through which
the pass-through funds transit. Figure A.4.1 shows anexample of round tripping where a company A in thereporting economy provides DI funds through threenonresident related companies (B1, B2, and B3) forinvestment ultimately in another company (C) in thereporting economy. In the simple case, there may be
only one company B.
A4.39 If a resident company with a foreign direct investor identifies a resident as the ultimate investor (defined ahead), then this is an example of round tripping.
Round tripping is more easily identified in the source/
destination economy. The compilation of supplementary data on funds in transit (pass-through funds andround tripping) is recommended in the BPM6 foreconomies with large values of such transactions.

Voting Power
A4.40 The basis for identifying DI and for classifying ownership links within DI relationships is voting
power (see BPM6, paragraph 6.19). Although equity isoften used as a proxy for voting power, voting power
is not the equivalent of equity. Circumstances including the issue of various classes of shares with higher
weight, nonvoting shares, and “golden shares” (sharesusually held by government that provide a controllinginterest) can cause equity percentages to vary fromForeign Direct Investment

the voting power in a company. Indeed, some formsof equity are recorded as debt in the IIP and balanceof payments accounts. The compiler should be alert
to these situations and treat them appropriately in theaccounts.
A4.41 Derivative instruments can be constructedin a manner that provides access to voting power
without delivering ownership of the underlying equity.
Voting power accessed through these instruments is
not recognized in determining whether a DI relationship exists.
A4.42 In some economies, regulations disallow
foreign investors from owning more than 49 percentof the voting power. Voting power of 49 percent inthese economies should be recognized as substantial
influence and not control.

Valuation
Unlisted Equity
A4.43 The underlying principle for the valuationof equity is the market value of that equity. Listing onan organized market provides a good basis for valuing
listed equity. However, it can be more difficult to determine a market value for unlisted equity and illiquid
listed equity.
A4.44 Six methods for approximating market
value for unlisted equity are considered acceptableproxies (see BPM6, paragraph 7.16):• Recent transaction price• Own funds at book value (OFBV)• Net asset valueo Including goodwill and intangibles
o Excluding goodwill and intangibles• Market capitalization method• Present value• Apportioning global value
A4.45 The choice of method depends primarilyon having information available to support the application of the method. In practice, one or more ofthese methods could be ruled out because of a lackof information available to support the application of
the method. Among the methods that could be implemented, the primary consideration should be how
well the method approximates market value. A further

377

consideration is the stringency of the requirement forsymmetric recording by debtors and creditors.
A4.46 Each method is described in more detailahead, giving information on what is needed to apply
the method and caveats on its use. If there is a material change in a company’s financial position since thedate to which the valuation applies (but before the reference date), an adjustment may need to be made. Examples of such material events include an unexpected
decision in a lawsuit, credit downgrade or upgrade,major new invention or mineral find, or bankruptcy.
Recent transaction priceA4.47 Unlisted equity may trade from time totime, and recent prices at which the equity exchanged
hands may be used. The transaction price must represent an “arm’s length” price between an independentbuyer and seller, where neither party is under compulsion or duress to engage in the transaction. Morerecent transactions are preferable, and it is desirable
that the transaction should have occurred within thepast year. If the most recent transaction is more than
one year old, the compiler may wish to consider analternate method.
Usage:A recent, arm’s length transaction price isrequired.
Caveats: Not often available due to the low frequency of
trades in unlisted equity. When a transaction
price has been used in the past to value theequity, but the information is becoming dated, astrategy to splice the valuation with a valuation
calculated from another method may be useful.
Own funds at book value

A4.48 OFBV involves valuing a company at thevalue appearing in its books following International
Accounting Standards (IAS). OFBV is based on thebooks of the DIENT and can be seen on its balance
sheet as shareholder’s equity. The definition of OFBV
contains paid-up capital. IAS require most financial
assets to be revalued on, at least, an annual basis andfor plant and equipment to be depreciated.
A4.49 OFBV is the method recommended for the
CDIS and described in the CDIS Guide.
Usage: This method may be used where books are kept
on the basis of IAS, and data are available fromthe books of the DIENT.

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Balance of Payments and International Investment Position Compilation Guide

Caveats: In some cases, IAS may prohibit the recognition of certain intangible assets produced by
a company for itself (e.g., brands, mastheads,
publishing titles, customer lists). Goodwill canonly be bought; it cannot be internally generated. Assets in some asset classes (assets held tomaturity) may be valued at nominal or historiccost. These will all cause distortion from themarket valuation.
Net asset value, including goodwill
and identiﬁed intangibles

A4.50 Net asset value (NAV) is total assets at current/market value less total liabilities (excluding equity) at market value. Under this valuation method,
all financial and nonfinancial assets and liabilities of
the company, including intangible assets, are stated interms of current period prices. The valuations should
be based on very recent appraisals—certainly theymust be within the prior year. Appraisals may be conducted by knowledgeable management or directors of
the firm, and/or provided by independent appraisers.
A capitalization ratio may be calculated and applied(with or without liquidity adjustments) if sufficient
information is available (see market capitalization
method).
Usage: At a minimum, this method requires an asset
and liability valuation to be undertaken by thecompany.
Caveats: NAV provided by a company may exclude
some classes of assets (e.g., intangibles), whileother assets may be valued using a method that
results in a distortion from the current market
value (e.g., historic cost or nominal value). To
the extent that valuations are poor or assets are
excluded from the NAV, this method can be aweak approximation of market value and othermethods may be more appropriate. Calculationof capitalization ratios requires a reasonably
broad stock market with high trading volume.
Net asset value, excluding goodwill
and identiﬁed intangibles

A4.51 Under this valuation method, all financial
and nonfinancial assets and liabilities of the company,
excluding intangible assets, are stated in terms of current period prices. The valuations should be basedon very recent appraisals—certainly they must bewithin the prior year. Appraisals may be conducted byknowledgeable management or directors of the firm,
and/or provided by independent appraisers.
A4.52 Note that the difference between this method,
and the one immediately preceding, is that thismethod excludes goodwill and identified intangibles.
However, it is often very difficult to estimate the valueof these assets. If the compiler can develop relatively
accurate estimates of unquoted equity that include
goodwill and identified intangibles he/she is encouraged to do so. Doing so promotes consistency between
the estimates for quoted shares (these shares trade at
prices that reflect the value of intangible assets) andthe estimates for unquoted shares.
Usage: The compiler who cannot accurately provide
estimates that include goodwill and identified
intangibles may use this method.
Caveat: Goodwill and intangible assets may accountfor much or most of the current value of many
DIENTs. This valuation might not be representative of market value.
Market capitalization method

A4.53 This method proposes the use of a capitalization ratio as the ratio of the stock exchange market
capitalization to OFBV calculated from a set of listedcompanies. In constructing the capitalization ratio
under this method, stock market data for an individual economy may be used when the stock market inthat economy is broad and trading volume is relatively
high, and broad regional indexes should be used whenthese circumstances do not exist. The estimate of market values of direct investment equity in unlisted companies is calculated by multiplying own funds at bookvalue (owners’ equity) of unlisted DIENTs by the capitalization ratio [that is, by the stock exchange market
capitalization (numerator) to the own funds at bookvalue of listed companies (denominator)]. Capitalization ratios developed from broad stock exchange data
should be adjusted, or individual ratios should be developed for separate industry groups, if the industries
represented in the broad stock exchange for a given
economy are not representative of the industry mix of
DIENTs located in the same economy.
Usage:

Useful exercise if the overall companies listed
in the stock exchange are good representativesof the national industry. Compared to someForeign Direct Investmentof the other valuation methods (including
OFBV), this method more fully includes intangible assets such as goodwill in the valuation.
Caveats: Some very large local foreign direct investment
unlisted companies might represent almost
the entire industry. Another strategy is thenrequired to better reflect the market valuation of that company. Apart from this, someother considerations could be seen as caveatsof this method—for example, some specialists
question the assumption that quoted and nonquoted companies should use the same ratio
to own funds. Being quoted in a public market means that a company has to comply withmore strict rules, provide more detail information to market participants, and so forth.
Also, because the equity is liquid, it may trade
at a premium over unlisted equity. On the other
hand, most unlisted DIENTs are controlled bytheir direct investors, and controlling interests
generally trade at premiums over noncontrolling interests.
Present value/price to earnings ratio

A4.54 The value of unlisted equity can be estimated as the present value of the forecast stream of
future earnings. This method has at its heart the issueof choosing an appropriate discount rate, which canbe inferred from the implicit discount rate obtained
for listed equity, and forecasting the future profits. At
its simplest, this method can be approximated by applying a market or industry price-to-earnings ratio tothe (smoothed) recent past earnings of the unlistedcompany to calculate a price. In this case, the recent
past earnings are used as the basis to forecast the future earnings, and the market price-to-earnings ratio
implies the discount rate.
Usage: This method is most appropriate where there
is a paucity of balance sheet information but
earnings data are more readily available. It also
requires an appropriate discount rate or reasonably broad-based price-to-earnings ratio to be
calculated.
Caveats: Earnings for an individual company can havea highly irregular component and can be negative (leading to negative equity valuations). As
a result, if earnings information over a longer
period of time is available, the earnings of thecompany should be smoothed. If earnings for

379

only one period are available or discount rates
or price-to-earnings ratios are based on a narrow market, other methods are preferable.
Apportioning global value

A4.55 If the equity in a particular DIENT is unlisted, but the company belongs to a global enterprisegroup whose equity is listed, the current market valueof the global enterprise group can be calculated andapportioned to the operations in each economic territory. The current market value of the global enterprise group should be based on its market price on
the exchange on which it is traded, and the apportionment of this value to each economic territory should
be based on an appropriate indicator (e.g., sales, net
income, assets, or employment). Where possible,
compilers in partner economies may wish to consider
using the same indicator.
Usage: Current market capitalization of the global
enterprise group is required. An indicator thatis well correlated with market value and readily
available is also necessary. This may be more
likely to occur in enterprise groups that are
horizontally integrated.
Caveats: Weaknesses in the correlation between market value of equity and the variable used forapportioning the global value will lead to distortions—sensitivity to the distortion is greatest
when the proportion allocated to an economic
territory is small or when the global enterprisegroup undertakes different types of activities
in different economic territories. In this case,other methods may be preferable.

Treatment of Transfer Pricing
A4.56 When a transaction in goods or services occurs between two companies, this transaction should
be recorded at market prices. The BPM6 defines market prices as “amounts of money that willing buyers
pay to acquire something from willing sellers . . . oncommercial considerations only—sometimes called‘at arm’s length’ ” (BPM6, paragraph 3.68).
A4.57 Due to the nature of the relationship between
companies related under the DI relationship, the transaction value for a good or service between related companies may not always reflect market values. “Transfer
pricing” refers to this distortion between transaction
values and market values. It can be motivated by in-380

Balance of Payments and International Investment Position Compilation Guide

come distribution or equity injections. In the unusualcase where the distortion is significant and data are
available to do so, the BPM6 suggests that adjustments
be made to remove the impact of transfer pricing.
A4.58 Identification of instances of transfer pricing and selection of the best market value equivalents
to replace reported transaction values is an exercise
calling for cautious and informed judgment. In mostcases, sample surveys, contacts with companies andgovernment agencies engaging in international transactions on a large scale, exchanges of information
between compilers in partner economies, or similar
statistical research will be necessary to provide thebasis for such judgment. Adjustments for transfer
pricing have implications for the data of the counterpart economy; therefore it is useful to exchange information with compilers in counterpart economies(to the extent possible) to avoid asymmetries. Moredetails on treatment of transfer pricing are presented
in Chapter 11 of this Guide.

the good or service should be adjusted upwards, by
the difference, as in the previous case.
A4.61 The compiler should recall that dividends andremitted earnings are required to be paid out of the accrued profits. If the accumulated profits do not cover thedividends and distributed earnings, then the additional
payment should be treated as a withdrawal of equity.
Hidden injections of equity

A4.62 Where a DIENT is underinvoiced on a goodor service provided by the direct investor, or a direct
investor is overinvoiced on a good or service provided
by the DIENT, the difference between the market
value and the invoice price is effectively an injection ofequity into the DIENT by the direct investor. This injection takes the form of provision of additional assets(underinvoiced goods) or cash (overinvoices). Equity
transactions should be adjusted to remove the impactof the transfer pricing. Also, the earnings of the DIENT
should be adjusted downwards by the same amount.

Hidden dividends

A4.59 Where a DIENT is overinvoiced on a goodor service provided by the direct investor, the difference in payment between the market value and the invoice price is effectively a distribution by the DIENT
to the direct investor (a “hidden dividend”). Distributed earnings and total earnings of the DIENT should
be adjusted upwards by the difference (in the balanceof payments, this would be balanced by a downwards
adjustment to the value of trade in goods or services).
A4.60 Where a direct investor is underinvoiced ona good or service provided by the DIENT, the difference in payment between the market value and theinvoice price is effectively a return of assets by
the DIENT to the direct investor or a rundown of
the assets of the DIENT by the direct investor. Thisis treated as a hidden dividend; the earnings of the
DIENT should be adjusted upwards, and the value of

Ultimate Controlling Parent
A4.63 This part of the Guide focuses on defining
relationships between companies that are important
for analytical purposes—either through identifying
the economy in which ultimate control over an inward investment is located; and through applying thedirectional principle to DI data for fellow enterprises
and reverse investment.
A4.64 The ultimate controlling parent (UCP) of aresident company in a direct investment relationshipis important to identify for the purposes of correctly
applying the directional principle in compiling partner economy statistics (the directional principle isdescribed in Chapter 7, along with the asset/liability
presentation; see also Table A4.2). The economy ofresidence of the UCP determines the treatment of positions between fellow enterprises (see Figure A4.2).

Figure A4.2 Linkages Between UCP’s Residence and Treatment of Fellow Enterprises
If the UCP is resident

Positions and transactions between fellow enterprises are recorded as outward

If the UCP is nonresident

Positions and transactions between fellow enterprises are recorded as inward

If there is no UCP or if
UCP is unknown

Asset positions and transactions between fellow enterprises are recorded as outward,
and liability positions and transactions between fellow enterprises are recorded as
inwardForeign Direct Investment

381

Table A4.2 Treatment of Direct Investment under the Assets/Liabilities Presentation
and Directional Principle
Assets/liabilities presentation

Directional principle

Assets:Outward investment:

Investments by resident direct investors intheir direct investment enterprises abroad
plus
Reverse investments by resident direct
investment enterprises in their direct
investors abroadplus
Investments by resident fellow enterprises
in other fellow enterprises abroad

Investments by resident direct investors in their direct investment enterprises
abroadminus
Reverse investments by direct investment enterprises abroad in their resident
direct investors
plus
Investments by resident fellow enterprises in other fellow enterprises abroadwhere the ultimate controlling parent is a resident
minus
Investments by fellow enterprises abroad in resident fellow enterprises where
the ultimate controlling parent is a resident

Liabilities:

Inward:Investments by direct investors abroad in
their resident direct investment enterprises
plus
Reverse investments by direct investment
enterprises abroad in their resident direct
investors
plus
Investments by fellow enterprises abroadin resident fellow enterprises

Investments in resident direct investment enterprises by direct investors
abroadminus
Reverse investments by resident direct investment enterprises in their direct
investors abroadplus
Investments in resident fellow enterprises by fellow enterprises abroad where
the ultimate controlling parent is a nonresident
minus
Investments by resident fellow enterprises in fellow enterprises abroad where
the ultimate controlling parent is a nonresident

A4.65 The UCP of a fellow enterprise is identified
by proceeding up the ownership chain from the resident fellow enterprise through the controlling links(ownership of more than 50 percent of the voting
power) until an individual, household, or company
that is not controlled by another company is reached.
If there is no company, individual, or household that
controls the resident company, then the resident company may be considered to be its own UCP.
A4.66 Model form 18 in Appendix 8 requests information on whether the UCP is a resident or nonresident.

Reverse Investment
A4.67 Reverse investment refers to asset positions
held by DIENTs in their direct investors. In the caseof equity positions, the ownership of the equity by
the DIENT is such that it does not provide voting
power of 10 percent or more (otherwise, mutual DI
occurs, where each company is a direct investor in
the other).
A4.68 Reverse investment is treated differently
under the directional principle when comparedwith its treatment under the asset/liability presen-tation. Under the asset/liability presentation, reverse investment is recorded on a gross asset andliability basis. Under the directional principle, reverse investment is considered a (negative) inward
investment position for the DIENT and as a (negative) outward position for the direct investor (seeTable A4.3).

Presentational Methodof Direct Investment
A4.69 The standard components on the balanceof payments and on the IIP use the assets/liabilities
presentation of DI, which is organized according
to whether an investment relates to an asset or liability. The directional principle, which is organizedaccording to the direction of the DI relationship (inward, DI in the reporting economy, and outward,
DI abroad), is the principle used in the CDIS. It canbe applied to IIP, balance of payments financial account, and investment income.6 When the CDIS is
6

The rearrangement of standard components for direct
investment positions and transactions is shown in
Box 6.4 of the BPM6.

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Balance of Payments and International Investment Position Compilation Guide

Table A4.3 Assets/Liabilities Presentation Compiled from Foreign Direct Investment Survey(model survey form 18 in Appendix 8) (continued )IIP standard components

Foreign direct investment survey form positions

Direct investment assets
Equity and investment fund shares
Direct investor in direct investment enterprise (DIENT)

Equity claims on DIENT (outward +)Direct investment enterprise in direct investor (DI)(reverse investment)

Equity claims on DI (inward –)Between fellow enterprises
if ultimate controlling parent is resident

Equity claims on fellows if ultimate controlling parent is resident(outward +)if ultimate controlling parent is nonresident

Equity claims on fellows if ultimate controlling parent isnonresident (inward –)if ultimate controlling parent is unknown

Equity claims on fellows if ultimate controlling parent is
unknown (outward +)Debt instruments
Direct investor in direct investment enterprise

Debt claims on DIENT (outward +)Direct investment enterprise in direct investor (reverse
investment)

Debt claims on DI (inward –)Between fellow enterprises
if ultimate controlling parent is resident

Debt claims on fellows if ultimate controlling parent is resident(outward +)if ultimate controlling parent is nonresident

Debt claims on fellows if ultimate controlling parent isnonresident (inward –)if ultimate controlling parent is unknown

Debt claims on fellows if ultimate controlling parent is unknown(outward +)Direct investment liabilities
Equity and investment fund shares
Direct investor in direct investment enterprises

Equity liabilities to DI (inward +)Direct investment enterprises in direct investor (reverse
investment)

Equity liabilities to DIENT (outward –)Between fellow enterprises
if ultimate controlling parent is resident

Equity liabilities to fellows if ultimate controlling parent isresident (outward –)if ultimate controlling parent is nonresident

Equity liabilities to fellows if ultimate controlling parent isnonresident (inward +)if ultimate controlling parent is unknown

Equity liabilities to fellows if ultimate controlling parent is
unknown (inward +)Debt instruments
Direct investor in direct investment enterprises

Debt liabilities to DI (inward +)Direct investment enterprises in direct investor (reverse
investment)

Debt liabilities to DIENT (outward –)Between fellow enterprises
if ultimate controlling parent is resident

Debt liabilities to fellows if ultimate controlling parent is resident(outward –)if ultimate controlling parent is nonresident

Debt liabilities to fellows if ultimate controlling parent isnonresident (inward +)if ultimate controlling parent is unknown

Debt liabilities to fellows if ultimate controlling parent is
unknown (inward +)Foreign Direct Investment

383

Table A4.3 Assets/Liabilities Presentation Compiled from Foreign Direct Investment Survey(model survey form 18 in Appendix 8) (continued)
Balance of payments standard components

Foreign direct investment survey form transactions(increases-decreases)

Direct investment assets
Equity and investment fund shares
Equity other than reinvestment of earnings
Direct investor in direct investment enterprises

Equity claims on DIENT (outward +)Direct investment enterprises in direct investor (reverse
investment)

Equity claims on DI (inward –)Between fellow enterprises
if ultimate controlling parent is resident

Equity claims on fellows if ultimate controlling parent is resident(outward +)if ultimate controlling parent is nonresident

Equity claims on fellows if ultimate controlling parent isnonresident (inward –)if ultimate controlling parent is unknown

Equity claims on fellows if ultimate controlling parent is
unknown (outward +)Reinvestment of earnings(Net income of the DIENT—realized and unrealized holding gains or losses included in net
income)* percentage held in the nonresident DIENT (outward +)Debt instruments
Direct investor in direct investment enterprise

Debt claims on DIENT (outward +)Direct investment enterprise in direct investor (reverse
investment)

Debt claims on DI (inward –)Between fellow enterprises
if ultimate controlling parent is resident

Debt claims on fellows if ultimate controlling parent is resident(outward +)if ultimate controlling parent is nonresident

Debt claims on fellows if ultimate controlling parent isnonresident (inward –)if ultimate controlling parent is unknown

Debt claims on fellows if ultimate controlling parent is unknown(outward +)Direct investment liabilities
Equity and investment fund shares
Equity other than reinvestment of earnings
Direct investor in direct investment enterprise

Equity liabilities to DI (inward +)Direct investment enterprise in direct investor (reverse
investment)

Equity liabilities to DIENT (outward –)Between fellow enterprises
if ultimate controlling parent is resident

Equity liabilities to fellows if ultimate controlling parent isresident (outward –)if ultimate controlling parent is nonresident

Equity liabilities to fellows if ultimate controlling parent isnonresident (inward +)if ultimate controlling parent is unknown

Equity liabilities to fellows if ultimate controlling parent is
unknown (inward +)Reinvestment of earnings(Net income of the DIENT—realized and unrealized holding gains
or losses included in net income)* percentage held in the resident DIENT(inward +)384

Balance of Payments and International Investment Position Compilation Guide

Table A4.3 Assets/Liabilities Presentation Compiled from Foreign Direct Investment Survey(model survey form 18 in Appendix 8) (concluded)
Debt instruments
Direct investor in direct investment enterprise

Debt liabilities to DI (inward +)Direct investment enterprise in direct investor (reverse
investment)

Debt liabilities to DIENT (outward –)Between fellow enterprises
if ultimate controlling parent is resident

Debt liabilities to fellows if ultimate controlling parent is resident(outward –)if ultimate controlling parent is nonresident

Debt liabilities to fellows if ultimate controlling parent isnonresident (inward +)if ultimate controlling parent is unknown

Debt liabilities to fellows if ultimate controlling parent is
unknown (inward +)used as the data source for compiling DI data, thecompiler should rearrange the CDIS data reported
under directional principle to the assets/liabilities
presentation.
A4.70 Chapter 7 of this Guide as well as Tables
A4.2 and A4.3 describe two presentations of DI information—under the asset/liability presentation
and under the directional principle. The identification of fellows is important for the appropriate classification of positions and flows under the directional
principle.

Compilation
Calculating DI Earnings
A4.71 DI earnings measure earnings from current
operations. Therefore, this amount should be calculated before recognition of holding gains and losses
and extraordinary items. Operational earnings of the
DIENT should be reported after deducting provisions
for depreciation and for corporate taxes charged onthese earnings by the government in the host economy. Depreciation should, in principle, be measured
at current replacement cost, particularly if market
values are available for position figures. If data on depreciable assets and on depreciation are available only
on a book value or historical cost basis, those values
should be adjusted wherever possible to a current replacement cost basis. The compiler should base theestimates of DI earnings, and of DI positions, on acurrent market value basis. If market values are un-available, DI data at book value should be adjusted toestimates of market value.
A4.72 The earnings of DIENTs reported using theCurrent Operating Performance Concept (COPC)
should exclude the following:• Any gains or losses arising from valuation changes,
such as inventory write–offs, write-downs, or
write-ups• Gains or losses on plant and equipment from theclosure of part or all of a business• Writing-off of intangible assets, including goodwill, due to unusual events (the standard amortization of intangible assets is, however, included
as an expense under the COPC)• Extraordinary gains or losses (e.g., losses by aninsurer due to a catastrophic event)• Writing-off of research and development expenditures capitalized in a prior period• Provisions for losses on long-term contracts• Exchange rate gains and losses incurred by the
DIENT both from its trading activities andfrom its holdings of foreign currency assets andliabilities• Unrealized gains or losses from the revaluationof fixed assets, investments, and liabilities• Realized gains or losses made by the company
from the disposal of assets (other than inventory)or liabilities

Foreign Direct Investment

A4.73 The exclusion of realized and unrealized
holding gains and losses is applicable to all DIENTs,
including those such as banks and securities dealers
for whom the making of such gains is an importantor even the main part of their business. This promotes
consistency with the calculation and treatment of
earnings in the national economic accounts, as prepared pursuant to SNA guidelines.
A4.74 Earnings of a DIENT under COPC include
the full profit accruing to that DIENT from any further companies in which the DIENT is, itself, a direct
investor—the earnings of the DIENT include accrued
reinvested earnings from DI by the company, not justany remitted earnings.
A4.75 In line with the FDIR, the reinvested earnings of each company down the ownership chain
should be attributed to each of the immediate direct
investors up the chain. Table A4.4 illustrates thispoint. If A (Level 1) is owned 100 percent by B (Level2), B is owned 50.01 percent by C (Level 3), and C is
40 percent owned by D (Level 4), then A’s reinvested
earnings represent part of the net investment incomeof B, and, as a result, they are part of the sources ofrevenue that form part of the reinvested earnings thatare deemed distributed to C by B, and then as partof C’s reinvested earnings that are deemed distributed
to D. Where ownership is less than 100 percent, the385

proportional ownership should be applied, even when
there is more than one direct investor. This principle
applies whether A, B, and C are each in separate economies from D, or are in the same economy, but separate from D.
A4.76 In the situation where company C owns 50
percent or less of B, then companies A and B are notin a DI relationship with company D under the FDIR.
As company D is not considered to have significant
influence over company B, company D cannot be considered to have significant influence over the earnings
distribution and savings decisions of company B. As aresult, the reinvested earnings that accrue to company
C from company B are not considered part of company C’s current operating profit that accrues to company D. The calculation in Table A4.4 would show 16
in reinvested earnings accruing to company D fromcompany C (rather than 60) with 16 being reinvested
by company D in company C.
A4.77 Normally, when companies perform theconsolidation of transactions for a group, they use
data on the total profits, including holding gains andlosses, foreign exchange gains and losses, write-offs
and write-downs, and dividends. It is, therefore,
important that clear instructions be provided to respondents to enable them to report on the required
basis.

Table A4.4 Calculation of Reinvested Earnings along a Direct Investment Ownership Chain
Level 1

Level 2

Level 3

Level 4

A

B

C

D

Ownership by next level

100 percent

50.01 percent

40 percent

Net operational surplus

200

250

300

350

Minus Corporate taxes payable

−50

−60

−70

−90

+50

+60

+100

−120

−250

+100

+110

−100

−110

−60

0

110

90

+100

+110

+60

0

+100

+110

Plus Dividends receivable from direct investment enterprise (DIENT)
Minus Dividends payable to all shareholders−50

Plus Reinvested earnings receivable from DIENT
Minus Reinvested earnings payable to direct investors
Equals Net saving

+60

420

In direct investment transactions and positions accountDirect investment liabilities reinvestment of earnings
Direct investment assets reinvestment of earnings

+60

386

Balance of Payments and International Investment Position Compilation Guide

Model Forms
A4.78 Model form 17 in Appendix 8 requests information on DI in the context of a comprehensive
collection of information on external financial assets and liabilities. Model form 18 in Appendix 8 focuses specifically on DI. Both forms collect sufficient

information for the application of the directional
principle as well as the asset/liability presentation.
A4.79 Box A4.1 presents Mauritius’ practice incollecting and compiling data on special purpose entities. The questionnaire used for collecting data ispresented in Annex 1 of this appendix.

Box A4.1 Compiling Data on Special Purpose Entities in Mauritius
Background
This example covers the collection and compilation of offshore banking data in Mauritius. The effective integration of
the offshore and onshore banking business in July 2005 in balance of payments statistics of Mauritius contributed tosigniﬁcant net errors and omissions. An “external ﬁnancing” data gap had emerged as banks’ foreign assets continued to grow, reﬂecting the increase foreign currency deposits of the offshore vehicles, while no data were available
on the latter’s liabilities to nonresidents. For this reason, in 2007 the Bank of Mauritius (BOM)—the institution responsible for the compilation of the balance of payments and IIP statistics in Mauritius—started to implement a survey
covering the offshore business sector.
There are two different types of global business corporations (GBC) in Mauritius: Type 1 GBCs (GBC1) are considered tax
residents of Mauritius, and Type 2 GBCs (GBC2) are considered nonresidents for Mauritius tax purposes. The legislation
requires that management companies (MC) administer GBC1s and act as registered agents for GBC2s. Both GBCs andMCs are supervised by the Financial Services Commission (FSC) responsible for all non–deposit-taking ﬁnancial institutions in Mauritius.1
Approach applied in conducting the survey
The survey was carried out by the BOM and the FSC. As the regulator of the MCs and GBCs, the FSC has the power toensure compliance, and therefore it was decided that the FSC would act as a facilitator and undertake the survey on
BOM’s behalf. The key issue in launching the survey was how to minimize the reporting burden and costs for the MCs,
which would be the ones doing the painstaking work of collecting the required information from individual balance
sheets. It was decided to adopt a phased approach where only information on GBC1’s activities and positions should
be collected until such time that the authorities amend the statutory requirements for GBC2s. Given the magnitude of
the task, the option of having a census survey was ruled out and a sample survey was chosen.
An analysis of information on the total assets of all GBC1s showed that a relatively small number of units would provide
robust data. The FSC decided that the survey frame will include twelve MCs administering 70 percent of the GBC1’s total
assets. MCs that had the ﬁnancial information in electronic spreadsheets would report the data for the whole population. The MCs that did not have the information available in electronic spreadsheets would report data for at least 75
percent of the total balance sheet value of the GBC1s they administer. Additionally, the latter group had to report at thesame time the total balance sheet value of all the GBC1s under their administration, so that their sample value could begrossed up to the total value.
The questionnaire was designed in a simple way, which reﬂected elements of a typical balance sheet requesting transactions separately from positions data between resident and nonresident companies. To measure the extent of integrationof GBC1s’ economic activity with the domestic economy, selected transactions and positions data between residents
were also collected. The BOM questionnaire for collecting data on offshore activity is presented in the annex of this appendix. The questionnaire was supplemented by the CDIS and Coordinated Portfolio Investment Survey forms.
Incorporation of survey results in balanceof payments and IIP statistics
For the incorporation of survey’s results, a three-tier approach was implemented:
1) For the MCs that did not have an electronic spreadsheets (that reported on a sample basis), their estimates
were grossed up to the total assets of all GBC1s under their administration.

Foreign Direct Investment

Box A4.1 Compiling Data on Special Purpose Entities in Mauritius (concluded)
2) The total assets of 12 surveyed MCs were grossed up to the universe estimate using the information provided by
the FSC on the total assets of all GBC1s under the administration of the MC’s population.
3) The survey collection and the balance of payments statistics compilation had different frequency—the former
collected annual data while the latter statistics were published on a quarterly basis. To overcome this problem,an indicator series based on the cross border transactions’ settlement data for all GBCs reported by banks on amonthly basis was used for apportioning the annual data into four quarters.
Difﬁculties encountered in conducting the survey•

During the sensitization meetings, the BOM had difﬁculties in convincing the MCs to report their offshoretransactions and positions with nonresidents. The MCs’ arguments were that other competitive offshore
jurisdictions were not reporting those data. Also, they viewed the new survey as an additional reporting
burden as they were already collecting CPIS data and providing them to the regulator.

•

The FSC was sensitive to the high probability of the exercise of collecting offshore data doing damage to theindustry that generally thrived on conﬁdentiality. A high risk that GBCs investors would leave the Mauritianjurisdiction to move to other jurisdictions without such collections was predicted by the MCs. The GBCs needed
to be convinced about the advantages of collecting the data and given assurances about the conﬁdentiality
policy.

•During the ﬁrst survey exercise, BOM was not granted access to the individual survey returns and therefore was unable to validate the aggregated data. Because BOM could not interact directly with the MCs
and the communication with reporters was done through the FSC, the data validation was difﬁcult. Thischanged for the second survey exercise. The direct interaction of the balance of payments compiler withthe responding MCs at all stages of the survey increased the quality of survey results.

•

Because the Type 2 GBCs were not required to manage and control their business from Mauritius nor to
prepare and audit their ﬁnancial accounts in Mauritius, the balance of payments compiler considered inappropriate their inclusion in the survey. The alternative course of action would be to amend the ﬁnancialsummary requirements to collect the balance of payments and IIP data and as a substitute to use appropriate estimation methods. The BOM plans to extend the survey coverage to GBC2s; however, no decision has
been taken yet.

Lessons learned

1•

The support and commitment of the regulator was crucial. In conducting such a survey, all parties involved have to take ownership of the project with a clear demarcation of responsibilities. In the case of
Mauritius, the fact that the government had committed to subscribe to the IMF Special Data Dissemination Standard provided the motivation to all parties.

•

The compiler should understand the difﬁculties of the task and be well prepared to accommodate therespondents’ needs, as well as the concerns of the regulator and the regulatees regarding the reporting
burden and costs by adopting a phased approach.

•

The survey is aimed at facilitating the compiler’s task to compile the balance of payments and IIP statistics. In
the same time, the MCs have to be motivated by the beneﬁts of the collection of offshore data, so that thesurvey exercise is seen as a win-win exercise for all groups affected.

•

The compiler should be sensitive to the reporting burden and cost. The survey design should be reviewed
over time to attain this objective, and respondents have to be informed about that changes are made withthe goal to reduce the reporting burden for the MCs.

•

Sensitization and follow-up meeting before, during, and after the survey exercise are equally essential. Suchinteractions with the respondents help the compiler to understand the offshore sector and improve thequestionnaire design.

•

The reporting burden could be eased to a large extent by the use of IT. In the near future, the BOM plans
to design a Web-based questionnaire and to incorporate the editing of checks electronically into the survey
form. Respondents will then be able to see for themselves where data inconsistency may arise.

As of the end of 2012, there were 10,728 GBC1s, 15,208 GBC2s, and 164 MCs in Mauritius.

387

388

Balance of Payments and International Investment Position Compilation Guide

Annex to Appendix 4
Balance of Payments Survey of Category 1 Global Business Companies (GBC1s)
Statistics Division
Bank of Mauritius

Ref:

GBC 10CONFIDENTIAL

1 Purpose of Collection
The purpose of this survey is to collect information from the financial statements and supporting details of GBC1s
to facilitate compilation of their transactions and positions vis-a-vis nonresidents for compiling the balance of
payments accounts and the external assets and liabilities position of Mauritius. Balance of payments statistics are
published in the Bank’s Monthly Statistical Bulletin and in the Annual Report and are also posted on the Bank of
Mauritius website http://bom.intnet.mu.
2 Role of Management Companies in Filling the Questionnaire
The intention is that management companies (MC) set up a template for Tables A, B, and C in the questionnairethat is linked to the spreadsheets on which the financial accounts of GBC1 are maintained. The accounting period
should be for the accounting year followed by the GBC1 in reporting to its shareholders. Each MC will provide anaggregated return to the Financial Services Commission. Two approaches are recommended. For those MCs thathave the financial information in spreadsheets (or some other easily aggregated software) for GBC1s that they
manage, the information should be provided as an aggregate for all such GBC1s. This approach will not require
any decision on what GBC1 should be included, thereby reducing the burden on the MCs. For those MCs that do
not have the information available in spreadsheets (or some other easily aggregated software), it is recommended
to report transactions and positions data that account for at least 75 percent of the total balance sheet value of the
GBC1s they manage.
3 Collection Authority
By virtue of the section 51A(1) of the Bank of Mauritius Act 2004, the responsibility for the preparation of thebalance of payment accounts and the external assets and liabilities position of Mauritius is vested on the Bankof Mauritius. In this regard, section 51A(2) states that the Bank may, by notice in writing, require any person to
furnish, within such time and in such form and manner as the Bank may determine, such information and dataas the Bank may require for the preparation of the balance of payments accounts and the external assets and liabilities position of Mauritius.
4

Confidentiality

Information provided in the questionnaire by individual enterprises shall not be published without the writtenconsent of the enterprise. The information supplied will be published only in aggregated form.
5

OffenceAny person who fails to comply with a requirement under section 51A(2) of the Bank of Mauritius Act 2004 shallcommit an offence and shall, on conviction, be liable to a fine not exceeding 50,000 rupees for each day on which
the offence occurs or continues.
6

Queries

Technical concepts in the questionnaire will be familiar to the director, finance manager, or accountant of yourenterprise. Queries or assistance regarding the completion of this form may be addressed to:Foreign Direct Investment

389

Name:

Mr. Vikram Punchoo

Name:

Mrs. Padma Hurree Gobin

Title:

Head, Statistics Division

Title:

Chief, Statistics DivisionTel:

202-3949

Tel:

202-3981

E-mail:vikram.punchoo@bom.mu

E-mail:padma.hurreegobin@bom.mu

Explanatory Notes for Filling the Questionnaire
7 Residents and Nonresidents
An institutional unit (which may be an individual, an enterprise, or any other entity) is a resident of the Mauritian
economy, regardless of its nationality, if it exists, within Mauritius, some location, dwelling, place of production,or other premises on which or from which the unit engages and intends to continue engaging, either indefinitely
or over a finite but long period of time—exceeding one year—in economic activities and transactions on a significant scale. Corporations and nonprofit organizations normally may be expected to have a center of economic
interest in the economy in which they are legally incorporated and registered. Representation of foreign governments and international organizations are excluded.
Nonresidents are institutional units, regardless of their nationality, living or operating outside the economic territory of Mauritius for one year or more and include the following:(1) Individuals having their principal residence outside the economic territory of Mauritius or enterprises operating abroad for a year or more
(2) Foreign governments(3) Bilateral development assistance organizations (e.g., Commonwealth Development Corporation (UK)) orinternational organizations with shareholders who are governments of more than one economy (e.g., International Finance Corporation; World Bank; African Development Bank, etc.)
If you are not sure of the residency status of any organization, please give its name.
8

The Reporting Year: 20XX

This questionnaire asks for opening position as of 1 January 20XX ( C.O.B. 31 December 20XX-1), transactions
as well as revaluation and other changes during the year 20XX, and closing position as of end-December 20XX.
If the financial accounts are for some other period, please provide the information on the basis of the accounting
year as reported in question 1.8.
9 Valuation Principles
Please provide all data in U.S. dollars.
10 Shareholders Funds
Please report on a fair value basis for collective investment funds, and on a book value basis for other entities, if
fair value is not available.
11 Loans and Trade Credit (assets and liabilities)
Please report on a nominal value basis (after allowing for any changes that may result from changes in exchange
rates).
12 Debt Securities on Issue
Please report the market value of the securities on issue, at the balance sheet date (for positions) and the actual proceeds (or retirement values), for transactions, with both positions and transactions inclusive of accrued
interest.

390

Balance of Payments and International Investment Position Compilation Guide

13 Debt and Equity Securities Held
Please report the market value of the securities held at the balance sheet date (for positions) and the actual purchase/sale price, for transactions.
13a Exceptions to the Rule of Foreign Direct Investment(1) Debt positions between affiliated financial intermediaries except insurance companies and pension funds(a subset of financial corporations) are excluded from direct investment.
The financial corporations covered by the financial intermediary exclusion are deposit-taking corporations,money market funds (MMF), non-MMF investment funds, and other financial intermediaries except insurance companies and pension funds. (In other words, the usual direct investment definitions apply for insurance corporations, pension funds, other financial institutions, and financial auxiliaries.) All debt positions
between these selected types of affiliated financial corporations are excluded from direct investment (but equity positions between all types of affiliated financial corporations should be included in direct investment).
For example, deposits and other amounts lent by a parent bank or other financial intermediary to its direct
investment enterprise located abroad that is also a financial intermediary, and deposits and other borrowings
taken from such offices, should not be classified as direct investment.
(2) Equity in international organizations is excluded from direct investment, even in cases in which voting power
is 10 percent or more. These equity contributions are included in portfolio investment (if in the form of securities) or other investment—equity (if not in the form of securities).
(3) Financial derivatives and one-off guarantees are excluded from direct investment. Financial derivatives are
excluded largely on practical grounds. One-off guarantees represent loans or securities that are guaranteedwith such particular circumstances that it is not possible for the degree of risk associated with them to be
calculated with any degree of precision. They are recognized as financial assets or liabilities only at activation—that is, when the event occurs that makes the guarantor responsible for the liability.
(4) Direct investment also includes investment in real estate, properties, vacation homes, and lease of land forlong periods, provided the property is located in an economy other than that of the direct investor.
14

Affiliated Enterprises

These refer to enterprises that hold 10 percent or more of the GBC1 shares or equivalent or are owned by anotherenterprise which has such a holding in the GBC1. Affiliates include parent companies, branches, and associatecompanies.

Foreign Direct Investment

391

Section A. Characteristics of the Management Company

15 Name of management company.....................................................................................................................
..................................................................................

16 Address of management company...................................................................................................................................................................................................
.....................................................................................................................
17

E-mail address.....................................................................

Tel no.

Fax no.

..................................

....................................................

18

Website of management company ........................................................................................................................

19

Name of person completing form .........................................................................................................................

Functional title ....................................................

E-mail address ....................................................

Tel no. ..................................................................

Fax No. .............................................................

20

Name of alternative contact person ...................................................................................................................

Functional title ....................................................

E-mail address ....................................................

Tel no. ..................................................................

Fax no. ..............................................................

21 If the questionnaire is being completed for the management company by an agent (such as its accounting firm), please provide the name, postal and e-mail addresses, and phone number below:
Name of firm...................................................................................................................

Address...................................................................................................................

E-mail address...................................................................................................................

Tel no.

...................................................................................................................

Fax no.

...................................................................................................................

22

Total number of GBC1 under management and administration ...........................................................

23

Number of GBC1 companies surveyed ........................................................................................................

24

Gross value of all GBC1s’ assets that your company manages (U.S dollars millions):.................................................

392

Balance of Payments and International Investment Position Compilation Guide

Section B. Aggregated Balance Sheet of GBC1s Managed by Your Company

Please report the opening and closing balances, as well as the transactions, other changes in volume and revaluation changes, for the assets, liabilities, and shareholders’ funds, of the population of GBC1s managed by yourcompany.
Reporting Currency: U.S. dollars (millions)
Transactions

Assets
1.1
1.2
1.2.1

1.2.2
1.2.3
1.2.4
1.3
1.3.1
1.3.2
1.3.3
1.4
1.4.1
1.4.2
1.4.3
1.4.4
1.5
1.5.1
1.5.2
1.5.3
1.5.4

Shares in unafﬁliated nonresident
enterprises
Shares in afﬁliated nonresident enterprisesof which:(1) Shares held in afﬁliated investment
funds(2) Direct investor in direct investment
enterprises(3) Reverse investment(4) Between fellow enterprises
Loans to unafﬁliated nonresident
enterprisesof which:(1) Short-term on an original maturity basis(2) Long-term due for receipt within one
year or less
(3) Long-term due for receipt in morethan one year
Loans to afﬁliated nonresident enterprisesof which:(1) Loans to afﬁliated investment funds(2) Direct investor in direct investment
enterprises(3) Reverse investment(4) Between fellow enterprises
Debt securities issued by afﬁliatednonresident entitiesof which:(1) held on afﬁliated investment funds(2) Direct investor in direct investment
enterprises(3) Reverse investment(4) Between fellow enterprises

1.6

Debt securities issued by unafﬁliatednonresident entities

1.6.1

of which:(1) Short-term on an original maturity basis

1.6.2(2) Long-term due for receipt within one
year or less

1.6.3

(3) Long-term due for receipt in morethan one year

1.7

Deposits held at nonresident banks

Openingbalance as of
01.01.20XX

(+)

(−)

Other
changes involume

Revaluation
changes

Closingbalanceas of
31.12.20XX

Foreign Direct Investment

393

Section B. Aggregated Balance Sheet of GBC1s Managed by Your Company (continued)

1.8
1.9
1.9.1
1.9.2

1.9.3
1.10
1.11

1.12
1.12.1
1.12.2
1.12.3
1.13
1.13.1
1.13.2
1.13.3
1.14

1.14.1
1.14.2
1.14.31.15

1.15.1
1.15.2
1.15.3
1.16
1.17

Reporting Currency: U.S. dollars (millions)
Transactions
Opening(+)(−)
balance as ofAssets01.01.20XX
Cash, and deposits held at resident banks
Nonﬁnancial assets owned in Mauritiusof which:(1) Buildings(2) Machinery and equipment(3) IT inclusive of expenses to develop
databases(4) Inventories of goods and other
Shares in afﬁliated resident enterprises(other than GBCs)
Nonﬁnancial assets owned abroad (such as
property, equipment, inventories of goods,
etc.)Interest income (net of tax) receivable from
(1) Afﬁliated nonresidents(2) Unafﬁliated nonresidents(3) Residents
Dividend income (net of tax) receivable
from(1) Afﬁliated nonresidents(2) Unafﬁliated nonresidents(3) Residents
Any other assets—other than shares,
loans, and debt securities and notclassiﬁed elsewhere—held with afﬁliatednonresidents (please specify)1---------------------------------------------------------------------------------------------------Any other assets—other than shares, loans,and debt securities and not classiﬁed
elsewhere—held with unafﬁliatednonresidents (please specify)1---------------------------------------------------------------------------------------------------Other assets held with residents
Total assets (1.1+1.2+1.3+1.4+1.5+1.6+1.7+1.8+1.9+1.10+1.11+1.12+1.13+1.14+1.15+1.16)

Other
changes involume

Revaluation
changes

Closingbalanceas of
31.12.20XX

394

Balance of Payments and International Investment Position Compilation Guide

Section B. Aggregated Balance Sheet of GBC1s Managed by Your Company (continued)

2.1
2.1.1

2.1.2
2.1.3
2.1.4
2.2

Liabilities
Borrowing from afﬁliated nonresident
enterprisesof which:(1) Borrowings from
afﬁliated investment funds(2) Direct investor in direct investment
enterprises(3) Reverse investment(4) Between fellow enterprises
Borrowing from unafﬁliated nonresident
enterprises

2.2.1

of which:(1) Short-term on an original maturity
basis

2.2.2

(2) Long-term due for payment within
one year or less

2.2.3

(3) Long-term due for payment inmore than one year

2.3

Debt securities placed with afﬁliatednonresident entities

2.3.1

of which:(1) Placed with afﬁliated investment
funds

2.3.2

(2) Direct investor in direct investment
enterprises

2.3.3
2.3.4
2.4

(3) Reverse investment(4) Between fellow enterprises
Debt securities placed with unafﬁliatednonresident entitiesof which:(1) Short-term on an original maturity
basis

2.4.1

2.4.2
2.4.3
2.5
2.5.1
2.5.2
2.5.3
2.6
2.6.1

(2) Long-term due for payment within
one year or less
(3) Long-term due for payment inmore than one year
Interest income (net of tax) payable toof which:(1) Afﬁliated nonresidents(2) Unafﬁliated nonresidents(3) Residents
Dividend income (net of tax) payable toof which:(1) Afﬁliated nonresidents

2.6.2(2) Unafﬁliated nonresidents

2.6.3
2.7

(3) Residents
Tax payable to foreign governments

Openingbalance as of
01.01.20XX

Transactions
(+)
(−)

Other
changes involume

Revaluation
changes

Closingbalanceas of
31.12.20XX

Foreign Direct Investment

395

Section B. Aggregated Balance Sheet of GBC1s Managed by Your Company (concluded)
Transactions

Liabilities

Openingbalance as of
01.01.20XX

(+)

(−)

Other
changes involume

Revaluation
changes

Closingbalanceas of
31.12.20XX

Any other liabilities—otherthan shares, loans, and debt securities
and not classiﬁed elsewhere—to afﬁliatednonresidents (please
specify)2
2.8.1-----------------------------------2.8.2-----------------------------------2.8.3-----------------------------------2.9
Any other liabilities—other than shares,
loans, and debt securities and notclassiﬁed elsewhere—to unafﬁliatednonresidents (please specify)2
2.9.1-----------------------------------2.9.2-----------------------------------2.9.3-----------------------------------2.10
Other liabilities to residents
2.11
Total liabilities: (2.1+2.2+2.3+2.4+2.5+2.6+
2.7+2.8+2.9+2.10)
Shareholders’ funds
2.12
Shares/units held by afﬁliatednonresidents
2.12.1of which held by

2.8

2.12.22.12.32.12.4
2.13(1) Afﬁliated investment funds(2) Direct investor in direct investment
enterprises(3) Reverse investment(4) Between fellow enterprises
Shares/units held by unafﬁliatednonresidents

2.14
2.14.12.14.22.15
2.15.1
2.15.1.a
2.15.1.b
2.15.2
2.16
2.17
2.18

Shares/units held by residents
held by non-GBCs
held by GBCs
Retained earnings
otherwise due to nonresidents
Afﬁliates
Unafﬁliates
otherwise due to residents
Reserves provisions
All other shareholders’ funds
Total shareholders’ funds(2.12+2.13+2.14+2.15+2.16+2.17)

2.19

Total liabilities and shareholders’ funds(2.11+2.18)

Please note that items 1.14 and 1.15 are residual categories and to help us with any reclassiﬁcation at our end, please specify the nature of
the position or transaction. Please also note that unafﬁliated nonresidents include banks.

1

Please note that items 2.8 and 2.9 are residual categories and to help us with any reclassiﬁcation at our end, please specify the nature of theposition or transaction. Please also note that unafﬁliated nonresidents include banks.

2

396

Balance of Payments and International Investment Position Compilation Guide

Section C. Income and Expenditure

Please report Income and expenses during the year 20XX.
1. Income from services provided to:
U.S. Dollars
Residents1
GBC1s

Other than
GBC1s

Nonresidents

Total

Total
of which (please list main services)(1) Gains on foreign exchange / foreign currency translation(2) Net change in fair value of available –for sale investments

2. Recurrent expenses on goods and services paid to:
U.S. Dollars
Residents1
GBC1s
Total
of which:(1) Fees paid to management companies(2) Management fees paid to CIS manager(3) Fund administration fees(4) Other administration expenses(5) Legal fees(6) Accounting fees(7) Auditing fees(8) Director fees(9) Secretarial fees(10) Consultancy fees(11) Advisory fees(12) Professional fees(13) Tax fees(14) Custody fees(15) Rental of premises(16) Rental of equipment(17) Bank charges(18) Bank interest(19) Insurance premium(20) Income tax(21) Rates and other taxes(22) License fees(23) Depreciation(24) Other expenses (please specify)

Other than GBC1s

Nonresidents

Total

Foreign Direct Investment

397

Section C. Income and Expenditure (concluded)
3. Other transactions
U.S. Dollars
A. For goods which have not transited through Mauritius(1) Value of goods sold.................................................................................................

(2) Cost of sales.................................................................................................

B. Compensation of employees

Paid in Mauritius............................
............................
............................
............................

(1) Wages and salaries including bonus(2) Other2

Paid outside Mauritius............................
............................
............................
............................

Total............................
............................
............................
............................

4. Number of employees as of June 20XX
Residents

Nonresidents

Male
FemaleTotal
1Receipt from and payment to GBC1s in Mauritius are considered to be with residents.

Includes overtime, payment in kind, travelling allowances, other allowances, retirement pension, employer’s contribution to pension fundand life insurance scheme, fringe beneﬁts, and so forth.

2

APPENDIX

5Compiling Balance of Payments
and IIP by Partner Economy

Introduction
A5.1 The body of the Guide is concerned with thecompilation of global balance of payments statistics—that is, economic transactions of an economy
in respect of all other economies. Similar statistics
can be compiled on a regional basis to show an economy’s transactions with residents of a selected foreign economy (e.g., main trade partners) or groupof economies. In the Guide, these economies arereferred to as partner economies, and this appendix examines methods by which the compiler may
compile balance of payments statements by partner
economy.

Economy Classiﬁcation
A5.2 Compilation of balance of payments statistics on a regional basis provides many analytical andcompilation benefits. Partner economy statistics provide information that enables users to develop greater
insight into balance of payments aggregates. Governments use partner economy statistics as a basis forpolicy formulation and bilateral negotiations. Use ofpartner economy statistics facilitates bilateral reconciliations and, therefore, enhances the quality of balance of payments statistics.
A5.3 In compiling partner economy statistics, thecompiler must decide on the principle of classificationand the list of economies or economy groupings to beshown.
A5.4 The principle of classification used in balanceof payments regional statistics is based on change ofownership. Application of this concept to regionalbalance of payments statistics means that, for transactions in goods, the economy classification should
be based on the economies of residence of the former owners of imports and of the new owners of exports; for transactions in services, on the economy ofresidence of the provider and the recipient of the ser-vice; for income, on the economy of residence of thecompany earning or paying the income; and for transfers, on the economy to which the offset transaction isrecorded. For the IIP, liabilities should be classified by
the economy of residence of the holder of the claim;
and assets should be classified by the economy of theissuer of the liability.
A5.5 The BPM6 indicates that for financial transactions in many cases the transactor principle is applied (BPM6, paragraph 4.148) (noting that the BPM5
allowed the use of either the transactor principle or
the debtor/creditor principle) partly because it may
represent the only information available.1 Under thetransactor principle, transactions are classified by
the economy of the nonresident counterparty to thetransaction. However, as noted earlier, acquisition of
securities should be recorded according to the issuerof the liability.
A5.6 Table A5.1 shows the treatment of a secondary market transaction in a security under the transactor principle. In the example it is assumed that a
resident of economy B has issued a security that is
initially held by a resident of economy A. The resident of economy A sells the security to a resident of
economy C.
A5.7 In data sources available to the compiler, theclassification by economy may not be based on a strictchange-of-ownership concept. For example, transactions in goods may be classified by economy of origin
or consumption. The balance of payments compiler
may wish to publish supplementary statistics based onalternative classifications. For example, publication of
information on securities classified on both a transactor principle basis and on a debtor/creditor principle
basis could help an analyst gain a better understandingof international capital markets and the impact ofthese markets on the balance of payments.
1

The compiler should make the economy attribution clear for users.

Compiling Balance of Payments and IIP by Partner Economy

399

Table A5.1 Treatment of Transactions and Other Changes in Securities under the Transactor
Principle
Partner economy
A

B

C

Economy A records

Net acquisition of ﬁnancial
assets—securities [decrease]

Economy B records

Other change in ﬁnancial
assets and liabilities—
securities—volume change[decrease]

Other change in ﬁnancial
assets and liabilities—
securities—volume change[increase]

Economy C records

Net acquisition of ﬁnancial
assets—securities [increase]

Table A5.2 Balance of Payments Transactions of Economy A with Partner Economies
Economy A’s recording of transactions with
Economy B

Total

Economy C

CreditDebit

CreditDebit

Credit

Debit

Goods

...

100

...

...

...

100

Net errors andomissions

...

...

...

2

...

2

Net
acquisitionof ﬁnancial
assets (debit)Net
incurrenceof liabilities(credit)Net
acquisition ofﬁnancial assets(debit)Net
incurrenceof liabilities(credit)Net
acquisitionof ﬁnancial
assets (debit)Net
incurrenceof liabilities(credit)

...

...

-102

...

-102

...

100

100

100

100

Bank external
assetsMultilateral
settlements

Multilateral Settlements
A5.8 Multilateral settlements arise when an company in one economy undertakes a transaction witha resident of a second economy and the payment forthat transaction involves a claim on a resident of athird economy. This practice requires the compiler torecord offsetting entries in regional balance of payments accounts in order to balance them for particular economies or regions (assuming that balanced
accounts at the regional level are required). In practice, those entries will typically be combined with net
error and omission items as it is generally not possible
to measure a pure multilateral settlement item.
A5.9 An example illustrates these points. Economy
A imports a good, valued at 100, from economy B
and uses a bank account in economy C to make thesettlement. However, as a result of measurement errors, the payment is recorded by economy A as 102.
In compiling a partner economy balance of payments
statement, economy A would classify imports from
economy B, but the transaction in foreign currency
assets would be attributed to economy C. To balance
the various accounts, the compiler would have to record multilateral settlements items for economies B
and C. Table A5.2 shows the entries that would be recorded in a partner economy classification of balanceof payments transactions for economy A. The tabledemonstrates the necessity for creating the multilateral settlement item to balance the accounts and also
shows that these entries cancel each other when accounts are consolidated.

400

Balance of Payments and International Investment Position Compilation Guide

Data Sources and Speciﬁc Treatments

transit trade (unless the goods were cleared throughcustoms into economy A—an unlikely event) andthus would not be recorded. Another problem withthe use of the purchase/sale concept with IMTS is thatagents often act on behalf of principals and, according to the guidelines, identification of principals canconsume considerable time and resources.

Data Sources
Use of international merchandise trade
statistics

A5.10 International merchandise trade statistics(IMTS) are described in Chapter 5, which includes a
discussion of the international guidelines, concepts,
and definitions that the IMTS compiler is expected
to follow. According to the change-of-ownershipprinciple, imports would be classified by economy ofpurchase—the economy where the importer’s cocontractor is domiciled or has its business—and exports
would be classified by economy of sale—the economy
where the exporter’s cocontractor is domiciled or has
its business. However, the IMTS guidelines reject thisconcept as it essentially measures the movement ofgoods rather than the change of ownership of goods.
The guidelines illustrate the inconsistency by using an
example, shown in Table A5.3, in which a resident of
economy A buys goods produced in economy B andsells the goods to a resident in economy C, but ships
the goods directly from economy B to economy C (thisis an example of merchanting, which should be recorded in the balance of payments accounts as negative
exports when the goods are acquired, and as positive
exports when resold (see Merchanting in Chapter 11).

A5.12 Another concept used to classify partner
economy data for IMTS is economy of origin andconsumption. The economy of origin is the economy
in which the goods are produced or manufactured,
whereas the economy of consumption is the economy
known at the time of dispatch as the economy inwhich the merchandise is intended to be consumed,
utilized, or further processed. As the guidelines point
out, determinations of economy of origin are usuallystraightforward, but determinations of economy ofconsumption are much more difficult.
A5.13 Still another classification is economy ofconsignment/economy of destination. For imports,
the economy of consignment is the economy fromwhich goods were initially dispatched, without any
commercial transactions taking place in intermediate
economies, to the importing economy. For exports,
the economy of destination is the economy known at
the time of dispatch to be the final economy where
goods are to be delivered.

A5.11 Table A5.3 uses the purchase/sale (changeof ownership) concept and shows transactions of
economies B and C with economy A, which would
not record the transaction in merchandise trade statistics as there is no physical movement of the good
into or out of economy A. If goods were shipped byeconomy A, the shipment would be treated as direct

A5.14 The International Merchandise Trade Statistics Manual (IMTS 2010) recommends in the caseof imports the origin and in the case of exports thedestination concept to be the most suitable for IMTS.
However, the IMTS 2010 recognizes that the partner
economy data compiled on this concept are very often

Table A5.3 Comparison of Merchandise Trade and Trade in Goods for Merchanting
IMTS (movement of goods)

Balance of payments—trade in goods(change of ownership)Partner economy

Partner economy

A

B

C

A

B

C

Economy Arecords

...

...

...

...

Negative
exportExportEconomy Brecords...

...

ExportExport...

...

Economy Crecords...

Import...

Import...

...

Compiling Balance of Payments and IIP by Partner Economy

not comparable (IMTS 2010, paragraphs 6.25 and6.26) and recommends that economy of consignment
be recorded for imports as the second partner economy attribution, and that economy of consignment be
an encouraged item for exports.2

401

approach produces a symmetrical treatment notachieved by the origin/consumption approach.
A5.17 Apart from transactions that involve merchanting and are recorded in goods, the concept of consignment/destination is the same as the change-of-ownershipprinciple required for use in the balance of payments.
This Guide recommends that the IMTS compiler produce IMTS on a consignment/destination basis and thatthe balance of payments compiler use these data to compile partner economy statistics on goods. Transactions ingoods could be adjusted to a complete change-of-ownership basis if the balance of payments compiler collects
data on gross purchases and sales of goods classified byeconomy from companies involved in merchanting—asubject that is discussed in Chapter 3. Suitable questions in
respect of merchanting are contained in model form 5 inAppendix 8.

A5.15 Table A5.4 provides examples of transactions recorded by using the consignment/ destinationand the origin/consumption concept. In the example,
petroleum is produced and refined in economy B andpurchased by a resident of economy A, who imports
the petroleum and stores it in economy A. Subsequently, the petroleum is exported to economy C.
A5.16 Table A5.4 shows that, if the concept of origin/consumption approach is used, economy A shows anexport to economy C while the latter shows an importfrom economy B. Further, economy A shows an export
to economy C while economy C registers an importfrom economy B. If the consignment/destination approach is used, economy B shows an export as destinedfor economy A; economy A shows an import consigned
from economy B and destined for economy C; andeconomy C shows an import consigned form economy A. In other words, the consignment/destination

Use of international transactions reporting
system (ITRS)

A5.18 There are no international standards forthe content, reporting thresholds, or degree of detailcollected in an ITRS, and the method of economy

Table A5.4 Use of Origin/Consumption and Consignment/Destination to Record Goods Trade
Merchandise trade origin/consumption

Merchandise trade consignment/destination

Partner economy

Partner economy

A

B

C

A

B

C

Economy Arecords...

ImportExport...

ImportExportEconomy Brecords

Export...

...

Export...

...

Economy Crecords...

Import...

Import...

...

2
IMTS 2010 states:
Paragraph 6.25: Although no single method of attributing partner country is ideal, attribution by origin for imports meets what is considered to be a priority application of international merchandise trade statistics, namely, matters of trade policy and related economic
analysis. Consequently, it is recommended that:(a) In the case of imports, the country of origin be recorded;(b) In the case of exports, the country of last known destination be recorded.
Paragraph 6.26: Country of consignment. Since the partner data compiled on the basis of the country of origin (for imports) and the country of last known destination (for exports) are very often not comparable and in view of the needs for internationally comparable partner
data for analytical purposes as well as for trade data reconciliation studies, it is recommended that country of consignment be recorded
for imports as the second partner country attribution, alongside country of origin. Considering, in the case of exports, that countries often
do not differentiate the country of last known destination and the country of consignment and that their separate recording could create asignificant additional data-reporting and data-processing burden, the compilation of export statistics on the country of consignment basis
is only encouraged, depending on a country’s needs and circumstances. It is recognized that the compilation of country of consignment
for exports may be considered by some countries as a longer-term objective.

402

Balance of Payments and International Investment Position Compilation Guideclassification varies from economy to economy. Generally, the classification is based on the economy ofresidence of the nonresident transactor and, in mostcases, this is appropriate for balance of payments purposes. For the recording of financial transactions, an
ITRS generally supports the transactor principle.

of portfolio investment liabilities and transactions inliabilities. More details on the use of CDIS and CPISin the compilation of balance of payments and IIP
statements are presented in Chapter 7.

A5.19 A particular problem in using an ITRS tocompile partner economy statistics is that the nonresident principal to a transaction may use an agent
who is a resident of a different economy. For example,
a resident of economy A may use a security broker in
economy B to purchase securities from a resident ineconomy C. It is unlikely that two principals (in economies A and C) will know each other’s identities, andthe ITRS in each of these economies will probably reflect transactions with economy B. This classification
is inconsistent with the change-of-ownership principle. A similar problem will occur when nominees
are used to undertake transactions for nonresident
principals. In practice, relatively little can be done toovercome these problems, other than analyzing information that may be available from international
financial centers on these types of transactions.

A5.22 If business surveys are used to compile balance of payments statistics, the compiler should ensure that information is classified by partner economy
in accordance with the change-of-ownership principle. With regard to financial transactions, businesssurveys generally support the debtor/creditor principle rather than the transactor principle, and model
forms 17 and 18 in Appendix 8 are consistent with the
debtor/creditor principle. However, there could be
problems with identifying the economies of residenceof purchasers of bearer securities issued by companiesof the compiling economy. In such cases, sometimes
the compiler classifies the transactions to a category
called international capital markets. While this solution is practical, it is not optimal, and it reduces theusefulness of information for bilateral comparisons.
Securities issued by the compiling economy and heldby nonresident nominees located in economies otherthan the economy of the nonresident principal are
likely to be misclassified in business surveys. In practice, apart from the use of partner economy sources,
little can be done to overcome this problem.

Use of securities databases

A5.20 Chapters 3 and 10 describe the use of securities databases in conjunction with security-by-security
collections for the compilation of portfolio securities
information. The information included in securities
databases can allow for the identification of the economy of the issuer and the economy of the holder.
Use of external sources of information

A5.21 There are a number of external sources thatprovide information by partner economy to which
the compiler will have access. These sources include
bilateral data compiled by compilers in other economies that represent the counterparts to transactionsof residents of the compiling economy. In addition,
the IMF conducts two surveys that can be used as thebasis for compilation of bilateral data for componentsof the financial account and IIP: the Coordinated Direct Investment Survey (CDIS) collects information
on direct investment liabilities and can be used in thecompilation of direct investment assets and transactions in assets; and the Coordinated Portfolio Investment Survey (CPIS) collects information on portfolio
investment assets and can be used in the compilation

Use of business surveys

Issues common to all sources

A5.23 When other balance of payments sources
are used, the compiler should make every effort toensure that partner economy information is classified
correctly. If it is not possible to obtain correctly classified data from the source, the compiler should, atleast in significant cases, investigate alternative sources
to obtain supplementary information. For example,
partner economy estimates for trade credits could bederived from an analysis of partner economy sharesfor imports and exports. Care should be taken to ensure that the supplementary source exhibits a partner
economy pattern similar to that of the item that thesource is being used to measure.

Presentations of Direct Investment
by Partner Economy
A5.24 There are two presentations that are available for use when compiling direct investment (DI)Compiling Balance of Payments and IIP by Partner Economy

information, including income flows, transactions, andpositions—DI according to the asset/liability principle,
and DI according to the directional principle. These
presentations serve different analytical purposes. The
standard presentation for global balance of payments
is according to the asset/liability principle; however, forpartner economy data, the directional principle could
be more preferred by economies. The CDIS requires
data to be reported on the basis of the directional principle, and the OECD Benchmark Definition of Foreign
Direct Investment, 4th edition, recommends the directional principle to be used for bilateral statistics.
The asset/liability principle

A5.25 DI aggregates as a part of national macroeconomic statistics are based on the asset/liability
principle. They are consistent with balance of payments statistics and IIPs as well as the components ofnational accounts statistics. These data provide for an
economy the aggregate totals of direct investment positions in assets and liabilities; net acquisition of direct
investment assets and net incurrence of direct investment liabilities; and income receivable on assets andincome payable on liabilities.
The directional principle

A5.26 DI statistics compiled according to the directional principle show outward investments andinward investments taking into account reverse investments (e.g., investment of DIENTs of the reporting economy into direct investors abroad are recorded
as negative inward investment) as well as investment

403

into fellow enterprises—the direction in the lattercase depending on whether the ultimate controllingparent of the resident fellow enterprise is a resident ora nonresident of the compiling economy.
A5.27 Note that the use of the ultimate controlling parent of the resident can lead to asymmetries intreatment where compilers in the economies of both
fellow enterprises may both recognize the investment
as outward (for example, where the common direct
investor does not have a controlling stake in either fellow) or as inward (for example, where the common
direct investor has a controlling stake in both fellows,
and is resident in a third economy). In both cases, theposition should be recognized as a positive inward investment for one economy and a negative inward investment in the other economy; both positions should
be valued the same (e.g., at market price).3
A5.28 The identification of the ultimate controlling parent is discussed in Appendix 4, where Tables
A4.2 and A4.3 show the different treatment of direct
investment aggregates under the asset/liability principle and under the directional principle. These treatments are presented also in Chapter 7 of the Guide,
Table 7.1.

Speciﬁc Treatment of Direct Investment
IncomeA5.29 Table A5.5 shows the investment income
flows among three entities in a direct investment relationship. A company in economy A has a wholly
owned subsidiary in economy B, which, in turn, has awholly owned subsidiary in economy C.

Table A5.5 Income Accounts of Companies in Economies A, B, and C
Economy A

Economy B

Economy C

Operating proﬁt

60

20

100

Other current income1

892

50

−352

Net earnings before tax

149

70

65

Taxes

49

16

15

Dividends

50

25

20

Reinvested earnings

50

29

30

Other current income includes interest, dividends, and reinvested earnings on direct investment receivable, less interest payable.

1
2

Income earned by the company in economy A includes accrued interest of 35 from the company in economy C on a loan made by the com-pany in economy A to the company in economy C.

3

See the BPM6, paragraphs 3.67–3.91, for more details on valuation in balance of payments and IIP.

404

Balance of Payments and International Investment Position Compilation Guide

Table A5.6 Partner Economy Direct Investment Income Statistics for Economies A, B, and C
Economy A’s accounts with

Economy B

Economy C

Total

CreditDebit

CreditDebit

CreditDebit

Reinvested earnings

29

...

...

...

29

...

Dividends

25

...

...

...

25

...

Interest

...

...

35

...

35

...

CreditDebit

CreditDebit

CreditDebit

Reinvested earnings

...

29

30

...

30

29

Dividends

...

25

20

...

20

25

Interest

...

...

...

...

...

Economy B’s accounts with

Economy A

Economy C’s accounts with

Economy C

Economy A

Total

Economy B

...
Total

CreditDebit

CreditDebit

CreditDebit

Reinvested earnings

...

...

...

30

...

30

Dividends

...

...

...

20

...

20

Interest

...

35

...

...

...

35

A5.30 Table A5.6 shows relevant income entries recorded in the regional balance of payments statementsof economies A, B, and C. There are no reinvested
earnings and dividend transactions between the company in economy A and the company in economy Cbecause reinvested earnings and dividends payable by
the company in economy C are solely attributable tothe company in economy B. However, income payable
by the company in economy C for a loan made by thecompany in economy A should be shown as an income payment between economies A and C.

Attribution of Data on Merchantingof Goods by Partner Economies
A5.31 Merchanting of goods involves two partner
economies for one transaction. Therefore, the compiler
needs to be aware of the right allocation of partner

economies. For the economy of the merchant goods
are recorded as gross values: negative export (negative
credit) for the acquisition and export (positive credit)
for the sale. The economy that sold the goods to theeconomy of the merchant and the economy that purchased the goods from the economy of the merchant(economy A in Table A5.3) record their merchandise
trade in the usual way—that is, as exports and importsof general merchandise, respectively, and not as merchanting transactions. Table A5.3 gives an overview
about the recording.
A5.32 As the goods involved do not cross the customs boundary of the economy of residence of themerchant, these data need to be collected directly via
enterprise surveys by all involving economies (seeAppendix 8, model form 5). Details on compiling dataon merchanting are presented in Chapters 3 and 11.

APPENDIX

6

Linkages with Other Macroeconomic
Datasets

Linkages of the International Accounts
with the National Accounts
Introduction
A6.1 Information from the international accounts
is essential to a full implementation of the System of
National Accounts 2008 (2008 SNA). The addition of
the balance on primary income converts GDP, a measure of the income arising in an economy from production by units resident in that economy, to grossnational income (GNI), a measure of the income
arising from production anywhere in the world attributable to the residents of the particular economy.
This is further converted to gross disposable incomeby the balance on secondary income. The difference
between domestic saving and capital formation (investment) equal to the current account balance is reflected in the capital account balance and net lending
or borrowing in the international accounts. Further,
the financial account information and the international investment position (IIP) make it possible tosee to what extent an economy has claims on nonresidents or liabilities to nonresidents.
A6.2 This integration of the two systems is madepossible because the underlying accounting systems
are identical, although different terminology andforms of presentation are sometimes used. Appendix
7 of the BPM6 provides a summary account of thecomplete concordance between the 2008 SNA andthe BPM6 in respect to residence, valuation, time ofrecording, conversion procedures, and coverage offlows and positions.
A6.3 In addition to measuring activity within
the domestic economy, the SNA records the exchanges between the domestic economy and therest of the world as if the nonresident units engaged
in transactions with units resident in the domestic

economy formed a distinct institutional sector of
the economy. The exchanges (flows) of all resident
units with nonresident units (and claims of one setof units on the other) are recorded in the rest of theworld sector of the 2008 SNA from the perspectiveof the rest of the world. Thus, for example, imports
are a resource to the domestic economy and exports are used by the rest of the world, reversing
the BPM6 convention that imports are a debit andexports a credit.
A6.4 Chapter 2 of the BPM6 includes a separate
annex (Annex 2.2) illustrating with a numeric example (1) an overview of the integrated economic
accounts as presented in the 2008 SNA, and (2) the
links between the financial instruments and thefunctional categories used in the BPM6, including
the conversion of data from instrument to functional category. Furthermore, standard components (BPM6, Appendix 9) include the 2008 SNA
codes, where appropriate, which facilitates comparison between the international accounts and the2008 SNA.
A6.5 This appendix complements the text in the
BPM6 with a presentation in parallel of the recording of various flows and positions in the 2008 SNA
vis-à-vis the BPM6 along the lines of the accounting
structure of the two systems. The intention here is toillustrate the correspondence of indicators and theconsistency between the two datasets. It also serves
the need for validation of the two datasets by theirrespective compilers, in particular when different
source data are used for some of the indicators. It is
worth noting the practice common in many economies whereby the balance of payments and IIP data
are compiled first and subsequently incorporated as
the relevant components of the 2008 SNA rest of theworld accounts.

406

Balance of Payments and International Investment Position Compilation Guide

Classiﬁcation
A6.6 The classification systems of the 2008 SNA
and BPM6 mainly employ consistent coverage andterminology. There is, however, a major presentational difference regarding the grouping of the financial assets and liabilities by functional categories—theprimary level of classification in the BPM6 with impacts on the financial account, the IIP, and the categories of investment income—as compared withthe categories used by the 2008 SNA in the same accounts. These differences are illustrated in the presentation of the sequence of accounts at the end of
this appendix.
A6.7 Other differences between the BPM6 and the2008 SNA concern the breakdown of the institutional
sectors and their groupings. While consistent in coverage, the aggregation of institutional sectors differs
according to the importance given to sectors and subsectors in the two datasets. Table A6.1 illustrates thecorrespondence between the classification of institutional sectors in the two systems.

Comparison/Correspondence between theInternational Accounts and the SNA
A6.8 As in the 2008 SNA, the international accounts(BPM6) cover current and accumulation accounts(flows), as well as positions in the balance sheet (IIP).
In the international accounts, transactions (flows) aregathered together under the balance of payments. In
the balance of payments the current accounts comprise
the goods and services account, the primary income
account, and the secondary income account while theaccumulation accounts include the capital accountand the financial account. In addition, flows that are
not transactions but affect the position of assets and liabilities are incorporated in a further account, the otherchanges in financial assets and liabilities. The IIP covers
that part of the national balance sheet that represents
the cross border element—that is, the position of financial claims (assets) and liabilities where one party isnonresident, and gold bullion held as reserves.
A6.9 The presentation ahead highlights the similarities and differences in the accounting presentation

Table A6.1 Conversion of the Sector Breakdown: System of National Accounts (SNA)—Balance ofPayments
Domestic sectors as they appear in the 2008 SNA and BPM6
2008 SNA

BPM6

Nonﬁnancial corporations

Central bankFinancial corporations

Deposit-taking corporations except the central bank

Central bank

General government

Deposit-taking corporations except the central
bank

Other sectors
Other ﬁnancial corporations

Money market funds

Money market funds

Non-MMF investment funds

Non-MMF investment funds

Other ﬁnancial intermediaries except insurance
corporations and pension funds

Other ﬁnancial intermediaries except insurance
corporations and pension funds

Financial auxiliaries

Financial auxiliaries

Captive ﬁnancial institutions and money lenders

Captive ﬁnancial institutions and money lenders

Insurance corporations

Insurance corporations

Pension funds

Pension funds

General government

Nonﬁnancial corporations, households, and NPISHs
Nonﬁnancial corporations

Households

Households

Nonproﬁt institutions serving households

Nonproﬁt institutions serving households

Linkages with Other Macroeconomic Datasetsof the 2008 SNA and BPM6. This presentation is account by account and emphasizes the balancing items,
as applicable. In the BPM6, the entries in the current
accounts are described as credits and debits. In the2008 SNA, they are described as resources and uses,
but, as noted in paragraph A6.3, a credit for the national economy in the BPM6 is treated as a use by therest of the world in the 2008 SNA and a BPM6 debit
as a resource in the 2008 SNA. In the BPM6, there isa balancing item for each account showing the excess
of credits over debits (or a net balance of the financial
account). In addition, the BPM6 shows the cumulative value of balancing items up to and including theaccount under consideration. This is done for comparison with the 2008 SNA, where only the cumulative balance is shown because the 2008 SNA records
the balancing item on the use side of the previous
account as the first entry on the resource side of thesubsequent account.
A6.10 To aid the exposition, Table A6.2 at the endof this appendix shows the main entries for the domestic economy as well as those for the rest of theworld from the 2008 SNA perspective, as well as themain entries for the international accounts. The numeric values are those given in the annex to Chapter 2of the BPM6.

Current Accounts
A6.11 As well as accounts showing transactions
between different units in the economy, or between
a resident and a nonresident unit, the 2008 SNA also
contains an account called the goods and services account. It shows how all goods and services made available in the economy through domestic production
or imports are used domestically or are exported. It
contains all items that do not have counterpart items
elsewhere in the sequence of accounts in the SNA andis the source of deriving GDP.
A6.12 There is no equivalent in the international
accounts for the SNA’s production account that shows
how goods and services are made available to the domestic economy via production. Thus, the recordingof imports and exports in the balance of payments
is taken as parallel to part of the goods and services
account.
A6.13 The balance of payments emphasizes thedistinction between goods and services. Goods are407

presented at an aggregated level while services arecovered in detail. The classification of services in
the 2008 SNA is strictly consistent with the Central
Product Classification (CPC); in the BPM6, it differsfrom the CPC for a few products—that is, travel, construction, and government goods and services n.i.e.,
which are transactor-based (relating to the provider/acquirer rather than the product itself). These distinctions reflect policy interests as well as source data issues (see Chapter 10, BPM6). In summary tables of
the SNA, imports and exports are usually shown intotal or broken down into goods and services separately only.
A6.14 The external balance on goods and services
for the rest of the world, which is part of the goods
and services account, is mirrored by the balance on
goods and services in the international accounts.
A6.15 There are no matching accounts in theinternational accounts to the SNA’s production account, showing the value of goods and services produced by resident units, or generation of income
account, which shows how value added arising fromproduction accrues to government and to the otherresident units participating directly in the production process.
A6.16 The primary income account entries in thebalance of payments are largely concerned with compensation of employees and property income, exactly
as in the allocation of primary income account in the2008 SNA. Also recorded in the primary income account are the payments of taxes on production payable by a resident to another government, as well as
any subsidy receivable by a resident from anothergovernment.
A6.17 Property income in the 2008 SNA is equal
to investment income in the balance of payments
plus rent. Rent rarely arises in cross border situations
because all land is deemed to be owned by residents,
if necessary by creating a notional resident unit. An
example where rent may be recorded in the international accounts may be short-term fishing rights interritorial waters provided to foreign fishing fleets.
Also, production sharing agreements in explorationof natural resources may include rent transactions(see Chapter 10, Box 10.1). Investment income inrelation to cross border transactions reflects the return to the financial capital invested abroad and vice

408

Balance of Payments and International Investment Position Compilation Guide

versa. Interest flows are measured on exactly the same
basis in both the BPM6 and the 2008 SNA. With effectfrom the BPM6, interest is adjusted for the implicit
service charge (known as financial intermediation
services indirectly measured (FISIM)) levied by deposit-taking corporations and treated by them as partof interest. FISIM is treated as an import/export of financial services.
A6.18 In order to make the reconciliation between investment income in the international accounts and in the 2008 SNA, subcomponents below
the level of the functional categories of investment
income need to be used. For example, the figures forinterest payments to and from the rest of the world
as shown in the 2008 SNA are the sum of interest
payments under each functional category heading,as indicated by the supplementary table to the rightof these headings.
A6.19 The balance on primary income, the balancing item of the primary income account in the balanceof payments, shows how GDP is converted to the GNI
by payments of primary income to and from abroad.
The cumulative balancing item for this sequence of
the international accounts is the balance on goods,
services, and primary income.
A6.20 The entries in the secondary income account of the balance of payments are mainly current transfers. These entries correspond exactly
to those in the secondary distribution of income
account in the SNA. Several of these are particularly important in the balance of payments, inparticular current international cooperation andpersonal transfers (remittances) sent by households in one economy to households in anothereconomy (see BPM6, Chapter12 and Appendix 5).
Insurance flows related to reinsurance can be of significant importance internationally. The balance of
payments records these flows in the same way as the
SNA, both as regards the separation of a financial
service charge and the treatment of direct insurance and reinsurance flows separately and not on
a consolidated basis (more details in Chapter 10,
BPM6). The balance of payments also includes inthe secondary income account an item known as theadjustment for the change in pension entitlements.
This appears in the use of income account in the

SNA, but this account does not exist in the balanceof payments.
A6.21 The balancing item recorded at this point
for the international accounts is the balance on secondary income. The cumulative balance is the current account balance. The SNA records disposable
income as the cumulative balancing item on thesecondary distribution account. There is then another SNA account, the use of income account, forwhich there is no corresponding account in the international accounts. The cumulative balancing itemon the use of income account is saving for the domestic economy and the current external balance forthe rest of the world. This item corresponds exactly
to the current account balance from the international accounts.

The Capital AccountA6.22 The elements of the capital account subject to international transactions contain fewer items
than those covered in the SNA. There are no transactions recording capital formation of produced
assets because the international accounts are notconcerned with the final use of products imported/
exported. There are entries to cover acquisitions
and disposals of nonproduced nonfinancial assets andcapital transfers, although these are infrequent and formany economies may not appear. The account also
records capital transfers receivable by and payable by
the domestic economy, leading to a capital accountbalance.
The Financial AccountA6.23 Of major importance for the international
accounts is the financial account, which, together
with the IIP, plays an important role in understanding the international financing, as well as the international liquidity and vulnerability of a given
domestic economy. In particular it indicates how acurrent account deficit was funded and how a surplus was used.
A6.24 As mentioned earlier, the major differencein presentation in the 2008 SNA and BPM6 concerns
the grouping of the financial assets and liabilities byfunctional categories as the primary level of classification in the BPM6 and the use of the instruments

Linkages with Other Macroeconomic Datasets

and sectors by the 2008 SNA for the same categories.
However, data by functional category are further
subdivided by instrument and institutional sector,
which makes it possible to link them to the corresponding 2008 SNA and monetary and financial statistics items.
A6.25 It must always be the case that the sum oftransactions in financial assets must be equal to thesum of the transactions in liabilities in the matching instruments. Thus the sum of the transactions
within the domestic economy and between residents
and nonresidents in one financial instrument must
be equal for both asset holders and liability holders.
For example, Table A6.2 shows that in the financial
account the change in assets of currency and deposits
held by residents was 89 and by residents in the rest of
the world was 11. The matching liability was 102 forresidents and -2 for nonresidents, making total assets
and liabilities equal to 100.
A6.26 As in the 2008 SNA, the balance of payments
has exactly the same balancing item—net lending or
net borrowing, which represents the balancing item
for the sum of the current and capital accounts, aswell as for their counterpart—the financial account.
In both systems, net lending or borrowing covers
transactions in all instruments used for providing
or acquiring funding, without consolidating matching asset and liability transactions. Conceptually, it
has the same value as the national accounts item forthe total economy, and the same as the national accounts item for the rest of the world but with the sign
reversed.

Balance Sheet—IIP
A6.27 The balance sheet in the 2008 SNA measures the positions of assets, both nonfinancial andfinancial, and liabilities for each institutional sector
so as to derive at the end the net worth by the total
economy. It also shows how the transactions andother flows occurring during the course of a year
explain the changes in positions between the opening and closing balance sheet. The part of the balance
sheet covered in the international accounts is called
the IIP and matches the rest of the world sector in
the 2008 SNA for financial assets and liabilities. Nonfinancial assets do not appear in the international409

accounts as they do not have a counterpart liability
or other international aspect. (If an item previouslyclassified as a capital item is sold abroad, it appears aspart of trade in goods.) In the case of financial claims,
the cross border element arises when one party is resident and the other party is nonresident. In addition,
while gold bullion is an asset that has no counterpart
liability, it is included in the IIP when held as a reserve asset, because of its role as a means of international payments.
A6.28 There is also a balancing item for the balance
sheet called net worth, reflecting the difference between the total value of assets and liabilities. Changes
in net worth due to different transactions and otherflows may also be derived.
A6.29 Figure 2.1 in the BPM6, which shows an
overview of the SNA as a macroeconomic framework including international accounts, illustrates
the sequence of accounts in the 2008 SNA including the balance sheet framework. This is the framework illustrated in the following table showing therelationship between the national and international
accounts.
A6.30 Table A6.2 gives you a comparative overview of the SNA—Balance of Payments accounts.
For the financial account and financial assets andliabilities in the accumulation account part, as well
as for the financial assets and liabilities in the balance sheet part, an additional breakdown is presented of the financial instruments by functional
category.

Linkages of the International
Accounts with Monetary and
Financial Statistics
Introduction
A6.31 The most recent methodology for compiling monetary and financial statistics is contained in
the draft Monetary and Financial Statistics Manualand Compilation Guide (MFSM-CG) of 2013. The
MFSM-CG is broadly consistent with the 2008 SNA
and BPM6, and take account of financial developments since the Monetary and Financial Statistics
Manual (MFSM) 2000 was published. The MFS
focus on the compilation and reporting of balance-

410

Balance of Payments and International Investment Position Compilation Guide

Table A6.2 A Comparative Overview of SNA—International Accounts (continued)
Current accounts

SNA

Balance of Payments
1

Domestic economy

Rest of the worldGoods and services
account2

Uses

Uses

Resources

Uses

499

499

499

Goods

392

392

392

Services

107

107

107

Resources

Imports of goods and services

Exports of goods and services
Goods
Services
External balance on goods and services

Resources

Credits

Debits

540

540

540

462

462

462

78

78

78

−41

41

Production accountOutputIntermediate consumption

3604

133

133

1883

Taxes less subsidies on products
Value added/Net domestic product

3604

1883

1632

Generation of income accountValue added/Net domestic productCompensation of employees

1632
1150

Taxes on production and imports

235

Subsidies−44

Surplus and mixed income

291

Allocation of primary income accountOperating surplus and mixed income

291

Compensation of employees

1150

6

2

6
0

Taxes on production and imports

235

0

Subsidies−440Property income

2

0

391

397

44

38

44

38

Interest

217

209

13

21

13

21

Distributed income of corporations

62

62

17

17

17

17

Reinvested earnings on FDI

0

14

14

0

14

0

Other investment income

47

47

0

0

0

0

Rent

65

65

0

0

0

0

10
Balance of primary income, net

1642

51

Linkages with Other Macroeconomic Datasets

411

Goods and services3
Goods
Services
Goods and services
Goods
Services
Balance on goods and services, net exports
This account does not exist in balance of payments

This account does not exist in balance of payments

Primary income accountCompensation of employees
Taxes on production and imports
Subsidies
Investment income

Directinvestment

Portfolio
investment

Interest**

Distributed income of corporations**

Reinvested earnings on FDI**

Other investment income
Rent
Balance of primary income
Balance on goods, services and primary income*

Financial derivatives Otherand employee stock investment
options*

Reserveassets
*
*

*

*

412

Balance of Payments and International Investment Position Compilation Guide

Table A6.2 A Comparative Overview of SNA—International Accounts (continued)
Current accounts

SNA

Balance of Payments
1

Domestic economy

Rest of the worldGoods and services
account2

Uses

Uses

Resources

Uses

Resources

Resources

Credits

DebitsSecondary distribution of income accountBalance of primary income, net

1642

Current taxes on income, wealth etc.

212

213

1

0

1

0

Net social contributions

333

333

0

0

0

0

Social beneﬁts other than social beneﬁts in kind

384

384

0

0

0

0

Other current transfers

283

244

16

55

16

55

Net nonlife insurance premiums

56

47

2

11

2

11

Net nonlife insurance claims

48

57

12

3

12

3

Current transfers within general government

96

96

Current international cooperation

31

1

1

31

1

31

Miscellaneous current transfers

52

43

1

10

1

10

Current transfers between resident and nonresident households

7

1

1

7

1

7

17

55

−38
Disposable income

1604

Use of income account
Disposable income

1604

Household consumption expenditure

1015

1015

General government consumption
expenditure

352

352

NPISH consumption expenditure

32

32

Adjustment for the change in pension
entitlements

11

Saving205

Current external balance

11

0

–13

0

0

13

0

Linkages with Other Macroeconomic Datasets

Secondary income accountCurrent taxes on income, wealth etc.
Net social contributions
Social beneﬁts other than social beneﬁts
in kind
Other current transfers
Net nonlife insurance premiums
Net nonlife insurance claims

Current international cooperation
Miscellaneous current transfers
Current transfers between resident andnon-resident households
Total current transfers
Balance on secondary income
This account does not exist in balance of payments(but note the adjustment item and also
current account balance shown below otheritems in the secondary income account)

Adjustment for the change in pension entitlements

Current account balance

413

414

Balance of Payments and International Investment Position Compilation Guide

Table A6.2 A Comparative Overview of SNA—International Accounts (continued)
Accumulation accounts

SNA
Domestic economy
Changesin assets

Changes inliabilities
and networth

Balance of Payments

Rest of the world
Changesin assets

Goods and services
account

Changes in Changes
liabilities in assets
and networth

Changes inliabilities
and networth

Credits

DebitsCapital account
Saving205

Gross capital formation

414

Consumption of ﬁxed capital−222

Acquisitions less disposals of nonproduced non-ﬁnancial assets

13
414

0

0

Capital transfers receivable

62

4

Capital transfers payable

−65

−1

1

4

−3
Net lending (+)lnet borrowing (−)

10

−10

10

Net
acquisitionofﬁnancial
assetsNet
incurrenceofliabilities

Financial accountNet lending (+)/net borrowing (−)
Monetary gold and SDRs

4

10
−1

10
1

1

Currency and deposits

89

102

11

−2

−2

11

Debt securities

86

74

9

21

21

9

Loans

78

47

4

35

35

4

Equity and investment fund shares

107

105

12

14

14

12

Insurance, pension and standarized
guarantee schemes

48

48

0

0

0

0

Finanancial derivatives and employee
stock options

14

11

0

3

3

0

Other accounts payable/receivable

15

39

10

−14

−14

10

57
47

Linkages with Other Macroeconomic Datasets

415

Current account balance

Acquisitions less disposals of nonproduced non-ﬁnancial assets
Capital transfers
Capital account balance
Net lending (+) l net borrowing (−)

Net lending (+) / net borrowing (−)

Directinvestment

Portfolio
investment

Financialderivatives

Monetary gold and SDRs1
Currency and deposits*

Debt securities

2/4

Loans

*

Equity and investment fund shares

10/3

Other
investment

Reserveassets

/1

*

−5/11

3/

14/5

5/

4/9

35/4

*

*

*

Insurance , pension and standarized
guarantee schemes**

Finanancial derivatives and employee
stock options

3/0*

Other accounts payable/receivable−4/4

Net acquisition of ﬁnancial assets

8

18

3

−10/6
20

Net incurrence of liabilities

11

14

0

22

8

416

Balance of Payments and International Investment Position Compilation Guide

Table A6.2 A Comparative Overview of SNA—International Accounts (continued)
Accumulation accounts

SNA
Domestic economy
Changesin assets

Rest of the world

Changes inliabilities
and networth

Changesin assets

Goods and services
account

Changes in Changes
liabilities in assets
and networth

Other changes inﬁnancial assets andliabilities account

Changes inNetliabilities changes inand netﬁnancial
worth
assetsNetchangesinliabilities

15

15

7

12

12

Accumulation accounts, continued
Other changes in the volume of assets
Non-ﬁnancial assets

10

Financial assets and liabilities

33

Equity and investment fund shares

22

Insurance, pension and standarized
guarantee schemes

1

1

Monetary gold and SDRs4
Currency and deposits
Debt securities
Loans

Finanancial derivatives and employee
stock options
Other accounts payable/receivable
Revaluation accountNon-ﬁnancial assets

280

Financial assets and liabilities
484

Monetary gold and SDRs

12

Currency and deposits

0

Debt securities

40

Loans

0

Equity and investment fund shares

32

Insurance, pension and standarized
guarantee schemes

0

Finanancial derivatives and employee
stock options

0

Other accounts payable/receivable

0

76

7

42

4

2

2

4

34

3

1

1

3

Linkages with Other Macroeconomic Datasets

Financial assets and liabilities

Directinvestment

Portfolio
investment

Financialderivatives

Other
investment

Monetary gold and SDRs4

417

Reserve assets*

Currency and deposits*

Debt securities

*

Loans

*

Equity and investment fund shares

*

*
*

*
*

*

*

*

*

*

Insurance, pension and standarized
guarantee schemes**

Financial derivatives and employee
stock options*

Other accounts payable/receivable**** value possible but unknown or negligible

Financial assets and liabilities

Directinvestment

Portfolio
investment

Financialderivatives

Other
investment

4

Monetary gold and SDRs

Reserve assets
12/

Currency and deposits*

Debt securities

1/1

Loans

*

Equity and investment fund shares

0/1

*
1/3

*
*

1/2

*

*

*

*

Insurance, pension and standarized
guarantee schemes**

Financial Derivattives and employee
stock options
Other accounts payable/receivable

*
*

*
*

418

Balance of Payments and International Investment Position Compilation Guide

Table A6.2 A Comparative Overview of SNA—International Accounts (concluded)
Balance sheets

SNA

IIP

Domestic economy

Rest of the world

AssetsLiabilities

AssetsLiabilities

AssetsLiabilities

4621
8231

7762

805

1274

1274

805

770
1482
1263
1384
2614
470

0
1471
1311
1437
2756
471

0
105
125
70
345
26

770
116
77
17
203
25

770
116
77
17
203
25

105
125
70
345
26

21
227

14
302

0
134

7
59

7
59

0
134

482
523

505

54

72

72

54

Monetary gold and SDRs4
Currency and deposits
Debt securities
Loans
Equity and investment fund shares

11
89
126
78
141

0
102
116
47
141

1
11
13
4
15

12
−2
23
35
15

12
−2
23
35
15

1
11
13
4
15

Insurance, pension and standarized guarantee schemes

49

49

0

0

0

0

14
15

11
39

0
10

3
−14

3
−14

0
10

5103
8754

8267

859

1346

1346

859

Monetary gold and SDRs4
Currency and deposits
Debt securities
Loans
Equity and investment fund shares

781
1571
1389
1462
2755

0
1573
1427
1484
2897

1
116
138
74
360

782
114
100
52
218

782
114
100
52
218

1
116
138
74
360

Insurance, pension and standarized guarantee schemes

519

520

26

25

25

Finanancial derivatives and employee stock options
Other accounts payable/receivable

35
242

25
341

0
144

10
45

10
45

Opening balance sheet
Non-ﬁnancial assets
Financial assets and liabilities
Monetary gold and SDRs4
Currency and deposits
Debt securities
Loans
Equity and investment fund shares
Insurance, pension and standarized guarantee schemes

Finanancial derivatives and employee stock options
Other accounts payable/receivable
Total changes in assets/liabilities
Non-ﬁnancial assets
Financial assets and liabilities

Finanancial derivatives and employee stock options
Other accounts payable/receivable
Closing balance sheet
Non-ﬁnancial assets
Financial assets and liabilities

Goods andservices account0144

Note: SNA = system of national accounts; IIP = international investment position. An entry of * indicates an entry is possible but in the example given the value iseither unknown or zero. Where two values are given separated by /, the ﬁrst ﬁgure relates to assets, the second to liabilities.
Rest of the world, as a pseudo sector in the SNA, records ﬂows reaching/ leaving the national economy from/to the rest of the world
The goods and services account (SNA), shows the balance between the total goods and services supplied as resources to the economy andthe use of the same gods and services
3
Balance of payments is part of the goods and services account (SNA)
4
In this table, ”monetary gold and SDRs“ are shown at equivalent values on the asset and liability sides of the balance sheet. Becausemonetary gold bullion has no counterpart liability, this table implicitly assumes that holdings of monetary gold bullion are zero.
1
2

Linkages with Other Macroeconomic Datasets

Financial assets and liabilities
Monetary gold and SDRs4
Currency and deposits
Debt securities
Loans
Equity and investment fund shares
Insurance , pension and standarized
guarantee schemes
Finanancial derivatives and employee
stock options
Other accounts payable/receivable

Financial assets and liabilities
Monetary gold and SDRs4
Currency and deposits
Debt securities
Loans
Equity and investment fund shares
Insurance, pension and standarized
guarantee schemes
Finanancial derivatives and employee
stock options
Other accounts payable/receivable

Financial assets and liabilities
Monetary gold and SDRs4
Currency and deposits
Debt securities
Loans
Equity and investment fund shares
Insurance, pension and standarized
guarantee schemes
Finanancial derivatives and employee
stock options
Other accounts payable/receivable

Directinvestment
0/0
10/15
*
53/155*

Portfolio
investment

Financialderivatives

Other
investment
80/105

40/110
17/70
*
25/26

150/190

7/0
15/40

Directinvestment
*
3/5
*
10/4

Portfolio
investment

Financialderivatives

*

Other
investment
/1
−5/11

15/8
35/4
*

5/11

3/0

*
−10/6

Portfolio
investment

Financialderivatives

Other
investment/1
75/11655/11852/74*

155/201*

Reserveassets
782/
39/
32/
*
*

25/26
10/0

11/44

Reserveassets
12/
3/
5/
*
*

*

−4/4

*
13/20
*
63/159Reserveassets
770/
36/
27/
*
*

44/94

*

Directinvestment419*
34/100420

Balance of Payments and International Investment Position Compilation Guide

sheet data (end-of-period positions) for the central
bank and other depository corporations. However,the new draft MFSM-CG provides more detailed
coverage of the other financial corporations sector.
A major step in the implementation of the methodology in the MFSM has been the introduction ofstandardized report forms (SRFs) for economies’
transmittal of monetary data for publication in IFS
and for operational purposes of the IMF. The SRFs
are designed for reporting of position data only. An
overview of the monetary statistics framework supporting the SRFs is presented in Annex 1 of thisappendix.

Common Principles and Differences inClassiﬁcations
A6.32 Monetary statistics share many principles
and concepts with the BPM6 and the SNA . 1 The
MFSM-CG and the BPM6 are consistent on such
issues as the definition and delineation of resident and nonresident entities, time of recordingof transactions and other flows, financial asset andliability valuation, and data aggregation and consolidation. However, there are some differences in
sectoring of the institutional units and in the classification of the various categories of financial assets
and liabilities.
A6.33 As regards the delineation of institutional
units and sectors, a special case is the definitionof other depository corporations (ODC). In themonetary statistics methodology, all financial corporations that issue liabilities included in broadmoney are designated as depository corporations.
These include the central bank subsector, the otherdeposit-taking corporations (ODC) subsector, and,in many economies, money market fund shares. The
latter two form the ODC subsector in MFSM-CG.
In the BPM6, money market funds are not consolidated with deposit-taking corporations but withother financial corporations. In summary in the
BPM6 the financial corporations sector is divided
into central bank, deposit-taking corporations,1

The annex to the Linkages of the International Accounts with
Monetary and Financial Statistics contains an overview of themonetary statistics framework.

except the central bank, and other financial corporations, while the MFSM-CG defines the following
subsectors: central bank, ODCs, and other financial corporations (OFC). Therefore if the balanceof payments compiler uses monetary statistics thecompiler should request separate data on money
market funds balance of payments transactions and
IIP in order to classify financial transactions andpositions correctly within the OFC subsector. Thebalance of payments compiler should also confirm
the institutional coverage of the deposit-taking corporations subsector, as some deposit-takers may
be excluded; for instance, offshore banks that do
not accept deposits from residents are still considered deposit-taking institutions in the BPM6
but classified as other financial corporations in themonetary statistics.
A6.34 The major categories for financial assets andliabilities in the monetary statistics follow the classification in the 2008 SNA and BPM6 financial instruments classification. Regarding the classification offinancial assets, the differences with the BPM6 are as
follows:• Classification by maturity—In the BPM6, mostof debt instruments are divided into separate
categories for short-term instruments (original maturity of one year or less) and long-term
instruments. The standard components in the
MFSM-CG do not include loans and debt securities classified by maturity, although the SRFs
include a maturity breakdown for central bankliabilities with nonresidents.
• Classification by currency of denomination—
The BPM6 recommends a breakdown of all debt
assets and all debt liabilities by major currency.
MFSM-CG requires a breakdown of all instruments, financial assets and liabilities, except
equity liabilities, into (1) national currency and(2) foreign currency.

Limitations in Using Monetary
Statistics in Compiling an IIP, andHow to Overcome Them
A6.35 For the compilation of the IIP using themonetary statistics as source data, the following typesof limitations can be identified: valuation, coverage,

Linkages with Other Macroeconomic Datasets

sector classification, functional categories, and maturity breakdown. These limitations also affect thecompilation of other external sector statistics—suchas the financial account of the balance of payments
and the external debt statistics—that use monetarystatistics.
Valuation

A6.36 The valuation principles and other accounting
rules in the MFSM-CG are in general agreement withthose in the BPM6. However, a major exception for themonetary statistics is the valuation of equity on the liability side of the sectoral balance sheets of financial
corporations. For the monetary statistics, liabilities in
the form of equity are measured at book value. In the
BPM6, equity securities (for both assets and liabilities)
should be valued at the market or fair value of the shares.
A6.37 Valuing equity at book value, particularly on
the SRFs, has important implications. The equity liability account in the sectoral balance sheet, insteadof being subclassified by counterpart sector, as in therest of the accounts, is classified by types of equity resources (i.e., funds contributed by owners; retained
earnings; general and special reserves; and valuation
adjustments). Therefore, the value of the equity issued
by the domestic financial system and held by nonresidents is not identified.
A6.38 To cover for the compilation needs of thefinancial statistics, including the financial account of
the SNA, the SRFs contain a memorandum item requesting the market or fair value of shares and other
equity by counterpart sector, thus allowing for therecognition of equity owned by nonresidents. However, the great majority of economies do not report
this memorandum item, implying that this information is not currently compiled by the monetary statisticians. To solve this situation, the IIP compiler (who
often does possess data on equity liabilities to nonresidents) should be encouraged to coordinate with theirmonetary statistics counterparts to promote the compilation of the referred SRF memorandum items, thus
avoiding duplication of efforts or excessive reporting
burden on financial institutions. Furthermore, foreign
liabilities in the monetary statistics are often underestimated because of the lack of liabilities to nonresidents in the form of equity.

421

CoverageA6.39 One significant difference between the BPM6
and MFSM-CG regards the treatment of money market funds, which in the BPM6 are part of the other financial corporations sector and in the MFSM-CG arepart of the other depository corporations sector. Thisand other possible deviations from the BPM6 definition of other deposit-takers is discussed in paragraph
A6.33.
A6.40 For OFCs in many economies the major reporting challenges arise from the large number anddiversity of OFCs, as well as from multiple channelsof existing data reporting. The OFCs might well outnumber ODCs owing to the prevalence of insurance
corporations, pension funds, and other financial intermediaries and auxiliaries such as financial asset dealers
and brokers. In some economies, OFC data reportingis incomplete or is not performed on a timely basis (orboth); reporting by some categories of OFCs may noteven exist.
A6.41 Ideally, all OFCs should report the monetarydata on a timely basis directly to the data compiler.
However, such reporting presently exists in relatively
few economies. Instead, OFCs report to government
agencies responsible for supervision of particular segments of the financial services industry—for example,
national agencies for supervision of securities trading or the operation of organized exchanges, and national or state supervisors of insurance corporations or
pension funds. Data reporting sometimes is channeledthrough trade associations or other nongovernment
entities that represent the interests of specific groupsof OFCs.
A6.42 Establishment of data reporting from OFCs
directly to the monetary statistics compiler should result in improved data quality and timelier reporting,with the possibility of sharing these data with the IIP
compiler, if efforts to define and gather the data are coordinated. However, national policy may dictate thatdata reporting to the monetary statistics compiler bechanneled through supervisory agencies to which OFCs
already report. In any case, if the central bank gathers
data on OFCs for monetary or financial sector analysis,
and provided BPM6 recording principles are followed,
these data should be used for balance of payments purposes too, thus avoiding duplication of efforts.

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Balance of Payments and International Investment Position Compilation Guide

A6.43 The ODCs subsector may include corporations operating under the control of receivers or regulators or that are no longer dealing with the public.
Technically, bankrupt institutions that continue tooperate may retain the legal status of operating banks,
or a special status may be imposed. In the BPM6,
bankrupt deposit-taking corporations that continue
to operate remain classified in the deposit-taking corporations institutional sector.
Functional categories

A6.44 Monetary statistics do not use functional
categories to classify financial assets and liabilities.
This can pose compilation challenges where monetarystatistics are used to estimate balance of payments/IIP
data on direct investment equity transactions and positions for deposit-takers. For OFCs, as a subsector,
there are compilation challenges for direct investment
data when monetary data are used in balance of payments / IIP.
A6.45 The emphasis on group consolidated supervision of the financial sector made the relationshipbetween parent, subsidiary, and associate financial
corporations broadly available as subaccounts within
the accounting chart of accounts used by financial
corporations. Nonetheless, the balance of paymentscompiler faces the difficulty of reconciling the definition of control and significant influence between
financial accounting and macroeconomic statistics. In other words, these definitions in the BPM6
do not entirely correspond to the definitions found,for example, in the international financial reporting standards (IFRS). Nevertheless, the closeness ofthe definitions may encourage some economies touse banking supervisor data or data based on IFRS
(without adjustment) for compiling the international
accounts.

Maturity breakdown

A6.46 The SRFs contain maturity breakdown only
for central bank liabilities with nonresidents, but not for
financial assets or for assets and liabilities in other financial subsectors. While traditional monetary analysis
does not focus on maturity of financial assets, supervisory data often used to compile the monetary sta-tistics present the short and long-term breakdowns
required by the BPM6 for selected financial instruments. These breakdowns are often available to themonetary statistics compiler.
A6.47 New requirements for financial sector data
focused on financial stability analysis, particularly on
liquidity, are putting emphasis on the availability of maturity breakdowns useful for the compilation of the IIP.2

Reconciliation Exercise between
Monetary Statistics and IIP
A6.48 This section presents tables reconcilingmonetary statistics and IIP components. It shows
the use and limitations of the monetary statistics indetails—that is, component by component.
A6.49 As mentioned in Chapter 9, the Sectoral
Balance Sheet for ODC,3 can be used for the deposittaking corporations, except the central bank sectorof the IIP. The Sectoral Balance Sheet for the Central
Bank can be used to compile data for the central banksector in the IIP. If economies complete the Sectoral
Balance Sheet for OFC,4 it can be used to compile IIP
data for other sectors—other financial corporations.
A6.50 The Sectoral Balance Sheet for ODC, which
can be used by the compiler to identify and select theexternal assets and liabilities of deposit-taking corporations, except the central bank, is reported to the
IMF through the SRFs for reporting monetary and financial data. Table A6.3 presents the reconciliation of
positions of depository corporations, except the central bank vis-à-vis nonresidents, with the corresponding IIP components.5
A6.51 Table A6.3 shows that, although the sectoral balance sheet data can largely correspondwith IIP components, the differences in the classification do not allow a full reconciliation of the twoframeworks.
2
An IMF project to expand the SRFs called the Supplementary
Data Report Forms (SDRFs) is under consideration. The SDRFs
include maturity breakdowns.
3
See footnote 3, Chapter 9.
4
See footnote 4, Chapter 9.
5
The reconciliation of OFC vis-à-vis nonresidents with the corresponding IIP components is very similar to the one for ODC
and is, therefore, not included in this annex.

Linkages with Other Macroeconomic Datasets

A6.52 Table A6.4 presents the reconciliation of positions of the central bank vis-à-vis nonresidents withthe relevant corresponding IIP components.

423

A6.53 Tables A6.3 and A6.4 demonstrate that there
may be a number of limitations when using monetary statistics to derive the IIP. In many instances,

Table A6.3 Reconciliation of Other Depository Corporations’ Balance Sheet Items with International
Investment Position (IIP) Components (concluded)
Monetary statistics: Sectoral Balance Sheet
Other Depository Corporations

IIP: Deposit-taking corporations, except central bank
Assets: Claims on nonresidents1

Foreign currency

4.2.2 Other investment, currency and deposits

Deposits (transferable and other, in nationaland foreign currency)

4.2.2.1 Short-term
4.2.2.2 Long-term

Debt securities

2.2.2 Portfolio investment, debt securities
2.2.2.1 Short-term
2.2.2.2 Long-term

Loans

4.3.2 Other investment, loans
4.3.2.1 Short-term
4.3.2.2 Long-term

Equity and investment fund shares

1.1

Insurance, pension, and standardized
guarantee schemes

4.4.2 Other investment, insurance, pension, and standardized guarantee
schemes

Financial derivatives and employee stock options

3.2

Other accounts receivable
Trade credit and advances

Other

Direct investment assets, equity and investment funds shares
1.1.1 Direct investor in direct investment enterprise
1.1.2 Direct investment enterprise in direct investor (reverse investment)
1.1.3 Between fellow enterprises
2.1.2 Portfolio investment, equity and investment fund shares
4.1 Other investment, other equity

Financial derivatives and employee stock options (other than reserves)

4.5.3 Other investment, trade credit and advances
4.5.3.1 Short-term
4.5.3.2 Long-term
4.6.2 Other investment, other accounts receivable—other
4.6.2.1 Short-term
4.6.2.2 Long-term
Liabilities to nonresidents

Deposits (excluded from broad money,
transferable and other, in national andforeign currency)

4.2.2 Other investment, currency, and deposits
4.2.2.1 Short-term
4.2.2.2 Long-term

Debt securities (excluded from broad money,in national and foreign currency)

2.2.2 Portfolio investment, debt securities
2.2.2.1 Short-term
2.2.2.2 Long-term

Loans

4.3.2 Other investment, loans
4.3.2.1 Short-term
4.3.2.2 Long-term

Insurance, pension, and standardized
guarantee schemes

4.4.2 Other investment, insurance, pension, and standardized guarantee
schemes

Financial derivatives and employee stock
options

3.2 Financial derivatives and employee stock options (other than reserves)

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Balance of Payments and International Investment Position Compilation Guide

Table A6.3 Reconciliation of Other Depository Corporations’ Balance Sheet Items with International
Investment Position (IIP) Components (concluded)
Monetary statistics: Sectoral Balance Sheet
Other Depository Corporations

IIP: Deposit-taking corporations, except central bank

Other accounts payable
Trade credit and advances

4.5.3 Other investment, trade credit and advances
4.5.3.1 Short-term
4.5.3.2 Long-term
4.6.2 Other investment, other accounts payable—other
4.6.2.1 Short-term
4.6.2.2 Long-term

Other

Equity and investment fund shares: Market
value, by holding sector (memorandum item)

1.1

Direct investment liabilities, equity and investment funds shares
1.1.1 Direct investor in direct investment enterprise
1.1.2 Direct investment enterprise in direct investor (reverse
investment)
1.1.3 Between fellow enterprises
2.1.2 Portfolio investment, equity and investment fund shares
4.1 Other investment, other equity

Note: Numbers shown in the table follow the numbering sequence in the standard components of the IIP in the BPM6.
1

Reserve assets are excluded from this table, because reserves are not commonly held by deposit-taking corporations, except the central bank.

Table A6.4 Reconciliation of Sectoral Balance Sheet Items for the Central Bank with International
Investment Position (IIP) Components (continued)
Monetary statistics: Sectoral Balance Sheet
Central Bank

IIP: Central bank

Assets: Claims on nonresidents
Monetary gold

Reserve assets
5.1 Monetary gold
5.1.1 Gold bullion
5.1.2 Unallocated gold accounts

Holdings of SDRs

Reserve assets
5.2 Special drawing rights (SDRs)—Holdings

Foreign currency included in ofﬁcial reserve assets

Reserve assets
5.4.1 Currency and deposits
5.4.1.1 Claims on monetary authorities
5.4.1.2 Claims on other entities

Foreign currency other

Other investment
4.2.1 Currency and deposits
4.2.1.0.1 Short-term
4.2.1.0.2 Long-term

Deposits in national currency (transferable andother)

Other investment
4.2.1 Currency and deposits
4.2.1.0.1 Short-term
4.2.1.0.2 Long-term

Deposits in foreign currency (transferable and other)
Included in ofﬁcial reserve assets

Reserve assets
5.4.1 Currency and deposits
5.4.1.1 Claims on monetary authorities

Linkages with Other Macroeconomic Datasets

425

Table A6.4 Reconciliation of Sectoral Balance Sheet Items for the Central Bank with International
Investment Position (IIP) Components (continued)
Monetary statistics: Sectoral Balance Sheet
Central Bank

IIP: Central bank
5.4.1.2 Claims on other entities
Other investment
4.2.1 Currency and deposits
4.2.1.0.1 Short-term
4.2.1.0.2 Long-term

Other

Debt securities
Included in ofﬁcial reserve assets

Reserve assets
5.4.2.1 Debt securities
5.4.2.1.1 Short-term
5.4.2.1.2 Long-term
Portfolio investment
2.2.1 Debt securities
2.2.1.1 Short-term
2.2.2.1 Long-term

Other

Loans
Loans to IMF
Repurchase agreements
Included in ofﬁcial reserve assets
Other
Other loans
Included in ofﬁcial reserve assets
Other

Reserve assets
5.3 Reserve position in the IMF
5.4.4 Other claims
Other investment
4.3.1 Loans
4.3.1.1 Credit and loans with the IMF (other than reserves)
4.3.1.2 Other short-term
4.3.1.3 Other long-term

Equity and investment fund shares
Included in ofﬁcial reserve assets

Reserve assets
5.4.2.2 Equity and investment fund shares Portfolio investment
2.1.1 Equity and investment fund shares
Other Investment
4.1 Other equity

Other
Insurance, pension, and standardized guarantee
schemes

Other investment
4.4.1 Insurance, pension, and standardized guarantee schemes

Financial derivatives and employee stock options
Included in ofﬁcial reserve assets
Other

3.1 Financial derivatives (other than reserves) and employee stock options
Reserve assets
5.4.3 Financial derivatives (net)Other accounts receivable
Trade credit and advances

Other investment
4.5.1 Trade credit and advances
4.5.1.1 Short-term
4.5.1.2 Long-term
4.6.1 Other accounts receivable—other4.6.1.1 Short-term
4.6.1.2 Long-term

Other

Liabilities to nonresidents1
Currency in circulation (nonresidents’ holdings, notseparately identiﬁed in balance sheet)
Deposits excluded from broad money (transferable
and other, in national and foreign currency)2
Short-termLong-term
Debt securities excluded from broad money
Short-termLong-term

Other investment
4.2.1 Currency and deposits
4.2.1.0.1 Short-term
4.2.1.0.2 Long-term

Portfolio investment
2.2.1 Debt securities
2.2.1.1 Short-term
2.2.1.2 Long-term

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Balance of Payments and International Investment Position Compilation Guide

Table A6.4 Reconciliation of Sectoral Balance Sheet Items for the Central Bank with International
Investment Position (IIP) Components (concluded)(continued)
Monetary statistics: Sectoral Balance Sheet
Central Bank
Loans
Loans from IMF
Repurchase agreements
Short-termLong-term
Other Loans
Short-termLong-term

IIP: Central bank
Other investment
4.3.1 Loans
4.3.1.1 Credit and loans with the IMF
4.3.1.2 Other short-term
4.3.1.3 Other long-term

Financial derivatives and employee stock options
Short-termLong-term

3.1 Financial derivatives (other than reserves) and employee stock
options

Other accounts payable
Trade credit and advances

Other investment
4.5.1 Trade credit and advances
4.5.1.1 Short-term
4.5.1.2 Long-term
4.6.1 Other accounts payable—other4.6.1.1 Short-term
4.6.1.2 Long-term

Other

SDR Allocations

4.7 SDRs (Allocations)

Note: Numbers shown in the table follow the numbering sequence in the standard components of the IIP in the BPM6.
1

In the “Monetary statistics: Sectoral Balance Sheet Central Bank” column, the short-term and long-term breakdown is provided only forliabilities in foreign currency.
2
It includes IMF accounts and use of Fund credit.

monetary statistics do not provide enough detail tocompile the full breakdown of standard components
in the IIP. But both systems have enough in common
to consider pursuing a coordinated effort to use thesame source data with the necessary details to compile
both types of statistics. When properly designed andimplemented, this approach would avoid duplicationof effort and improve consistency between these related datasets.

Linkages of the International
Accounts with the Government
Finance Statistics
Introduction
A6.54 The Government Finance Statistics Manual
2014 (GFSM 2014) describes an integrated macroeconomic statistical framework (the government financestatistics (GFS)) designed specifically to support fiscal

analysis. The manual provides the economic and statistical principles to be used in compiling the statistics
and guidelines for the presentation of fiscal statistics
within an integrated analytic framework that includes
appropriate balancing items.6
A6.55 As a result of the conceptual interlinkages
between these two datasets, the compiler of the international accounts and GFS may be able to usefully consult with one another to ensure consistency
in definitions, coverage, concepts, and accounting
rules. The compiler may also be able to share source
data,7 and to reconcile these estimates where they
overlap.
6

Balancing items summarize the net value of the activities
covered by a set of accounting entries, such as the net operatingbalances, which is the value of total revenue less total expense.
7
For the selection of data sources for the compilation of GFS, see
the Government Finance Statistics-Compilation Guide for Developing Countries (IMF, 2011) at http://www.imf.org/external/data.
htm#guide.

Linkages with Other Macroeconomic Datasets

A6.56 This appendix summarizes important similarities and differences between GFS and the balanceof payments and IIP statistics. It also indicates how
the data compiled for general government in the balance of payments and IIP could be reconciled with
GFS. It does not list, however, all similarities and differences between the two datasets and should not be
considered a comprehensive guide.

Coverage and Accounting Rules
A6.57 Since the GFSM 2014 is harmonized withthe 2008 SNA, it is also harmonized with other macroeconomic systems, including the BPM6. In GFS
total economy is divided into five mutually exclusive
sectors (general government, financial corporations,8
nonfinancial corporations, households, and nonprofit
institutions serving households). The units in eachsector have similar objectives, and these objectives are,in turn, different from those of units in other sectors.
The international accounts use the same sectors andsubsectors as the 2008 SNA and the GFS framework
but with a different presentation to allow continuity
with previous international classifications (such as the
Balance of Payments Manual, fifth edition). The international accounts have a shorter list of sectors andinclude only four main sectors: general government,
central bank, deposit-taking corporations, except thecentral bank, and other sectors9 (see Table 4.2 in the
BPM6 for the detailed classification of the institutional
sectors) for economies in which it is not practical to
implement the full classification. The general government sector10 follows the definitions of the SNA in GFS
and the international accounts. The compiler of both8
Financial corporations include subsectors for the central bank,deposit-taking corporations, except the central bank, and otherfinancial corporations, while the GFS framework also recommends that subsectors for public corporations be identified bothin the financial and nonfinancial corporate sectors.
9
The “other sector” category in the international accounts
includes both financial and nonfinancial sectors, so it is recommended that the other financial corporations be identified
separately. The full institutional sector detail is required forinternational accounts to be fully integrated with monetary, flowof funds, and other financial data. Public corporations may be
identified separately on a supplementary basis.
10
The general government sector consists of entities that fulfill thefunctions of government as their primary activity. Depending on
the administrative and legal arrangements, there may be more than
one level of government within an economy, and statistics should
be compiled for each level. In GFS, provision is made for threelevels of government: central, state/provincial/regional, and local.
Social security funds are permitted to either be included in one of427

datasets should ensure that the actual coverage of thegeneral government used in their statistics is identical.
A6.58 Both frameworks can be described as thesystematic recording and presentation of positions andflows, with flows comprising transactions and othereconomic flows. The accrual basis of recording is used,
and the valuation principle is the current market value
for recording positions and flows. Both use the doubleentry accounting system (i.e., each transaction is recorded as consisting of a debit and credit entry of equalvalue), and the sum of credit entries and the sum of thedebit entries are the same.
A6.59 Both GFS and the international accounts record, respectively, revenue and expense and current
and capital transactions on a gross basis; and bothrecord transactions and other changes in financial
assets and liabilities on net bases for each categoryof assets or liabilities. For dissemination purposes,
GFS presents revenue (credits) and expense (debits)
separately (i.e., in two different detailed tables), whilein the international accounts, credits and debits arepresented under the same respective categories. Positions of financial assets and liabilities are recorded ona gross basis in both datasets.
A6.60 Consolidation is a method of presenting statistics for a set of units as if they constituted a single
unit. Because the international accounts reflect transactions involving residents and nonresidents and externalfinancial assets and liabilities, including other flows associated with them, consolidation is not relevant for international accounts of an individual economy. In GFS,
consolidation is relevant and used for the preparationof statistics for the general government and its subsectors (central, regional, and local governments). General government units by definition are resident units;
therefore GFS consolidation principles would not affectthe consistency in data between the two datasets.

Comparison of the Structures of GFS andthe Balance of Payments and the IIP
A6.61 The structure of the GFS framework is similar to the structure used in the balance of payments
and IIP frameworks, and comprises: (1) the statement
these levels or constitute a separate level of government. Not
all the economies will have all the levels of government. Theinternational accounts identify general government, but they do
not present data for the subsectors of the general government, asis the case in GFS.

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Balance of Payments and International Investment Position Compilation Guide

and closing balance sheets to be fully integrated. Thatis, the position of a given type of asset or liability at the
beginning of an accounting period plus the changes
in that position indicated by transactions and othereconomic flows equal the stock position at the end of
the period.

of operations, which records the results of all transactions during an accounting period; (2) the statementof other economic flows, which summarizes changes
in assets, liabilities, and net worth that have not been
generated by transactions; and (3) the balance sheet,
which shows positions of financial and nonfinancial
assets owned, positions of liabilities owed, and net
worth, which is equal to the total value of all assets lessthe total value of all liabilities. As illustrated in Figure
A6.1, the comprehensive treatment of transactions
and other economic flows in GFS enables the opening

A6.62 The GFS framework generates a set of statistical statements, which if combined, demonstrate that
all changes in the positions result from flows. This issimilar to the accounting identity in the IIP that requires all changes in investment positions to result

Figure A6.1 Government Finance Statistics Framework

Flows
Positions+=
Transactions

Positions

Other economic flows

Statement of Operations
Revenue
minus
ExpenseOpening
Balance Sheet

Net worth+EqualsNonfinancial
assetsChange in net
worth due totransactions(net operatingbalance)

Transactions in
nonfinancial
assetsPlus

Plus

Net financial
worth

Change in net
financial worth due
to transactions(net lending (+) / net
borrowing (–))+

EqualsFinancial assets+

Transactions infinancial assets+

Transactions inliabilities=

Other economic
flows innonfinancial
assets+Change in net
financial worth
due to othereconomic flows=

Other economic
flows in financial
assets=Other economic
flows in liabilities

Net financial
worth

Equals=Financial assets

Minus

Minus

+

Nonfinancial
assetsPlus

Equals+

Net worthEquals

Plus

Minus

+

Change in net
worth due toother economic
flows
EqualsEqualsMinus

Liabilities+

Equals+Closing
Balance Sheet

Statement of Other
Economic Flows

Equals=Liabilities

Linkages with Other Macroeconomic Datasetsfrom transactions and other flows. In addition, theGFS framework includes a statement of sources anduses of cash to provide key information on liquidity. A
similar statement is not prepared in the international
accounts.

The Statement of Operations
A6.63 The statement of operations is a summaryof transactions of the general government sector ina given accounting period. This statement presents
three main categories of transactions (see Table A6.5):(1) transactions affecting net worth that include details of transactions on revenue and expense; (2)transactions in nonfinancial assets (net acquisition of
nonfinancial assets);11 and (3) transactions in financial assets and liabilities (net acquisition of financial
assets, and the net incurrence of liabilities). The statement of operations has similarities with the balance of
payments, because both statements summarize transactions during a period. In the balance of payments,
transactions are presented in a sequence of three accounts, the current, capital, and financial account.
A6.64 The transactions presented in the first two
categories of the GFS framework—namely, revenue
and expense—are similar to the transactions in thecurrent account of the balance of payments with one
exception: capital transfers included in respectively
revenue (credit) and expense (debit) of GFS, because
these transactions affect net worth, are presented in
the capital account of the balance of payments. Grossacquisitions (debit)/disposals (credit) of nonproduced
assets included in the net investment of nonfinancial
assets of GFS are presented in the capital account of
the balance of payments. The GFS transactions in financial assets and liabilities of the statement of operations are fully consistent with those shown in thefinancial account of the balance of payments.
A6.65 The statement of operations in GFS has alinkage to the accounts in the balance of payments tothe extent that general government sector units are involved in transactions with nonresidents. For grants,
interest, and transactions in financial assets and liabilities, GFS separately identifies transactions withnonresidents. However, for other transactions withnonresidents GFS will usually not separately identify
11
Expenditure is the sum of expense and the net acquisition of
nonfinancial assets.

429

these transactions, which limit opportunities for reconciliation between the international accounts and
GFS. However, in some cases, supplementary information in the general government sector accounting
system may identify such transactions—particularly

Table A6.5 Statement of Operations
Transactions Affecting Net Worth1

Revenue

11

Taxes

12

Social contributions [GFS]

13

Grants14
2

Other revenue
Expense21

Compensation of employees [GFS]22

Use of goods and services

23

Consumption of ﬁxed capital

24

Interest

25

Subsidies

26

Grants27

Social beneﬁts [GFS]

28

Other expense

NOB/GOB

Net/gross operating balance (1–2)1

Transactions in nonﬁnancial assets:
31

Net/gross investment in nonﬁnancial assets2

311

Fixed assets

312

Inventories

313

Valuables

314

Nonproduced assets

2M

Expenditure (2+31)

NLB

Net Lending (+)/borrowing (–)[GFS](1–2–31=1–2M=32–33)

Transactions in ﬁnancial assets
32

Net acquisition of ﬁnancial assets

321

Domestic3

322

External3

Transactions in liabilities
33

1

Net incurrence of liabilities

331

Domestic3

332

External3

The net operating balance equals revenue minus expense. The
gross operating balance equals revenue minus expense other thanconsumptions of ﬁxed capital.
2
The net investment in nonﬁnancial assets equals acquisitions minus
disposals minus consumption of ﬁxed capital. The gross investment
in nonﬁnancial assets equals acquisitions minus disposals.
3Classiﬁed by instrument and/or sector of the counterparty (seeTable 9.1 and 9.2, GFSM 2014.).

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Balance of Payments and International Investment Position Compilation Guide

where these are of an unusual nature, large volume,or large value.
A6.66 In GFS, revenue is defined as an increase in
net worth resulting from a transaction, and expense asa decrease in net worth resulting from a transaction.
The net investment in nonfinancial assets equals grossfixed capital formation less consumption of fixed capital, plus changes in inventories, transactions in valuables, and nonproduced assets. The net acquisition offinancial assets and the net incurrence of liabilities
represent financial transactions that change a government’s holdings of financial assets and/or liabilities.
A6.67 Two important analytical balances are derived in GFS in the statement of operations. Revenue
less expense equals the net operating balance(change
in the net worth due to transactions). The subsequent
deduction of the net investment in nonfinancial assets
results in net lending (+)/net borrowing (−)(change
in the net financial worth), which is also equal to
the net result of transactions in financial assets andliabilities—that is, equal to the net acquisition of financial assets minus the net incurrence of liabilities.
The net operating balance is a summary measure of
the ongoing sustainability of government operations,and the net lending (+)/net borrowing (−) is a summary measure indicating the extent to which the government is either putting financial resources at thedisposal of other sectors in the economy or to abroad,or utilizing the financial resources generated by othersectors or from abroad. In addition, the gross operating balance is a balance that differs from the net operating balance in that it does not include consumptionof fixed capital as an expense.12
A6.68 There are more balancing items in the balance of payments than in GFS, partly because there
are more transaction accounts than categories in thestatement of operations. In GFS, as indicated in theprevious paragraph, the balancing items are: the net
operating balance and the net lending/net borrowing, while in the balance of payments the balancing
items are: current account balance; balance on goods

12
Consumption of fixed capital can be difficult to measure inpractice, and a satisfactory estimate may not be possible. If so,
the gross operating balance may be more practical for analysis
than the operating balance. The net operating balance is, however,preferred because it captures all current costs of government
operations.

and services; balance on goods; balance on services;balance on primary income; balance on secondary
income; capital account balance; net lending/borrowing (i.e., balance from current and capital accounts);
and net lending/net borrowing (i.e., balance from financial account). In both datasets, the net lending/net
borrowing is equal to the financial account balance.

Revenue
A6.69 Governments receive four major types ofrevenue from their fiscal operations: compulsory levies in the form of taxes and certain types of social
contributions, property income derived from theownership of assets,13 sales of goods and services,14
and transfers receivable from other units. Of these,
compulsory levies and transfers are the main sourcesof revenue for most general government units. Revenue is composed of heterogeneous elements classified according to different characteristics dependingon the type of revenue. The four types of revenue areclassified in four categories: (1) taxes; (2) social contributions; (3) grants; and (4) other revenue.
Taxes

A6.70 Taxes are compulsory, unrequited amounts
receivable by government units from institutional
units.15 The coverage, timing, and valuation of tax revenue in the balance of payments and GFS are identical,
but the classifications differ. The balance of payments
has provisions for compilation of (1) taxes on production and imports; (2) current taxes on income, wealth,and so forth; and (3) capital taxes, while the approach
adopted in GFS is to classify taxes mainly by the basis
on which the tax is levied. Taxes are grouped in six
major categories in GFS: (1) taxes on income, profits,
and capital gains; (2) taxes on payroll and workforce;(3) taxes on property ; (4) taxes on goods and services;13
Financial assets and natural resources put at the disposal ofanother institutional unit.
14
In GFS, sales of goods and services consist of sales by market
establishments, administrative fees, incidental sales by nonmarket
establishments, and imputed sales of goods and services.
15
Tax revenue is considered to be unrequited because the government provides nothing directly to the individual unit in exchange
for the payment. Certain compulsory receivables, such as fines,
penalties, and most social security contributions, are excluded
from taxes. These transfers have, under certain conditions, anelement of exchange and are therefore not classified as taxes.

Linkages with Other Macroeconomic Datasets

431(5) taxes on international trade and transactions; and(6) other taxes (see Table A.6.6 for additional details).16

taxes and duties are still included in the heading oftaxes and duties on imports in the GFS.

A6.71 While certain taxes may be levied on nonresidents (such as some taxes on international tradeand on international transactions), the portion attributable to nonresidents may be difficult to identify in
GFS and may vary from one tax category to the next
and from one year to another.

A6.73 Current taxes on income, wealth, and soforth reported in the balance of payments secondary income account are the sum of several detailed
tax categories as reported in the GFS, and comprisetaxes on income, profits and capital gains (GFS 111)
and several other tax categories mainly payable by
final consumers (such as taxes on use of goods and on
permission to use goods or perform activities (GFS1145), and other taxes on international trade andtransactions (GFS 1156).

A6.72 Taxes on products and production reported
in the balance of payments primary income accountcomprise the same tax categories as in the SNA. Some
examples of these taxes17 are value added taxes (GFS11411);18 sales taxes (GFS 11412); excise (GFS 1142);
taxes on specific services (GFS 1144); customs andother import duties (GFS 1151); taxes on exports (GFS1152); and profits of export or import monopolies(GFS 1153). Exceptionally, some taxes and duties may
be payable on goods that physically enter the economy but where there is no change of ownership, sothey are not treated as imports. Nevertheless, any such

A6.74 Capital taxes included in the balance of payments capital account consist of taxes levied at irregularand infrequent intervals on the values of the assets or
net worth owned by institutional units or on the valueof assets transferred between institutional units as aresult of legacies, gifts inter vivos, or other transfers.
Capital taxes19 are the sum of estate, inheritance, andgift taxes (GFS 1133), and capital levies (GFS 1135).

Table A6.6 Taxes in Government Finance Statistics (GFS) and Balance of Payments (continued)
GFS: Taxes
1

Revenue

11

Taxes

111

Taxes on income, proﬁts and capital gains

Balance of payments: Taxes
I.B

Primary income

I.B.3.1

Taxes on production and on imports

Payable by individuals

I.C

Secondary income

1112

Payable by corporations and other enterprises

I.C.I

General government

1113

Other taxes on income, proﬁts, and capital gains

I.C.1.1

1111

112

Taxes on payroll and workforce

IC.2

113

Taxes on property

LC.2.2

1131

Recurrent taxes on immovable property

1132

Recurrent taxes on net wealth1133

Estate, inheritance, and gift taxes

1135

Capital levies

1136
114

Other recurrent taxes on property
Taxes on goods and services

16
The classification of taxes in the GFSM 2014 is quite similar tothe classification employed in Revenue Statistics by the Organization for Economic Cooperation and Development (OECD).
17
For a complete list of taxes, see Chapter 5, GFSM 2014.
18
Here and further the numbers in parentheses next to GFS referto classification codes in the GFSM 2014.

Current taxes on income, wealth, etc.
Financial corporations, nonﬁnancial corporations,households, and nonproﬁ
Other current transfers

I.C.2.0.1

2

Capital account

2.2

Capital transfers

2.2.1
2.-2.1.2

19

Current taxes on income, wealth, etc.

General government
Other capital transfers

GFS does not have a category of capital taxes.

432

Balance of Payments and International Investment Position Compilation Guide(concluded)
Table A6.6 Taxes in Government Finance Statistics (GFS) and Balance of Payments (continued)
GFS: Taxes
1141

General taxes on goods and services

Balance of payments: Taxes
2.2.1.2.1

11411

Value-added taxes

2.2.2

11412

Sales taxes

2.2.2.2

11413

Turnover and other general taxes on goods
and services

2.2.2.2.1

11414

Taxes on ﬁnancial and capital transactions

1142

Excise1143

Proﬁts of ﬁscal monopolies

1144

Taxes on speciﬁc services

1145

Taxes on use of goods and on permission to use
goods or

11451

Motor vehicle taxes

11452

Other taxes on use of goods and on
permission to use goods

1146
115

Other capital transfersof which: Capital taxes

Other taxes on goods and services
Taxes on international trade and transactions

1151

Customs and other import duties

1152

Taxes on exports

1153

Proﬁts of export or import monopolies

1154

Exchange proﬁts

1155

Exchange taxes

1156

Other taxes on international trade andtransactions

116

of which: Capital taxes
Financial corporations, nonﬁnancial corporations,households, and NPISHs

Other taxes

1161

Payable solely by business

1162

Payable by other than business orunidentiﬁable

Note: To maintain consistency with codes used in GFSM 2001, the 11414 code does not follow directly the code of the previous category oftaxes- taxes on capital and ﬁnancial transactions (GFS 1134 in GFSM 2001) are now classiﬁed in taxes on goods and services (GFS 114) to enhance consistency with 2008 SNA.

Social contributions

A6.75 In GFS, social contributions are actual or
imputed revenues receivable by social insurance
schemes to make provision for social insurance benefits payable. Social contributions may be from either
employers on behalf of their employees or from employees, self-employed, or nonemployed persons on
their own behalf. These contributions secure entitlement to social benefits (GFS 27) that are payable tothe contributors, the dependents, or their survivors.
The contributions may be compulsory or voluntary.
Social contributions are classified as social security
contributions (GFS 121) or other social contributions(GFS 122) depending on the type of scheme receiving
them. Additional breakdowns are included to classify
this information by employees, employers, and selfemployed or nonemployed persons. In GFS, social
contributions are not divided between residents andnonresidents.
A6.76 The coverage of social contributions in GFS
is more restricted than in the 2008 SNA and BPM6. In
GFS, only contributions that constitute revenue are included in social contributions (GFS 12)—that is, onlytransactions that increase the net worth are included.
In GFS, social contributions exclude contributions toautonomous and nonautonomous pension funds andLinkages with Other Macroeconomic Datasets

to unfunded employment related pension schemesthat provide pension and other retirement benefits.
Social contributions to autonomous and nonautonomous pension funds and to unfunded employer social
insurance schemes that provide retirement benefits
are recorded as incurrence of liabilities by the government.20 The 2008 SNA and BPM6 21 record all social
contributions and incurrence of liabilities, with theaccounting being neutralized by recording an adjustment for the change in pension entitlements. Social
contributions receivable from nonresidents by general government sector units are included in the secondary income account in the balance of payments,

433

and, when identified, they should be consistent withthe corresponding GFS categories.
Grants

A6.77 Grants are transfers receivable by government
units from other resident or nonresident government
units or international organizations, and that do notmeet the definition of a tax, subsidy or a social contribution. Three sources of grants are recognized in GFS:
grants from foreign governments (GFS 131), grants
from international organizations (GFS 132), and grants
from other general government units (GFS 133). Each ofthese categories distinguishes current and capital grants.

Table A6.7 Other Revenue Categories in Government Finance Statistics (GFS) and Balance ofPayments (concluded)
GFS: Other revenue categories
12
121

Social contributions [GFS]

Balance of payments: Other revenue categories
I

Current accountSocial security contributions

I.A

Good and services

1211

Employee contributions

I.B

Primary income

1212

Employer contributions

I.B.2

Investment income1213

Self-employed or nonemployed contributions

I.B.2.1

Direct investment

1214

Unallocable contributions

I.B.2.1.1

Income on equity and investment fund shares

122

Other social contributions

I.B.2.1.1.1

Dividends and withdrawals from incomeof quasi-corporations

1221

Employee contributions

IB2112

Reinvested earnings

1222

Employer contributions

1223

Imputed contributions

13
131

GrantsFrom foreign governments

Investment income attributable to policy
holders in insurance, pension schemes,
and standardized guarantee schemes
and to investment funds
I.B.2.1.2
I.B.2.2
I.B.2.2.1

Interest
Portfolio investment
Investment income on equity andinvestment fund shares

1311

Current

I.B.2.2.1.1

Dividends

1312

CapitalI.B.2.2.1.2

Investment income attributable toinvestment fund shareholders

I.B.2.2.1.2.1

Dividends on equity excluding
investment fund shares

132

From international organizations

1321

Current

I.B.2.2.1.2.2

1322

CapitalI.B.2.2.2

Interest

I.B.2.3

Other investment

133

From other general government units

Reinvested earnings

1331

Current

I.B.2.3.1

Withdrawals from income of quasi-corporations

1332

CapitalI.B.2.3.2

Interest

20
For additional information about autonomous and nonautonomous pension funds and funded and unfunded employer social
insurance schemes, see Appendix 2 in the GFSM 2014.

21
See the BPM6, paragraph 12.38, for additional information about the adjustment (“adjustment for change in pension
entitlements”).

434

Balance of Payments and International Investment Position Compilation Guide

Table A6.7 Other Revenue Categories in Government Finance Statistics (GFS) and Balance ofPayments (concluded)
GFS: Other revenue categories
14

141

Other revenue

Property income [GFS]

Balance of payments: Other revenue categories
I.B.2.3.3

I.B.2.4

Investment income attributable to policy
holders in insurance, pension schemes,
and standardized guarantee schemes
Reserve assets

1411

Interest [GFS]

I.B.2.4.1

Income on equity and investment fund shares

1412

Dividends

I.B.2.4.2

Interest

1413

Withdrawals from income ofquasi-corporations

IB.3

1414

Property income from investment income
disbursements

I.B.3.3

1415

Rent

1416

Reinvested earnings on foreign direct
investment

142

Sales of goods and services

Other primary income
Rent

I.C

Secondary income

I.C.I

General government

1421

Sales by market establishments

I.C.I.I

Social contributions

1422

Administrative fees

I.C.I.4

Current international cooperation

1423

Incidental sales by nonmarket establishments

I.C.I.5

Miscellaneous current transfers of general
government

1424

Fines, penalties, and forfeits

144

Transfers not elsewhere classiﬁed

1441

Net nonlife insurance premiums

Imputed sales of goods and services

143

Current transfers not elsewhere classiﬁed

14411

Subsidies

14412

Other current transfers

1442

Capital transfers not elsewhere classiﬁed

145

Premiums, fees, and claims related to nonlife
insurance and standardized guarantee schemes

1451

Premiums, fees, and current claims

1452

Capital claims

A6.78 Current grants receivable from foreign general governments and international organizations(GFS 1311 and 1321, respectively) are often the mostimportant linkage between the GFS and the balance of
payments secondary income account. Capital grants
receivable from foreign general governments andinternational organizations (GFS 1312 and 1322, respectively) are linked to the capital transfer categoryof the general government in the balance of payments
capital account. Current (GFS 1331) and capital grants(GFS 1332) receivable from other general government
units are transactions between residents—that is, units
within the general government of any particular economy, and they do not impact the balance of payments.

2

Capital account

2.2

Capital transfers

2.2.1

General government

2.2.1.1

Debt forgivenessA6.79 The following is the treatment of some
capital transfers in the GFS and balance of payments
accounts:• Debt forgiveness22 received from nonresidents
will be reflected in the GFS as revenue in capital
grants received either from foreign governments(GFS 1312), or international organizations (GFS1322), or as capital transfers not elsewhere classified (GFS 1442), when received from othernonresident entities. A corresponding reduction
22
Debt forgiveness is defined as the voluntary cancellation bymutual agreement of all or part of a debt obligation within a contractual arrangement between a creditor and a debtor.

Linkages with Other Macroeconomic Datasetsin the appropriate external debt instrument will
be recorded. In the balance of payments, debt
forgiveness is recorded as a capital transfer (seeBPM6, paragraph 13.23) in the capital accountfrom the creditor economy to the debtor economy, offset by a reduction in the liability of the
debtor (reduction in the asset of the creditor)
under the appropriate debt instrument in the financial account.
• Investment transfer consists of capital transfers
in cash23 or in kind made by foreign governments
or international organizations to other institutional units to finance all or part of the cost of
their acquiring fixed assets. These transfers will
be recorded in the same categories of revenue
and expense as for debt forgiveness as describedearlier in GFS. However, in this case, a corresponding increase in cash will be recorded if theinvestment grant was received in cash, while theappropriate nonfinancial asset will increase in
the case of a grant in kind. In the balance of payments, investment grants are recorded as othercapital transfer (see BPM6, paragraph 13.25) inthe capital account from the donor economy to
the recipient economy, and the counterentry is in
the relevant financial instrument, if the transfer
was received in cash, or in import of goods andservices, if received in kind.
• Calls on one-off guarantees and other debt assumption are capital transfers that occur when aone-off guarantee is activated and the guarantor
acquires no claim on the debtor or a claim worth
less than the value of the guarantee, or in othercases of debt assumption. When general government sector units and nonresidents are involvedin these transactions, they should be consistently
treated in the capital account and GFS. For treatment in balance of payments see the BPM6,
paragraph 13.27.
A6.80 Other capital transfers consist of major nonrecurring payments in compensation for extensive
damage or serious injuries not covered by insurance
policies. When general government sector units are
the recipients of this type of transfer from nonresidents, they will be recorded as part of capital grants receivable either from foreign governments (GFS 1312),
23
Cash is used in a broader sense since it includes all types offinancial instruments.

435

or international organizations (GFS 1322), or as capitaltransfers n.e.c. (GFS 1442), when receivable fromother nonresident entities. In balance of payments,
such payments are recorded as other capital transfers in capital account (see BPM6, paragraph 13.29).
When statistics are compiled for the general government sector, grants from other domestic government
units would be eliminated in consolidation24 so that
only grants from foreign governments and international organizations would have nonzero values in thegeneral government accounts.
Other revenue

A6.81 In GFS, other revenue includes property income, sales of goods and services, fines, penalties, andforfeits, transfers not elsewhere classified, and premiums, fees, and claims related to nonlife insurance andstandardized guarantee schemes.
A6.82 The contribution of the general government
sector to investment income in the primary income
account is mainly derived from the portion receivable from nonresidents of the GFS categories interest(GFS 1411), dividends (GFS 1412), withdrawals fromincome of quasi-corporations (GFS 1413), property
income from investment income disbursements (GFS1414),25 rent (GFS 1415), and reinvested earnings on
foreign direct investment (GFS 1416). In the balanceof payments, the primary income account groups
these items by functional category (direct investment,
portfolio investment, other investment, and reserve
assets). GFS does not present a functional classification26 similar to that in the international accounts.
24

See paragraph A6.60 for consolidation.
Insurance enterprises hold technical reserves in the form of
prepayments of premiums, reserves against outstanding claims,
and actuarial reserves against outstanding risks with respect tolife insurance policies. These reserves are considered to be assetsof the insurance company with matching liabilities towards thebeneficiaries, including any government units that are policyholders. Any income receivable from the investment of insurance technical reserves is also considered to be the property ofthe policy holders or beneficiaries and is described as property
income from investment income disbursements (GFS 1414). In
the BPM6, the account title used is Investment income attributable to policyholders in insurance, standardized guarantees, andpension funds.
26
The GFS framework also uses a functional classification for
expenses, based on the OECD/UN classification of the functionsof government (COFOG). It is a detailed classification of thefunctions (socioeconomic objectives) that general government
units aim to achieve through various kinds of expenditure (seeGFSM 2014, paragraph A6.1 for additional information).
25

436

Balance of Payments and International Investment Position Compilation Guide

A6.83 The contribution of the general government
sector to the goods and services accounts of the balance of payments comprises the sales of goods andservices to nonresidents. These sales are classified in
the corresponding categories of the goods and services accounts. In the services account, a separate
disclosure of government goods and services n.i.e. isincluded and covers the following:• Goods and services supplied by enclaves, suchas embassies, military bases, and internationalorganizations• Goods and services acquired from the host economy by diplomats, consular staff, and military
personnel located abroad, and their dependents
but excluding revenue/expense of workers who
are residents of the local economy• Services supplied by governments and not included in other categories of services
A6.84 As foreign government and internationalorganization enclaves are not residents of the territory in which they are physically located, their transactions with residents of the territory of location areinternational transactions. Government revenue fromlicenses and permits sold to nonresidents is also included in this category if it is not instead treated as
taxes, as well as some activities related to technicalassistance provided by one economy to another (seeBPM6, Box 10.6).
A6.85 The GFS framework does not specificallyrequire the identification of transactions with nonresidents in goods and services, or produced nonfinancial assets owned by the government. However, wherethese transactions can be identified and classifications
are built into the underlying public sector accounting
system, the information could be supplied to the balance of payments compiler for estimating credits fromthe sales of goods and services category of GFS (GFS
142), as well as the net investment in nonfinancial assets, other than nonproduced assets (GFS 31).
A6.86 The secondary income and the capital accounts of the balance of payments have linkages toseveral GFS other revenue categories, including fines,
penalties, and forfeits (GFS 143), current transfers notelsewhere classified (GFS 1441) and premiums, fees,
and claims related to nonlife insurance and standardized guarantee schemes (GFS 145) in the secondary
income account, and capital grants (GFS 131 and 132)and capital transfers n.e.c. (GFS 1442) in the capital
account.

Expenses
A6.87 Sometimes governments supply goods andservices to the community. In doing so, a government
may produce the goods and services itself and distribute them, purchase them from a third party, or transfer cash to households so they can purchase the goods
and services directly. The types of expenses that relate
to the costs of production undertaken by government
itself incurred for these activities are: compensation of
employees, use of goods and services, and consumption of fixed capital. Expenses also include subsidies,
grants, social benefits, and other expense related totransfers in cash or in kind, and purchases of goods
and services from third parties for delivery to otherunits. In addition, expenses include interest that is
payable by units that incur certain kinds of liabilities—
namely, deposits, debt securities, loans, and other accounts payable (see Table A6.8 for additional details).
A6.88 The linkages that exist between the international accounts and GFS are presented ahead.
Compensation of employees

A6.89 Compensation of employees is the total remuneration, in cash or in kind, payable to an individual in an employer-employee relationship in returnfor work done by the latter during the accounting period. Compensation of employees (GFS 21) excludes
amounts connected with own-account capital formation. In GFS, compensation of employees payable toemployees engaged in own-account capital formation,
which is the production of nonfinancial assets for own
use, is directly recorded as a component of the cost of
the acquisition of nonfinancial assets. It includes both
wages and salaries (GFS 211) and employers’ social
contributions (GFS 212). Wages and salaries are payments in cash or in kind to employees in return forservices rendered, before deduction of withholding
taxes and employees’ contributions to social insurance schemes. In the balance of payments, the definition of compensation of employees is the same.
A6.90 Because government employment usually
has some residency criteria as preconditions, international payments of employee compensation by government are often not very large. However, in the caseof territorial enclaves, all compensation of employees

Linkages with Other Macroeconomic Datasets

437

Table A6.8 Expense in Government Finance Statistics (GFS) and Balance of Payments
2

Expense21

Compensation of employees [GFS]

211

Wages and salaries [GFS]

I

Current account

I.A

Good and services

I.B

Primary income

2111

Wages and salaries in cash [GFS]

I.B.1

2112

Wages and salaries in kind [GFS]

I.B.2.1

Compensation of employees
Direct Investment

212

Employers' social contributions [GFS]

I.B.2.1.1

Income on equity and investment fund shares

2121

Actual social contributions [GFS]

I.B.2.1.1.1

Dividends and withdrawals from income ofquasi-corporations

2122

Imputed social contributions [GFS]

I.B.2.1.1.2

Reinvested earnings

22

Investment income attributable to policy holders
in insurance, pension schemes, and standardized
guarantee schemes and to investment funds

Use of goods and services

23

Consumption of ﬁxed capital [GFS]

I.B.2.1.2

24

Interest [GFS]

I.B.2.2

Interest
Portfolio Investment241

To nonresidents

I.B.2.2.1

Investment Income on equity and investment fundshares242

To residents other than general
government

I.B.2.2.1.1

Dividends

243

To general government units

I.B.2.2.1.2

Investment income attributable to investment fundshareholders

25

Subsidies

I.B.2.2.1.2.1

Dividends

251

To public corporations

I.B.2.2.1.2.2

Reinvested earnings

2511

Public nonﬁnancial corporations

I.B.2.2.2

2512

Public ﬁnancial corporations

I.B.2.3

252

To private enterprises

Interest
Other investment

I.B.2.3.1

Withdrawals from income of quasi-corporations

2521

Private nonﬁnancial enterprises

I.B.2.3.2

Interest

2522

Private ﬁnancial enterprises

I.B.2.3.3

Investment income attributable to policy holders
in insurance, pension schemes, and standardized
guarantee schemes253

To other sectors

I.B.2.4

26

GrantsI.B.2.4.1

261

To foreign governments

2611
2612
262

I.B.2.4.2

Current

I.B.3

CapitalI.B.3.3

Reserve assets
Income on equity and investment fund sharesInterest
Other primary income
Rent

To international organizations

2621

Current

I.C

Secondary income

2622

Capital

I.C.I

General government

I.C.I.I

Social contributions

2631

Current

I.C.I.3

Social beneﬁts

2632

CapitalI.C.I.4

Current international cooperation

I.C.I.5

Miscellaneous current transfers of general government

263

27
271
2711

To other general government units

Net nonlife insurance premiums

Social beneﬁts [GFS]
Social security beneﬁts
Social security beneﬁts in cash

2

Capital account

2.2

Capital transfers

438

Balance of Payments and International Investment Position Compilation Guide

Table A6.8 Expense in Government Finance Statistics (GFS) and Balance of Payments (concluded)
2
2712
272

ExpenseSocial security beneﬁts in kindSocial assistance beneﬁts

2721

Social assistance beneﬁts in cash

2722

Social assistance beneﬁts in kind
[GFS]

273

Employment-related social beneﬁts

2731

Employment-related social beneﬁts
in cash

2732

Employment-related social beneﬁts
in kind

28
281
2811

I

Current account

2.2.1

General government

2.2.1.1

Debt forgiveness

Other expense
Property expense other than interest
Dividends

28111

To nonresidents

28112

To residents

2812

Withdrawals from income ofquasi-corporations

2813

Property expense attributed toinsurance policy holders, pension

2814

Rent

2815

Reinvested earnings on foreign
direct investment

282

Transfers not elsewhere classiﬁed

2821

Current not elsewhere classiﬁed

2822

Capital not elsewhere classiﬁed

283

Premiums, fees, and claims related tononlife insurance and standardized
guarantee schemes

2831

Premiums, fees, and current claims

2832

Capital claims(GFS 21) payable by government to residents of thehost economy should be included in the primary
income account. The GFS classifications do not specifically require the identification of compensation of
employees to nonresidents. However, when such payments are identified in the underlying source system,
the information should be reported consistently in the
GFS and primary income account debits in the balance of payments.
Uses of goods and services

A6.91 This category consists of goods and services
used for the production of market and nonmarket
goods and services. Excluded are the consumption of

fixed capital (GFS 23), the use of goods and services
in own-account capital formation that are recorded as
the acquisition of nonfinancial assets, and goods purchased by government and distributed without transformation that are recorded as some type of transfer
in kind.27
A6.92 The use of goods and services of the general
government sector from nonresidents is reflected in
the corresponding categories of the goods and services
accounts in the balance of payments where goods
and services accounts contain a separate category for27

See paragraphs 6.25–6.30 in the GFSM 2014.

Linkages with Other Macroeconomic Datasets

government goods and services n.i.e. (see paragraph
A6.83). The GFS system does not specifically require
the identification of transactions in goods and services of the government with nonresidents. However,where these transactions can be identified and classifications are built into the underlying public sector
accounting system, the information could be supplied
to the balance of payments compiler for estimating
debits from the uses of goods and services (GFS 22)
category of the GFS.
Consumption of ﬁxed capital

A6.93 Consumption of fixed capital is the decline
during an accounting period in the current value of
fixed assets owned and used by a general government
unit as a result of physical deterioration, normal obsolescence, or normal accidental damage. It is valued
in the average prices of the period. This is an internaltransaction where government act in two capacities,
and would therefore not have any impact on the balance of payments.
Interest

A6.94 Interest is the expense that the general
government unit (the debtor) incurs for the use ofcertain kinds of financial assets, for putting thesefinancial and other resources at the disposal of another institutional unit. In the GFS framework, theinterest category is not compiled using an international account functional classification. The interest
expense (GFS 24) category in the GFS framework is
broken down in three subcategories: to nonresidents(GFS 241), to residents other than general government (GFS 242), and to general government units(GFS 243). As opposed to other categories in GFS,
the nonresident portion of interest (GFS 241) is
separately identified and it should be linked with thecorresponding categories in the balance of payments
accounts. The compiler should also be aware that, as
opposed to general government interest receipts andpayments recorded in the balance of payments, interest in the GFS framework is not adjusted for FISIM.
SubsidiesA6.95 Subsidies are current unrequited paymentsthat government units make to companies on thebasis of the level of their production activities or
the quantities or values of the goods or services they439

produce, sell, export, or import. Subsidies may bedesigned to influence the level of production andthe prices at which outputs are sold, or the profits orlosses of the companies involved.
A6.96 In calculating other primary income in thebalance of payments, linkages with the GFS data arise
from the transactions with nonresidents related tosubsidies (GFS 25). Where the identification of suchpayments to nonresidents is provided in the underlying public sector accounting system, the information should be consistent with the primary income
account.
Grants

A6.97 Grants are transfers payable by a government unit to other resident or nonresident government unit, or international organizations, that do
not meet the definition of a tax, subsidy, or social
contribution. These three recipients of grants arerecognized in GFS. For reconciliation with the international accounts, the following grants are relevant:current grants payable to foreign governments (GFS2611) and to international organizations (GFS 2621)
are linked to the secondary income account in thebalance of payments, and capital grants payable toforeign governments (GFS 2612) and to internationalorganizations (GFS 2622) are linked to the capital account in the balance of payments.
A6.98 When the government sector unit is the
grantor of debt relief to a nonresident, an expense will
be reflected in grants, to foreign governments, capital(GFS 2612); or, grants, international organizations,capital (GFS 2622); or capital transfers not elsewhereclassified (GFS 2822), when provided to other entities
different from foreign government and internationalorganizations. A corresponding reduction in the appropriate foreign financial asset will be recorded. The
GFS framework does not identify a separate category
for debt forgiveness. Exceptionally large nonlife insurance claims—where these claims are payable bygovernment sector units—may be recorded as capital
claims (GFS category 2832) in the premium, fees, andclaims related to nonlife insurance and standardized
guarantee schemes (GFS 283) category.
A6.99 Governments are often involved in granttransfers, which should be reported in a consistent
way in GFS and the secondary income or capital

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Balance of Payments and International Investment Position Compilation Guideaccount of the balance of payments. Governments
undertake transfers to convey a benefit to anotherparty, or benefit from transfers receivable. These capital transfers consist of compulsory transfers to governments, transfers under court orders, and voluntarytransfers. There may also be imputed capital transfers
as a result of governments’ use of entities resident inother economies, for fiscal purposes (see GFSM 2014,
paragraph 2.124, and BPM6, paragraphs 8.24–8.26).
Social beneﬁts

A6.100 Social benefits are current transfers receivable by households intended to provide for the needs
that arise from certain events or circumstances—for
example, sickness, unemployment, retirement, housing, education, or family circumstances.28 In GFS, notall social benefits are treated as expense. The paymentof pension and other retirement benefits through employer social insurance schemes is treated as reductions
in liabilities (see also paragraph A6.76). Social benefits(GFS 27) payable to nonresidents should feed into thosecorresponding categories in the secondary income account. In the international accounts, social benefits are
divided in two subcategories—that is, those related to
the general government and those to the financial corporations, nonfinancial corporations, households, and
NPISHs. In the GFS framework, social benefits arecompiled with a different disaggregation, social security
benefits (GFS 271), social assistance benefits (GFS 272),
and employment-related social benefits (GFS 273).
Other expense

A6.101 The GFS framework, in addition to compensation of employees, use of goods and services, consumption of fixed capital, interest, subsidies, grants, and social
benefits, identifies other expense. Other expense comprises property expense other than interest, transfers notelsewhere classified, and premium, fees, and claims related to nonlife insurance and standardized guarantees.
A6.102 The contribution of the general government to the primary income account of the balance of
payments is often largely derived from the nonresident
portion of all the subcategories of property expense

28

A social risk is an event or circumstance that may adversely
affect the welfare of the households concerned either by imposing additional demands on their resources or by reducing theirincomes.

other than interest (GFS 281): dividends (GFS 2811),
withdrawals from income of quasi-corporations (GFS2812), property expense for investment income disbursements (GFS 2813), rent (GFS 2814), and reinvested earnings on foreign direct investment (GFS2815). In GFS, detailed classification of dividends
presents breakdowns to nonresidents (GFS 28111)
and to residents (GFS 28112).
A6.103 In calculating secondary income and capital account categories of the balance of payments,
linkages with the GFS other expense categories arise
from the transactions with nonresidents related tocurrent transfers not elsewhere classified (GFS 2821)
and premiums, fees, and claims related to nonlife insurance and standardized guarantees (GFS 283) in thesecondary income account, and capital transfers notelsewhere classified (GFS 2822) in the capital account.

Transactions in Nonﬁnancial Assets
A6.104 In GFS, transactions in nonfinancial assets
include all categories of produced and nonproduced
assets. It should be noted that, contrary to GFS, thecapital account in the balance of payments does notinclude produced nonfinancial assets; it instead records only transactions in nonproduced nonfinancial
assets. Transactions in produced nonfinancial assets
are included in the respective balance of payments
categories—for example, goods as recorded in the
goods and services account. The goods and services
account does not distinguish whether those goods orservices are of a capital or current nature.
A6.105 Nonproduced nonfinancial assets consistof natural resources; contracts, leases, and licenses;
and marketing assets and goodwill in the balanceof payments, which are identified in the GFS framework. There is full consistency in the macroeconomic
statistical framework with regards to the categories ofnonproduced, nonfinancial assets that exist. Where
general government sector units acquire or disposeof these assets in transactions with nonresidents,
supplementary information would be helpful fromthe GFS transactions to feed into the international
accounts.

Transactions in Financial Assets
and Liabilities
A6.106 The functional categories in the international accounts take into consideration some aspects

Linkages with Other Macroeconomic Datasetsof the relationship between the parties and the motivation for investment (see BPM6, Chapter 6). In
addition, data in the financial account are also presented according to the financial instrument employed, and the sector of the resident counterpart tothe transaction.
A6.107 Although the classification of financial assets and liabilities as presented in the GFS does notfollow the same functional categories of the international accounts, it is fully consistent with the financial
instrument and sector classification as used in theinternational accounts. The guidelines of the GFS
framework suggest that transactions in financial assets and liabilities with residents and nonresidents beseparately disclosed. GFS follows the same criteria for
determining residence as the international accounts.
Conceptually it therefore allows international financial transactions that are included in GFS to be compared to the data for general government as presented
in the financial account of the international accounts.29

The Statement of Other Economic Flows
A6.108 In the GFS framework, the other economic
flows in the financial assets and liabilities accountshows changes in positions that arise for reasons
other than transactions between residents and nonresidents. These changes are also called other flows,
and, as with the international accounts, they include
holding gains and losses, reclassifications, and otherchanges in volume of financial assets and liabilities.30
The classification of financial instruments for assets
and liabilities is conceptually fully consistent in GFS
and international accounts, which should promoteconsistency in the data reported for other flows in thetwo datasets.
The Balance Sheet
A6.109 In addition to classifying financial assets
and liabilities by the characteristics of the financial
instrument, categories of the general government
balance sheet are also classified according to the residence of the other party to the instrument (the debt29
The international accounts identify general government, but,contrary to GFS, they do not present data for the subsectors of thegeneral government.
30
Because of the importance of different currencies in the IIP,
revaluations (holding gains and losses) are separately shown for
those arising from exchange rate changes and those arising fromother price changes.

441

ors for financial assets and the creditors for liabilities).
Because there has been a growing recognition of
the role of balance sheet analysis in understanding
sustainability and vulnerability, currency composition and maturity analysis of the balance sheet areencouraged as additional information. In the IIP, thehighest level of classification used is the functional
categories. However, in addition, the IIP is disaggregated by financial instrument, and most of these instruments are further disaggregated according to thecounterpart institutional sector (which is the lender
for assets and the borrower for liabilities) and maturity. The currency composition of the IIP debt assets
and liabilities is a memorandum item.
A6.110 General governments’ financial asset/liability
position with nonresidents as reported in the GFS
balance sheet follows the same classification of instruments and accounting rules as the IIP. The maturity
and currency breakdowns, as suggested in the Public
Sector Debt Statistics: Guide for Compilers and Usersand the GFSM 2014, are also fully consistent with
the IIP.

Annex to Appendix 6
Overview of the Monetary Statistics
Framework
A6.111 This annex describes the framework forthe compilation of monetary statistics in accordancewith the methodology recommended in the MFSMCG. The monetary statistics cover position and flow
data on the assets and liabilities of the financial corporations sector and its subsectors.
A6.112 The monetary statistics include data for all
institutional units in the financial corporations sector,
as described in Chapter 3 of the MFSM-CG. For compiling the monetary statistics, the financial corporations sector is divided into central bank subsector,
other depository corporations subsector, and otherfinancial corporations subsector. Taken together, thecentral bank and other depository corporations constitute the depository corporations subsector.
A6.113 The framework for the monetary statistics
recommended in the MFSM-CG embodies two levels of data compilation and presentation. At the firstlevel, position and flow data reported by individual
institutional units are aggregated into sectoral balance

6305

Equity and i nvestment fund shares

Investment fund shares or units

Insurance, pension, and standardized

62052

6206

Pension entitlements [GFS]

Claims of pension funds on pension manager

Provisions for calls under standardized
guarantee schemes

62063

62064

62065

6228

6221-

622

62126218

Same instrument breakdown as above

External

Same instrument breakdown as above, but
excluding monetary gold and SDRs

Domestic

Miscellaneous other accounts receivable

621

Trade credit and advances

6208

62082

Employee stock options

Other accounts receivable

62072

62081

Financial derivatives

62071

Financial derivatives and employee stock options

Life insurance and annuities entitlements

62062

6207

Nonlife insurance technical reserves

62061

guarantee schemes [GFS]

Equity

6205

62051

6328

6321-

632

63126318

631

63082

63081

6308

63072

63071

6307

63065

63064

63063

63062

63061

6306

63052

63051

6303
6304

Debt securities

Loans

6203

6302

6204

Special drawing rights (SDRs)

Currency and deposits

62012

6202

Monetary gold

6301

63

Same instrument breakdown as above

External

Same instrument breakdown as above,
but excluding monetary gold and SDRs

Domestic

Miscellaneous other accounts receivable

Trade credit and advances

Other accounts payable

Employee stock options

Financial derivatives

Financial derivatives and employee stock
options

Provisions for calls under standardized
guarantee schemes

Claims of pension funds on pension
manager

Pension entitlements [GFS]

Life insurance and annuities
entitlements

Nonlife insurance technical reserves

guarantee schemes [GFS]

Insurance, pension, and standardized

Investment fund shares or units

EquityEquity and investment fund shares

Loans

Debt securities

Currency and deposits

Special drawing rights (SDRs)

Liabilities

GFS: Financial assets and liabilities

Monetary gold and special drawing rights (SDRs)

Financial assets

62011

6201

62

Special drawing rights
Reserve assets

3.4.7
3.5

Other accounts receivable/payable—otherTrade credit and advances

Insurance, pension, and standardized guarantee
schemes

Loans

Currency and deposits

Other equity

Other investment

Financial derivatives

Debt instruments

Equity and investment fund shares

Portfolio investment

Debt instruments

Reinvestment earnings

Equity other than reinvestment of earnings

Equity and investment fund shares

Direct Investment

3.4.6

3.4.5

3.4.4

3.4.3

3.4.2

3.4.1

3.4

3.3

3.2.2

3.2.1

3.2

3.1.2

3.1.1.2

3.1.1.1

3.1.1

3.1

Balance of payments: Financial assets and liabilities

Table A6.9 Financial Assets and Liabilities in Government Finance Statistics (GFS) and Balance of Payments

442
Balance of Payments and International Investment Position Compilation Guide

Linkages with Other Macroeconomic Datasets

sheets, which contain comprehensive data for the individual financial corporations subsectors—that is,the central bank, other depository corporations, andother financial corporations. At the second level, thedata in the sectoral balance sheets are consolidated
into surveys.
A6.114 Surveys are compiled for financial corporations subsectors and for the entire financial corporations sector. The depository corporations survey(DCS) and its component surveys—the central banksurvey (CBS) and the other depository corporations
survey (ODCS)—are the major focus of the monetarystatistics and constitute a core set of data for macroeconomic analysis. The DCS contains position andflow data on the depository corporations’ liabilities
that are components of broad money, as nationallydefined, and data on the depository corporations’ assets that are claims on (i.e., credit to) other sectorsof the economy. The DCS also contains data on thedepository corporations’ claims on and liabilities tononresidents. The CBS and ODCS show the data thatare consolidated to obtain the DCS and other datathat are used in monetary and credit analysis at the
separate levels of the central bank and other depository corporations.
A6.115 The monetary statistics framework also
includes the financial corporations survey (FCS),
which extends the coverage beyond the depository
corporations covered in the DCS. In the FCS, the position and flow data from the DCS are consolidatedwith the data from the other financial corporations
survey (OFCS), which contains position and flow
data consolidated for insurance corporations andpension funds, other financial intermediaries, andfinancial auxiliaries. The FCS thereby provides the
position and flow data for analyzing claims on andliabilities to all other sectors of the economy andnonresidents, at the level of the entire financial corporations sector. In particular, the FCS shows a comprehensive measure of credit extended by financial
corporations.
A6.116 The purpose of the sectoral balance sheets
is to provide a framework for the collection andpresentation of data in a format that facilitates thecompilation of surveys, as described in the preceding paragraphs. The data for a sectoral balance sheet
are obtained from the individual institutional units

443

within a financial corporations subsector and are classified into standard components, in accordance withthe sectorization, instrument classification, and accounting principles in the MFSM-CG. In addition,
sectoral balance sheets are directly useful for analyses
requiring subsector data that are more highly disaggregated than the asset and liability categories shownin the corresponding financial subsector surveys.
A6.117 The surveys contain position and flow
data31 encompassing all assets and liabilities for theunits covered by the respective survey. Each is basedon data for all institutional units within the subsector. Thus, the term survey refers to comprehensive
data for all units in a subsector, rather than to sample
survey data that would cover only a subset of units or
only a subset of the asset and liability accounts.
A6.118 The DCS covers the accounts of the depository corporations and is a consolidation of the CBS
and the ODCS. The FCS is a consolidation of the DCS
and the OFCS.
A6.119 For many economies, the DCS will constitute the principal set of monetary statistics for macroeconomic policy. The DCS is a consolidated statementof positions and flows for the accounts of all financial
sector corporations that incur liabilities included in
the national definition of broad money. The framework of the DCS is designed to facilitate analysis ofbroad money and its components, credit aggregates
and their components, and depository corporations’foreign assets and liabilities and other assets andliabilities.
A6.120 By maintaining the balance-sheet identity
in the DCS, the broad money liabilities of depository corporations are linked to their claims on (i.e.,
credit to) nonresidents and sectors of the domestic
economy, and to their other assets and liabilities. Thisbalance sheet identity is reflected in the position andflow data in the DCS.
A6.121 The DCS is structured to facilitate macroeconomic analysis that makes use of the linkages
between the monetary statistics and other macroeconomic statistics. The balance sheet presentation of
the DCS links depository corporations’ broad money
liabilities to their foreign assets and liabilities and to31

Through the SRFs, the IMF collects only stock data.

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Balance of Payments and International Investment Position Compilation Guide

their claims on and liabilities to central government,
thereby linking the monetary statistics to the IIP and
GFS, respectively.
A6.122 The DCS can be rearranged to show thatbroad-money liabilities (BML) equal the sum of net
foreign assets (NFA), domestic credit (DC), and otheritems (net) (OIN). That is, the opening or closing positions in the DCS can be shown as
BML = NFA + DC—OIN
where DC comprises credits to resident sectors (domestic credit). OIN denotes a residual category forother liabilities less other assets, when other liabilities
includes all liabilities not included in broad money.

A6.123 Total flows (closing positions less opening
positions) for the DCS are shown as
ΔBML = ΔNFA + ΔDC—ΔOIN
where Δ denotes a total flow (period-to-periodchange). The flow data in each category in the DCS
are decomposed into separate flows for transactions,valuation changes, and other changes in volume.
A6.124 Changes in broad money liabilities canarise from changes in the foreign assets and foreign liabilities of the depository corporations, as can be seenfrom the identity that links ΔBML to ΔNFA, shown in
the preceding paragraph.

APPENDIX

7

Balance of Payments
Coding System

Introduction
A7.1 This appendix is aimed at discussing the balance of payments and international investment position (IIP) coding system. The second section of theappendix discusses the balance of payments and IIP
coding structure, and the third section covers the steps
taken by the international statistical community to
implement a common coding system and data reporting structures for external sector statistics based on
the Statistical Data and Metadata Exchange (SDMX)
standards.

The IMF’s Coding Structure forBalance of Payments and IIP
A7.2 The principal goals and objectives of the
IMF’s balance of payments and IIP coding system
are completeness of coverage, brevity, simplicity,
adaptability to automation, stability over time, and,
where appropriate, extensibility. The scope of thecodes is narrow. It includes the standard components for balance of payments and IIP data as defined in the BPM6, data items associated with theInternational Reserves and Foreign Currency Liquidity Template (IRFCL), and trade-in-services items
from the Manual on Statistics of International Tradein Services.
A7.3 The coding scheme does not attempt to address dates or periodicity, currency, economy or partner economy, economic activity, or a number of otherrelated topics. These items are the concern of a muchbroader audience and would therefore involve a different design and consultation process.
A7.4 This coding system consists of five parts: (1)a two-digit aggregate code, (2) a four-digit balanceof payments item code, (3) a single-digit accounting
code, (4) a single-digit resident sector code, and (5)a single-digit maturity code. All parts of the code are
required to fully identify a data item.
A7.5 These codes were formed with the goal of facilitating the navigation of data within the database. A
basic hierarchical structure was instilled where possible. As mentioned earlier, the code consists of fivecomponents or sections as follows:<Aggregate>

Two digits provide a reference that allows for broad categorization of the data: the first digit
is a numeric key that identifies the account that the series falls under (e.g., current account,capital account, financial account, or international investment position). The second digit
is an alphanumeric indicator, which identifies the section within the account where theconcept falls.

<BOP Item>

Four digits define the concept within this category: identifies all the balance of payments standard components, trade in services, and selected supplementary information
components.

<Accounting Entry>

One digit identifies the accounting unit associated with the measurement of value for theconcept.

<Resident Sector>

One digit identifies the domestic sector associated with the concept.

<Maturity>

One digit identifies the length of maturity for the concept, where applicable.

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Balance of Payments and International Investment Position Compilation Guide

A7.6 Table A7.1 presents an example of the codefor other investment components of the balance of
payments. It follows the structure described earlier,which is: <Aggregate><BOP Item><Accounting
Entry><Resident Sector><Maturity>.
A7.7 In the example presented in Table A7.1, thecoding for “Other investment” begins with the aggregate “3D,” which indicates that “Other investment”
is part of the financial account (3) and is the fourthcomponent (D). The balance of payments item also
has a hierarchical structure, with 9999 indicating thetotal; the subcomponents A000 and B000 indicate thefirst child “Other equity” and the second child “Currency and deposits,” respectively. Furthermore, theaccounting item in the example determines the accounting unit that is associated with the concept (e.g.,
N = net, A = assets, and L = liabilities), the resident
sector item indicates the sector involved (e.g., C =central bank and M = monetary authorities), and thematurity item stands for the maturity of the instrument (e.g., A = all maturities, S = short-term, andL = long-term).
A7.8 The list of values of the first component “Aggregate” of the code is presented in Table A7.2. It
describes the position in the balance of payments and
IIP accounts.

Table A7.1 Example of the Balanceof Payments Codes

A7.9 For the purposes of publication, the IMF conducts two main alterations to the reported by member
economies’ figures: (1) reported figures for SDR holdings, SDR allocations, reserve position in the IMF,
and credit and loans with the IMF are substituted by
the IMF Finance Department (FIN) data, and (2) for
constructing the analytical presentation of balance of
payments, the exceptional financing transactions are
removed from the standard components and included
below the line reported figures.1 In order to differentiate between reported figures and those affected bythese alterations, the last digit of the affected balanceof payments items is attributed the value “S” or “F,”which indicates substitution of accounts and removalof exceptional financing, respectively. The affected
codes are listed in Table A7.3.

Table A7.2 List of Values of “Aggregate”
Component of the Code
Value

Balance of payments and IIP component

10

Current account

1Z

Goods and services

1A

Goods

1B

Services

1C

Primary income

1D

Secondary income

20

Capital account30

Financial account3A

Direct investment

Code

3B

Portfolio investment

3D9999NAA

3C

Financial derivatives

Net acquisition of ﬁnancial assets

3D9999AAA

3D

Other investment

Net incurrence of liabilities

3D9999LAA

3E

Reserve assets

Other equity

3DA000NAA

40

Net errors and omissions

Net acquisition of ﬁnancial assets

3DA000AAA60

Supplementary items

Balance of payments item
Other investment

Net incurrence of liabilities

3DA000LAA

80

Position

Currency and deposits

3DB000NAA

8A

Direct investment

Net acquisition of ﬁnancial assets

3DB000AAA

8B

Portfolio investment

Central banks

3DB000ACA

8C

Financial derivatives

Short-term

3DB000ACS

8D

Other investment

Long-term

3DB000ACL

8E

Reserve assets

Monetary authorities (where relevant)

3DB000AMA

Short-term

3DB000AMS

Long-term

3DB000AML

1
For more details on the analytical presentation of balance of
payments see Chapter 14 of the BPM6.

Balance of Payments Coding System

Table A7.3 List of Altered Balance ofPayments Codes
CodeBalance of payments component

30999S

Financial account (with FIN data)

3D999S

Other investment liabilities(with FIN data)

3D999S

Other investment net (with FIN data)

3DC0ZS

Credit and loans with the IMF (other thanreserves) (with FIN data)

3DG00SSDR allocations (with FIN data)

3DY00S

Other debt instruments

3DY00S

Other debt instruments, central bank

3E999S

Reserve assets (with FIN data)

3EB00S

SDR holdings (with FIN data)

3EC00S

Reserve position in the IMF (with FIN data)

40999S

Errors and omissions (with FIN data)

4Z999S

Reserves and related items

80999S

IIP assets (with FIN data)

80999S

IIP liabilities (with FIN data)

80999SNet IIP (with FIN data)

8D999S

Other investment liabilities (with FIN data)

8DG00SSDR allocations (with FIN data)

8DY00S

Other debt instruments

8DY00S

Central bank

8E999S

Reserve assets (with FIN data)

8EB00S

SDR holdings (with FIN data)

8EC00S

Reserve position in the IMF (with FIN data)

10999F

Current account

1D999F

Secondary income, credit

20999F

Capital account

20999F

Capital account, credit

30999F

Financial account

3A999F

Direct investment, liabilities

3AA00F

Direct investment: equity and investment fundshares, liabilities

3AB00F

Direct investment: debt securities, liabilities

3B999F

Portfolio investment, liabilities

3BA00F

Equity and investment fund shares

3BB00F

Debt securities

3D999F

Other investment, liabilities

3DA00F

Other investment, other equity, liabilities

3DZ00F

Debt instruments

4Y999F

Total, current plus capital minus
ﬁnancial account447

The SDMX Coding Structurefor Balance of Payments
Introduction
A7.10 Official data compiling agencies report statistics to many international organizations (IO), butwith reporting formats and coding structures that
may vary from one IO to another. Four internationalorganizations that collect data on external sector statistics have agreed to jointly develop a common reporting framework using the SDMX standards. These
organizations, the European Central Bank (ECB), Eurostat, the IMF, and the Organisation for Economic
Co-operation and Development that formed the Technical Group,2 have completed the development of
the SDMX reporting framework that will support
the specification of common coding structures ordata structure definitions (DSD) for balance of payments, IIP, direct investment, and other external sector statistics.
A7.11 It is expected that official data compilingagencies would see significant benefits in adopting the
SDMX standards and the common coding structuresthat were developed for the reporting and dissemination of BPM6-basis statistics. The adoption of thecommon formats and codes provided by the SDMX
standards and the DSD for external sector statistics
would enhance access to these statistics for the users’community, while supporting the automation of theprovision of these data to IOs.
A7.12 The DSD provides the various concepts andassociated code lists for the SDMX transmission ofthese data—namely, by compiling agencies to IOs, aswell as their dissemination to the public. It provides
a unique reporting format, simplifies the process of
mapping data from internal production systems of national agencies to the reporting requirements of IOs,
and facilitates data sharing across IOs, with the key objective of reducing the reporting burden of economies.
A7.13 The SDMX data exchange standards and the
DSD for external sector statistics will be used by theEuropean Union member economies and the Euro
2
The BIS is also participating in the technical group responsiblefor developing the DSD, as it has been involved in SDMX standards and data exchanges for many years and has a long-standing
involvement in external sector statistics.

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Balance of Payments and International Investment Position Compilation Guide

Area economies in their data provision to Eurostat
and ECB, respectively. Consequently, it will be one of
the modes for economies’ data submission to the IMF
for redissemination in the IMF International Financial Statistics and Balance of Payments Statistics Yearbook publications.

The Balance of Payments DSD
A7.14 The balance of payments DSD includes 16
dimensions and 12 attributes. Dimensions are used
to uniquely identify a time series, and, when joined
together, they provide the “time series keys” that are
the unique identifier for a time series. When defining a time series key using SDMX, a valid code must
be assigned to each dimension of the DSD. Attributes
are used to further describe the data. Attributes canbe attached at different levels of the data file: (1) at thelevel of the data file (or dataset in SDMX terminology); (2) at the level of the sibling series (that is thetime series keys for all applicable frequencies); (3) atthe group level (a group of dimensions); or (4) at thelevel of the observations. Attributes are either mandatory or conditional (i.e., reporting is not mandatory). Their level of attachment and status are definedin the DSD.
A7.15 In addition to the dimensions and attributes
explicitly defined in the DSD, the balance of payments
DSD includes the concept of observation value, where
the observed value can be found. The DSD also includes the time dimension, which is a specialized dimension. It represents the point in time at which thephenomenon was observed or measured.
A7.16 All dimensions provided in this DSD arecoded concepts which are associated with a code list
and a descriptor for the coded item, whether they are
dimensions or attributes. For some dimensions, thesame code list is reused when relevant. For example,
the same code list is used for identifying items of thereference area and the counterpart area, as they bothrefer to the same list of countries, territories, and regional groupings. Items listed are provided in a nonhierarchical presentation (flat list). However, in the
Excel version of the DSD, integrity rules are provided
for selected items to help users identify the relationships that exist within a code list as well as to describe
the composition of an item.

A7.17 The technical group defined the list of concepts necessary to codify the reporting requirementsof four international agencies involved in the SDMX
development for data collection of external sector
statistics compiled based on the BPM6 methodology.
The reporting requirements for direct investment statistics are covered by a separate DSD, which reuses
several dimensions from the balance of payments
DSD and adds a few complementary dimensions toaddress the specificities of direct investment.
A7.18 Some of the concepts used to identify external sector statistics are overlapping with thoseused in national accounts statistics. The items lists,
codes, and descriptors for these common concepts
have, therefore, been harmonized, to the extent possible, across the DSDs for balance of payments andnational accounts. As a result, the code lists of harmonized concepts are exhaustive and may include
items that are required for national accounts but not
used for reporting balance of payments statistics.
These longer code lists that are shared across statistical domains promote consistency of coded information, as well as sharing of data. In addition, sharedcode lists contribute to consistency across statisticaldomains.
A7.19 The generic codes for common concepts
are used when applicable. They are included in a verylarge number of DSDs because they cover very general and frequently used concepts. The main purposeof a set of generic code lists is to propose standardized identifiers that can be shared. The generic codes
are provided in Table A7.4. The leading underscore isused to visually mark the codes as “reserved,” which isin line with established programming practice.

Table A7.4 List of Generic Codes for the
Balance of Payments Data
Structure Deﬁnitions (DSD)
Recommended code
value

1

Recommended code
description_X

Not allocated/unspeciﬁed_Z

Not applicable_T

Total1

In a speciﬁc context, the code value _T might also be part of acode value to identify a total within a breakdown, and its description might be more speciﬁc depending on the concept to which it
relates.

Balance of Payments Coding System

A7.20 In the Excel representation of the DSD, filters are provided to preselect items relevant to specificreporting requirements. The filters should facilitate
navigating the items list by preselecting items that are
applicable for balance of payments reporting to IMF,
or reporting of Extended Balance of Payments Services (EBOPS) classification, for example.

Guidelines for Using the Balanceof Payments DSD
A7.21 This subsection provides general guidelines for using the 16 dimensions and 12 attributesof the balance of payments DSD for the constructionof the time series keys for data exchange and to report external sector statistics. The list of dimensions
and attributes used in balance of payments DSD ispresented in Tables A7.5 and A7.6.

Table A7.5 Dimensions for the Balanceof Payments Data StructureDeﬁnitions (DSD)
Positionin keyDimension’s
mnemonic

449

Dimensions
Frequency

A7.22 This concept refers to the periodicity of
the reported data. A single data file (or a dataset
in SDMX terminology) could include multiple frequencies. The most commonly used frequencies areannual, quarterly, and monthly. For example, if thefrequency of the time series is quarterly, the “frequency” dimension for that time series should be
coded as “Q.”
Reference economy or area

A7.23 This concept identifies the reference area
for the time series encoded using the relevant code
list of the DSD. The reference area is an economic
territory, economy, or region about which external
sector statistics are provided. External sector statistics disseminated by IOs would likely include manyreference countries, as well as regional economy
groupings (areas), of which the composition is provided by IOs.

Dimension’s name

1

FREQ

Frequency

2

REF_AREA

Reference country
or area

3

ADJUSTMENT

Adjustment indicator

Table A7.6 Attributes for the Balanceof Payments Data StructureDeﬁnitions (DSD)

4

FLOW_STOCK_ENTRY

Flows and stocks
indicator

Attachment
level

5

INT_ACC_ITEM

International accounts
item

SeriesTIME FORMATTime format

Observation

OBS STATUS

Observation status

6

ACCOUNTING_ENTRY

Accounting entries

Observation

CONF STATUS

Conﬁdentiality status

7

COUNTERPART_AREACounterpart Area

Observation

COMMENT OBS

8

REF_SECTOR

Reference sector

Comments to theobservation value

9

FUNCTIONAL_
CATEGORY

Functional category

Observation

PRE BREAK
VALUE

Pre-break value

10

INSTR_ASSET

Instrument and assets
classiﬁcation

Sibling

UNIT MULT

Unit multiplier

Sibling

COMMENT SBG

Detailed descriptionof the group of series

Sibling

DECIMALS

Decimals

SeriesTIME PERCOLLECTTime periodcollection

Sibling

COMPILING ORG

Compilingorganisation

Sibling

TITLE

Title

SeriesREF PERIOD DTL

Reference period
detail11

MATURITY

Maturity

12

COUNTERPART_SECTORCounterpart sector

13

CURRENCY_
DENOMINATION

Currency ofdenomination

14

VALUATION

Valuation

15

COMP_
METHODOLOGY

Compilation
methodology

UNIT_MEASURE

Unit of measure

16

Attribute’s
mnemonic

Attribute’s name

450

Balance of Payments and International Investment Position Compilation Guide

A7.24 The economy code list follows the ISO 3166–1
alpha-23 classification and is a cross domain code list,
according to the recommendation of the SDMX initiative. The codes used for various regional groupings
were harmonized across international agencies that
use the balance of payments DSD, wherever possible.
Adjustment indicator

A7.25 This concept identifies the type of adjustment made to the time series that refers to seasonal,
trading day, and trend cycle adjustments. In practice,
the adjustments usually apply only to intra-annual series, while annual time series data would usually be
coded as neither seasonally or working day adjusted(code N). In the data exchange agreements, the datacollection agency would usually specify which typesof adjusted time series (if any) they are seeking. For
example, if the time series is not subject to any adjustment, the “adjustment indicator” dimension for thattime series should be coded as “N.”Flows and positions indicator

A7.26 This concept identifies whether the time series is a transaction (flow), a position, or a change inposition not due to transactions (e.g., revaluations).
It also includes additional items to identify specificexternal sector transactions required for the IRFCL.
For example, if the time series refers to financial instruments, the “flows and positions indicator” dimension for this time series could be coded as “T” when
the instruments are transacted (included in balance of
payments reporting), or as “LE” when the time seriesrefer to positions (included in the IIP).
International accounts item

A7.27 This concept identifies the detailed items
that are outcomes of production activities (goods andservices, including the detailed list for the EBOPS
classification), types of primary and secondary income, and capital accounts items, and provides asingle item for the financial account. The concept provides memorandum items to record specific types oftransactions, such as the exceptional financing trans3
ISO 3166-1 alpha-2 codes are two-letter economy codes definedin ISO 3166-1, part of the ISO 3166 standard published by the International Organization for Standardization (ISO), to represent
economes, dependent territories, and special areas of geographical interest.

actions. The concept also provides items for specificinternational accounts data required for the IRFCL.
A7.28 While other concepts used in the balance of
payments DSD are designed to cover a unique methodological aspect of external sector statistics (e.g.,maturity or institutional sector), this concept has abroader scope. It covers many differing concepts,
such as the functional classification of services, classification of primary and secondary income, balancing
items, including net errors and omissions, and memorandum items. The items provided in this concept areclosely aligned with the standard components of thebalance of payments and, as such, provide a classification of concepts that is familiar to the compiler.
A7.29 The “financial account” is provided as a single concept in the international accounts item; however, it is further defined by other DSD dimensions,which support identifying the financial instrument,
reference sector, functional category, maturity, currency of denomination, and so forth. This approachprovides flexibility in the definition of time series
keys, supporting the definition of a very large numberof time series.
A7.30 In spite of the fact that “financial account”
is part of the balance of payments but not of the IIP,a pragmatic approach was adopted under which forreporting IIP statistics the present dimension “international accounts item” should include “financial account” (as one would select for balance of payments
statistics).
Accounting entries

A7.31 This concept identifies the type of accounting entry: (1) for transactions on current and capital account components, whether the time series isa credit, a debit, or the balance of credit minus debit(credit and debit series are reported as positive numbers; thus the balance is expected to correspondto credit minus debit);4 and (2) for positions and

4
There are very few instances when credits and debits may berecorded as a negative number. Such instances include the refundof taxes to taxpayers, the recording of negative reinvestment of
earnings by direct investment enterprises, which also implies therecording of negative income receivable and/or payable (depending if the data are about the economy of the direct investor orof the direct investment enterprise). The balance is reported as
credit minus debit.

Balance of Payments Coding Systemtransactions data in the financial account, whether
the time series refers to assets (or the net acquisition of), liabilities (or the net incurrence of), or a net
position (defined as assets minus liabilities). In the
BPM6 standard components, time series for transactions related to the “financial account” are usually
recorded as net acquisition of financial assets and net
incurrence of liabilities. However, there are instances
when time series for the underlying gross increases
and decreases in assets and liabilities could be required (e.g., exceptional financing transactions).
As such, the “accounting entries” concept also provides additional items to further identify transactions in financial assets as gross increases and grossdecreases of assets, and transactions in financial liabilities as gross increases and gross decreases of liabilities. Gross increases and decreases are reported
as positive numbers, while the net acquisition andthe net incurrence correspond to increases minus
decreases.5
A7.32 For example, for time series that refer togross acquisitions of equity shares assets, the “accounting entries” dimension will be coded as “AI,” while thenet result of acquisitions (AI) minus sales (AD) will be
coded as “A.”6
Counterpart area

A7.33 This concept identifies the counterpart area
for transactions and positions. All time series for external sector statistics make reference to transactions
between residents and nonresidents during a period(transactions) or at a specific point in time (position).
The counterpart area concept is used to identify the
territory of the nonresident entity of individual timeseries. For most time series in global balance of payments or IIP data, the counterpart area will be definedas the rest of the world.
A7.34 External statistics can also be compiled
with a geographical breakdown for partner economies. Reporting of balance of payments to the ECB
and to Eurostat, as well as detailed (EBOPS) trade in

5Additional net concepts are provided to support the needs of
direct investment reporting.
6
For balance of payments reporting of transactions in financial
assets and liabilities, only the net result is usually requested:“A” for net acquisition of assets, and “L” for net incurrence ofliabilities.

451

services, requires geographical breakdown for partner
economies. Detailed information on counterpart areas
is also required for the time series provided in thecontext of the Coordinated Portfolio Investment Survey and Coordinated Direct Investment Survey. The
economy code list follows the ISO classification andis a “cross domain” code list harmonized across international agencies that use the balance of payments
DSD, wherever possible.
Reference sector

A7.35 This concept identifies the reference (institutional) sector, which is the corresponding resident
sector within the compiling economy for the balanceof payments and IIP items. Traditionally, time series
for the goods and services account of the balance of
payments refer to the relations of all institutional
sectors of the reference area with the rest of theworld. This concept is also used in national accounts
statistics; therefore the items and codes included
under this concept accommodate the needs of external sector and national accounts statistics (the sector
classification in external sector statistics is generally
much more aggregated than in national accounts).
A7.36 This concept identifies functional categories
applicable to financial accounts. It applies to all timeseries for which the “international accounts items”
are coded as “financial account” and as types of “investment income.” For other time series, this item iscoded as “not applicable.”
Instruments and assets classiﬁcation

A7.37 This concept identifies the type of financial
instrument that is reported in the external sector timeseries as well as in national accounts. Therefore, theitems and codes included under this concept accommodate the needs of external sector and national accounts statistics.
A7.38 The list of financial instruments provided
under the subheading “memorandum item” reflects inpart the structure of the BPM6 presentation, where,
for selected functional categories, financial instruments are grouped in clusters rather than the standard classification of these instruments. Similarly, tothe functional category concept, the financial instruments concept applies to all time series for which the“international accounts item” is coded as “financial

452

Balance of Payments and International Investment Position Compilation Guideaccount” and to selected items coded as “investment
income.”7 For other time series, this item is coded as“not applicable.”for secondary income and for capital transfers, thisdimension should be used to codify transactions withspecific counterpart sectors.

Maturity

Currency of denomination

A7.39 This concept identifies the types of maturityof the financial instrument of the external sector statistics time series. For most time series for which the“international accounts items” are subcomponentsof the current account or the capital account, thematurity concept will be coded as “not applicable.”
For most “international accounts item” coded as “financial account” and for selected items coded as “investment income,” the time series are usually codedwith reference to the maturity of the coded financial
instrument. For financial instruments that are classified as equity securities, other securities, and investment fund shares, the maturity is “not applicable,” asthey do not have a specified redemption or repayment date.

A7.43 This concept identifies the currency of denomination of the financial instrument or of the invoice of goods and services. For balance of payments
and IIP data, the concept is usually recorded as “allcurrency of denomination.” However, there are anumber of instances when more detailed information is needed on the currency of denomination toaccommodate the additional analytical position datarequired by the BPM6.

Counterpart sector

A7.40 This concept identifies the counterpart (institutional) sector of the external sector time series
and is also used in national accounts. Consequently,
the items and codes included under this concept accommodate the needs for both statistics

Valuation

A7.44 This concept identifies the method of valuation for selected transactions and positions data. For
balance of payments and IIP data, a “not applicable”
will be used, even though market prices are the recommended basis for valuation of international accounts. Nevertheless, more detailed information on
the valuation method is sought for additional analytical position data required by the BPM6. The concept is applicable to both external sector and national
accounts statistics.
Compilation methodology

A7.41 Traditionally, time series for the external
sector statistics are vis-à-vis a counterpart area definedas the “rest of the world” and a counterpart sector defined as “total economy” (which covers all counterpart sectors). However, Eurostat and ECB require, forselected financial transactions, a breakdown for thecounterpart sector. When used together with the “reference sector,” this level of detail allows establishingwhat is often referred to as from-whom-to-whom statistics. The “counterpart sector” concept is also used
for transactions and positions data on reserve assets
to separately identify currency and deposit claims onmonetary authorities and on other entities.

A7.46 This concept identifies the unit of measurein which the time series is recorded. Most frequently,
but not always, it refers to a currency unit, but it could
also refer to fine troy ounces used for the IRFCL
reporting.

A7.42 For most current and capital account transactions, this concept is “not applicable.” However,Attributes

A7.45 The concept is used to distinguish between
external sector time series compiled at the national
level and similar external sector time series compiledusing the methodology applied for economic or currency union statistics.
Unit of measureA7.47 Table A7.7 presents the description of attributes used in balance of payments DSD.
7The DSD provides for a detailed identification of investment
income by instruments, although this is not part of the standard
components of the BPM6.

A7.48 Some examples of the codes for selected balance of payments series are presented inTable A7.8.

Balance of Payments Coding System

453

Table A7.7 Description of Attributes for the Balance of Payments Data Structure Deﬁnitions (DSD)
Description

Linkage

StatusTime format

Attribute

Provides coded information about the type of time references used in
the data

Attached at thedata ﬁle level

Conditional

Observation
statusProvides coded information about the “status” of an observation—i.e.,
the ranking based on its characteristics, as described in the code list

Attached at theobservation level

Mandatory

Conﬁdentiality
statusProvides coded information with respect to the sensitivity (for dissemination) and conﬁdentiality status of the data

Attached at theobservation level

Mandatory

Comments tothe observation
value

Provides information in a free text format on selected aspect of thedata or metadata—e.g., for explaining breaks in series or unusual
behavior

Attached at theobservation level

Conditional

Prebreak value

Allows transmitting a second value for a speciﬁc observation where
the time series breaks owing to changes such as methodologicalchanges, change of the reporting population, inclusion of new instruments, etc.; the prebreak value allows users to reconstruct a timeseries without break in series.

Attached at theobservation level

Conditional

Unit multiplier

Provides code values for indicating the magnitude in the units ofmeasurements

Attached at thesibling series level

Mandatory

Detailed description of thegroup of series

Provides for a description of series keys in free text format

Attached at thesibling series level

Conditional

Decimals

Provides a list of values showing the number of decimal points used in
the data

Attached at thesibling series level

Mandatory

Time periodcollection

Provides coded information on when the observation values arecollected

Attached at thedata ﬁle level

Mandatory

Compilingorganization

Provides codes to indicate the data compiling agency responsible forthe compilation of the time series

Attached at thesibling series level

Conditional

Title

Provides, in free text format, a short name describing the statisticalobject identiﬁed by the series key; could be used, for example, as
heading in a chart or a table

Attached at thesibling series level

Conditional

Reference
period detail

Gives information about the reference period if different from thecalendar year—for example, the start of the ﬁscal year for data reported on a ﬁscal year basis; while the information is reported in freetext format, rules are provided in the Excel version of the balance of
payments DSD on how to report this information.

Attached at thedata ﬁle level

Conditional

Time series key

Q. .N.T.G3.D.W1.S1_Z._Z._Z._Z._T._Z.

Q

Q. .N.T.D1.D.W1.S1._Z._Z._Z._Z._T._Z.

Debit

Q

Q

Q

Q. .N.T.D1.B.W1.S1._Z._Z._Z._Z._T._Z.
Q. .N.T.D1.C.W1.S1._Z._Z._Z._Z._T._Z.

Compensation of employees

CreditQ. .N.T.IN1.D.W1.S1._Z._Z._Z._Z._T._Z. Q

Debit

Q

Q. .N.T.IN1.C.W1.S1._Z._Z._Z._Z._T._Z.

Q

Q

Q. .N.T.SB.D.W1.S1_Z._Z._Z._Z._T._Z.
Q. .N.T.IN1.B.W1.S1._Z._Z._Z._Z._T._Z.

Q

Q

Q

Q

Q

Q

Q

Q

Q

Q

Q. .N.T.SB.C.W1.S1_Z._Z._Z._Z._T._Z.

Q. .N.T.SB.B.W1.S1_Z._Z._Z._Z._T._Z.

Q
Q

CreditPrimary income

Debit

Credit

Maintenance and repair services n.i.e.

Q. .N.T.SA.C.W1.S1._Z._Z._Z._Z._T._Z.
Q. .N.T.SA.D.W1.S1_Z._Z._Z._Z._T._Z.

CreditQ. .N.T.SA.B.W1.S1_Z._Z._Z._Z._T._Z.

Manufacturing services on physical inputs
owned by others

Debit

Q. .N.T.S.C.W1.S1_Z._Z._Z._Z._T._Z.
Q. .N.T.S.D.W1.S1_Z._Z._Z._Z._T._Z.

CreditDebit

Q. .N.T.S.B.W1.S1_Z._Z._Z._Z._T._Z.

Debit

Services

Q. .N.T.G3.C.W1.S1._Z._Z._Z._Z._T._Z.

Q. .N.T.G3.B.W1.S1_Z._Z._Z._Z._T._Z.

CreditNonmonetary gold

Q. .N.T.G1.C.W1.S1._Z._Z._Z._Z._T._Z.
Q. .N.T.G1.D.W1.S1._Z._Z._Z._Z._T._Z.

CreditDebit

Q
Q

Q. .N.T.G.D.W1.S1_Z._Z._Z._Z._T._Z.
Q. .N.T.G1.B.W1.S1._Z._Z._Z._Z._T._Z.

Debit

General merchandise on a balance of payments basis

Q
Q

Q. .N.T.G.B.W1.S1_Z._Z._Z._Z._T._Z.

Q
Q

Q. .N.T.G.C.W1.S1._Z._Z._Z._Z._T._Z.

CreditGoods

Q. .N.T.GS.C.W1.S1._Z._Z._Z._Z._T._Z.
Q. .N.T.GS.D.W1.S1_Z._Z._Z._Z._T._Z.

CreditDebit

Q
Q

Q. .N.T.CA.D.W1.S1._Z._Z._Z._Z._T._Z.
Q. .N.T.GS.B.W1.S1_Z._Z._Z._Z._T._Z.

Debit

Q

Goods and services

Q. .N.T.CA.B.W1.S1._Z._Z._Z._Z._T._Z.
Q

Title complement
Q. .N.T.CA.C.W1.S1._Z._Z._Z._Z._T._Z.

CreditCurrent account

Adjustment indicator
N T

Flows and stocks indicator

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

CA

International accounts item
W1 S1
W1 S1

W1 S1

W1 S1

W1 S1
W1 S1

W1 S1

W1 S1

W1 S1
W1 S1

W1 S1

W1 S1

W1 S1

W1 S1

W1 S1
W1 S1

W1 S1

D1

D1

D1

W1 S1
W1 S1
D W1 S1C

B

IN1 D W1 S1

IN1 C

W1 S1

D W1 S1

CB

D W1 S1

CB

D W1 S1

CB

D W1 S1

CB

D W1 S1

CB

D W1 S1

CB

D W1 S1

CB

D W1 S1

C

B

Accounting entries

IN1 B

SB

SB

SB

SA

SA

SA

S

S

S

G3

G3

G3

G1

G1

G1

G

G

G

GS

GS

GS

CA

CA

Counterpart Area

Reference country or area

Table A7.8 Statistical Data and Metadata Exchange (SDMX) Coded Example for Selected Balance of Payments SeriesFrequency_Z _Z

Functional category
_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z _Z

_Z

Maturity
_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

Valuation

Currency Denomination

Counterpart sector_Z _T _Z N

Compilation Methodology
Unit of Measure(continued )_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

454
Balance of Payments and International Investment Position Compilation Guide

Instrument Assets Classiﬁcation

Reference sector

Title complement

Time series key

Q. .N.T.FA.A.W1.S1.P.F5._Z._Z._T._Z.

Q. .N.T.FA.A.W1.S1.P.F._Z._Z._T._Z.

Q. .N.T.FA.N.W1.S1.P.F._Z._Z._T._Z.

Q. .N.T.FA.N.W1.S1._Z.F._Z._Z._T._Z.

Q

Frequency

Q. .N.T.FA.A.W1.S1.P.F3.T._Z._T._Z.

Q. .N.T.FA.L.W1.S1.P.F521._Z._Z._T._Z.

Q. .N.T.FA.L.W1.S121.P.F3.L._Z._T._Z.

Long-term

Q. .N.T.FA.L.W1.S121.P.F3.T._Z._T._Z.
Q. .N.T.FA.L.W1.S121.P.F3.S._Z._T._Z.

Short-term

Central bank

Q. .N.T.FA.L.W1.S1.P.F3.T._Z._T._Z.

Money market fund shares or units

Debt securities

Q. .N.T.FA.L.W1.S1.P.F52._Z._Z._T._Z.
Q. .N.T.FA.L.W1.S1.P.F52B._Z._Z._T._Z.

Investment fund shares or units

Q. .N.T.FA.L.W1.S1.P.F512._Z._Z._T._Z.

Unlisted

Reinvestment of earnings

Q. .N.T.FA.L.W1.S1.P.F511._Z._Z._T._Z.

ListedEquity securities other than investment fund shares Q. .N.T.FA.L.W1.S1.P.F51._Z._Z._T._Z.

Q. .N.T.FA.L.W1.S1.P.F5._Z._Z._T._Z.

Q. .N.T.FA.L.W1.S1.P.F._Z._Z._T._Z.

Q. .N.T.FA.A.W1.S13.P.F3.L._Z._T._Z.

Q

Q

Q

Q

Q

Q

Q

Q

Q

Q

Q

Q

Q

Q

Q

Q

Q

Q. .N.T.FA.A.W1.S1X.P.F3.L._Z._T._Z.
Q. .N.T.FA.A.W1.S13.P.F3.T._Z._T._Z.
Q. .N.T.FA.A.W1.S13.P.F3.S._Z._T._Z.

Equity and investment fund shares

Q
Q
Q

Long-term

Net incurrence of liabilities

Q
Q

Q. .N.T.FA.A.W1.S1X.P.F3.S._Z._T._Z.

Short-term

General governmentLong-term

Short-term

Q. .N.T.FA.A.W1.S1X.P.F3.T._Z._T._Z.

Q. .N.T.FA.A.W1.S121.P.F3.L._Z._T._Z.

Monetary authorities (where relevant)

Q. .N.T.FA.A.W1.S121.P.F3.S._Z._T._Z.

Long-term

Q. .N.T.FA.A.W1.S121.P.F3.T._Z._T._Z.

Short-term

Central bank

Debt securities

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

N T

Q. .N.T.FA.A.W1.S1.P.F52B._Z._Z._T._Z. Q
Q. .N.T.FA.A.W1.S1.P.F521._Z._Z._T._Z. Q

Reinvestment of earnings

Money market fund shares or units

N T
N T

Q. .N.T.FA.A.W1.S1.P.F52._Z._Z._T._Z.

Q. .N.T.FA.A.W1.S1.P.F512._Z._Z._T._Z. Q

Reference country or area
N T

N T

N T

N T

N T

N T

Adjustment indicator

Q. .N.T.FA.A.W1.S1.P.F511._Z._Z._T._Z. Q

Q

Q

Q

Q

Flows and stocks indicator

Q

Investment fund shares or units

Unlisted

ListedEquity securities other than investment fund shares Q. .N.T.FA.A.W1.S1.P.F51._Z._Z._T._Z.

Equity and investment fund shares

Net acquisition of ﬁnancial assets

Portfolio investment

Financial account - Net lending (+) / net borrowing (–)

FA

International accounts item
FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

FA

Accounting entries
N W1 S1

Counterpart Area

P

P

P

P

P

P

P

P

P

P

Reference sector

A W1 S121 P

L

L

L

L

L

L

L

L

L

L

L

L

P

F3

F3

F3

F3

F3

F521

P

P

P

P

P

P

P

P

P

P

P

P

P

W1 S121 P

W1 S121 P

_Z

_Z

_Z

_Z

_Z

_Z

L

S

_T

_T

_T

_T

L

S

_T

_T

_Z

F3

F3

F3

F3

F521

L

S

_T

_T

_Z

F52B _Z

F52

F512

F511

F51

F5

F

F3

F3

F3

F3

F3 _Z

W1 S121 P

W1 S1

W1 S1

W1 S1

W1 S1

W1 S1

W1 S1

W1 S1

W1 S1

W1 S1

A W1 S13

A W1 S13

A W1 S13

A W1 S1X

A W1 S1X

A W1 S1X

A W1 S121 P

_Z

_Z

_Z

_Z

_Z

_Z

_Z

_Z

Maturity

F52B _Z

F52

F512

F511

F51

F5

F

F

_Z F

Functional category

A W1 S121 P

A W1 S1

A W1 S1

A W1 S1

A W1 S1

A W1 S1

A W1 S1

A W1 S1

A W1 S1

A W1 S1

N W1 S1

Instrument Assets Classiﬁcation

Table A7.8 Statistical Data and Metadata Exchange (SDMX) Coded Example for Selected Balance of Payments Series (Concluded )Valuation

Currency Denomination
Counterpart sector_Z _T _Z N

Compilation Methodology_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

_Z _T _Z N

Balance of Payments Coding System
455

Unit of MeasureAPPENDIX

8Model Survey Forms

Table A8.1 Summary of the Model Survey Forms
Forms number and title

Scope and purpose

Other comments

1. Exploratory Survey

This form collects information on
the type and size of balance of
payments and IIP activity undertaken
by enterprise groups. It provides
information for maintaining anddeveloping a balance of payments and
IIP company register.

This form may be regarded as abenchmark collection form. It uses
mark boxes to encourage a quick
response. It may be modiﬁed toestablish an ITRS register.

2. Company Register Form

This form records details of enterprisegroups and the type and size of theirbalance of payments and IIP activity. It
provides data essential for the balanceof payments and IIP collection designs
and maintenance.

This is an ofﬁce form.

3-1. ITRS—Payments and Receipts

This form collects single transactions
reported to the banking system bybanks’ clients or by banks on behalf of
their clients.

3-2. ITRS—Imports and Exports

This form shows how an ITRS could
be used to capture data on goods
transactions.

3-3. ITRS—Companies

This form is for FDR reporters andcovers transactions passing throughcompany foreign currency accounts
at domestic banks, bank accounts
at nonresident banks, noncash
transactions, and external asset
and liability positions and for PDR
reporters. It includes transactions
passing through company bankaccounts at nonresident banks,
including positions.

3-4. ITRS—BanksThis form collects details of banks’positions.

3-5. ITRS—Bank’s Records ofTransactions

This form collects details of banks’
ﬂows.

Annex to Forms 3-1– 3-5 for
ITRS— Classiﬁcations

The annex presents sample list oftransaction and other codes used in ITRS.

4. Goods

The form collects across-the-board
data and selected data on exports
and imports of goods and thereceipts and payments for repairs andmanufacturing services.

It is not recommended to compile
goods statistics based on ITRS due tolimitations described in Chapter 11.

The form illustrates methods forcollecting various data—including
manufacturing services and repairs—on
goods.
(Continued)

Model Survey Forms

457

Table A8.1 Summary of the Model Survey Forms (Continued)
Forms number and title

Scope and purpose

Other comments

5. Goods for Merchanting

This form collects data required forrecording merchanting transactionsin the balance of payments. Datashould be collected on a gross basis, bycommodity, and by partner economy,
wherever possible.

6. International Trade in Services

The form collects data on services notcovered by forms 7–13 and 21–22 forcompilation of various services items.

7. Manufacturing Services

This form contains a sample
questionnaire on manufacturingservices on physical inputs owned byothers.

8. Resident Transport Operators

The form collects data on resident
transport operator earnings
and expenses for compilation oftransportation and certain goods
items.

The form could be tailored for
different modes of transport. Several
more specialized forms could becreated from the model form.

9. Transactions with Nonresident
Transport Operators

The form collects, from residents, dataon nonresident transport operators’
earnings and expenses for compilationof transportation and certain goods
items.

The form could be tailored for
different modes of transport. Several
more specialized forms could becreated from the model form.

10. International Travel

The form collects data on the means
used to pay for travel and related
services for compilation of the travel
item.

Several specialized forms could becreated from this form.

11. Construction Services

This form collects information on
construction abroad, construction in
the compiling economy, as well as dataon both short-term and long-term
construction projects.

12. International Insurance Transactions

The form collects information on theinsurance and reinsurance activities
of resident companies. The data areused in the compilation of services,
current and capital transfers, andthe IIP.

The form illustrates methods forcollecting various data speciﬁcallyassociated with the insurance industry.

13. International Pension Services

The form collects information on thepension activities of resident pension
funds. The data are used in thecompilation of services, current transfers,
ﬁnancial transactions, and the IIP.

The form illustrates methods forcollecting various data speciﬁcallyassociated with the operations ofpension funds.

14. Foreign Embassies andInternational Institutions

The form collects data on wages andsalaries paid to local workers, otherembassy expenditures, foreign aid, andofﬁcial ﬁnance. These data are used tocompile compensation of employee,government services, current transfer,ﬁnancial account, IIP, and investment
income items.

While the reporters to this form,
who will be nonresidents, cannot becompelled to complete it, a number ofcountries have successfully collected
information by using forms similar to
the model form.

Separate forms could be created tocollect information on speciﬁc aspectsof services (for example, provision ofﬁnancial services).

458

Balance of Payments and International Investment Position Compilation Guide

Table A8.1 Summary of the Model Survey Forms (Continued)
Forms number and title

Scope and purpose

Other comments

15. Private Aid and Charitable
Organizations

The form collects data on the income,compensation of employees, andcurrent and capital transfers of private
aid and other charitable organizations.

The form illustrates methods forcollecting various data speciﬁcallyassociated with the operationsof private aid and charitableorganizations, including theirrelationship with nonresident
entities.

16. Current Transfers, Grants, andTechnical AssistanceThis form collects information on
current transfers, grants, and technicalassistance. Part A of the form seeks
information on transfers in cash andin kind received by the government
and the private sector, including
nongovernment organizations(NGO). Part B of the form pertains totechnical assistance of project work /staffed missions received by the
economy.

The information can be used for thecompilation of current transfers in thesecondary income account and capitaltransfers in the capital account.

17. Financial Claims on and Liabilities
to Nonresidents

The form collects data on ﬁnancial
ﬂows, positions, reconciliation items,
income, certain ﬁnancial services,and withholding taxes. The data areused to compile ﬁnancial account, IIP,
investment income, ﬁnancial services,and current transfer items.

In practice, several forms may becreated from this form, or more
simpliﬁed versions of the form could
be developed. An example, associatedspeciﬁcally with foreign direct
investment, is provided as form 18.

18. Foreign Direct Investment

The form collects data speciﬁcally on
foreign direct investment items of form
17.

This form is a narrower version ofform 17, collecting data speciﬁcally on
foreign direct investment.

19. International Securities

This form collects data on ﬁnancialtransactions, positions, income,ﬁnancial services, and withholding
taxes associated with international
securities from ﬁnancial intermediaries.
The data are used to compile ﬁnancial
account, IIP, investment income,ﬁnancial services, and current transfer
items.

The form can be used in either anenterprise survey or an ITRS. The
form is based on the assumption thatcomprehensive data are available
from a single source; when this is
not the case, the form should be
modiﬁed. For enterprise surveys,
the compiler should ensure that thedelineation of reporting between
form 17 (or its equivalent) and form
19 is clear and that double counting is
avoided.

20. Holdings of and Transactions in
Financial Derivatives Contracts withNonresidents

This form collects collect information
on holdings of and transactions in
ﬁnancial derivatives contracts withnonresidents.

The data are collected by types ofderivative instruments (options,futures and forwards, and swaps). The
reporting instructions explain how theforms are to be accomplished.

21. Travel: Returning Residents

The form collects data from returning
residents on their expenditure on
goods and services and on income andother amounts received while abroad.
The data are used mainly to compile
travel and compensation of employee
items.

The model form is designed to becompleted by returning residents
shortly after they arrive back in thecompiling economy. Alternatively, thequestions could be included in regularhousehold surveys for completionsometime after returning.
(Continued)

Model Survey Forms

459

Table A8.1 Summary of the Model Survey Forms (Concluded )Forms number and title

Scope and purpose

Other comments

22. Travel: Departing Nonresidents

The form collects data fromnonresidents departing the economy
on their expenditure on goods andservices and on income and otheramounts received while in thecompiling economy. The data areused mainly to compile travel andcompensation of employee items.

The model form is designed to becompleted by departing nonresidents
shortly before they depart from thecompiling economy. Alternatively, theform could be used as the basis for aninterview survey of these nonresidents.

23. International Transactions andPositions of Households

This form requests data that would beof speciﬁc interest for households.

460

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 1—Exploratory Survey
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information for the purpose of determining companies that should be included in thebalance of payments or international investment position surveys, which in turn are used to compile Newland’s balance of
payments and international investment position statistics. These statistics are published quarterly in Newland: Balance ofPayments and International Investment Position, which is available from the Newland Ministry of Statistics.
Instructions: Information required by this form should be supplied for the company to which the form is addressed and forany subsidiaries located in Newland.
Due date: Please return the completed form in the postage-paid envelope by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and IIP statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

461

Form 1—Exploratory Survey
General Notes
1. This form should be completed for the company named on page 1 and any of its subsidiaries in Newland. If there areany errors in the address label, please make corrections before returning the form.
2. A nonresident is an individual, company, or other organization ordinarily domiciled in an economy other than Newland.
Newland subsidiaries of nonresident companies are regarded as residents of Newland. Similarly, subsidiaries of Newland
companies are regarded as nonresidents.
3. All values are expressed in Newland dollars.

Part A. Introductory Questions
1.

Is this company a subsidiary1 of another company in Newland?

Yes

[

]

No

[

]

Yes

[

]

No

[

]

Yes

[

]

No

[

]

3A. Is this company a subsidiary of a foreign company?

Yes

[

]

No

[

]

3B. Does a single nonresident shareholder (or a group of related
nonresident shareholders) hold between 10 and 50 percent of the voting
equity in this company or any of its subsidiaries in Newland?

Yes

[

]

No

[ ]

Yes

[

]

No

[ ]

If the answer is yes, go to question 13 and do not answer intervening
questions.
2.

Does this company have subsidiary companies in Newland?
If the answer is yes, the following questions should be completed in respectof the company and its subsidiaries in Newland.

Part B. Nonresident Owners
3.

Did this company have nonresident owners as of December 31, 20XX?
(A company has nonresident owners if it is a branch or subsidiary of anonresident company or has nonresident shareholders.)
If the answer is no, go to question 4.

If the answer to question 3A or 3B is yes, please list the names of theowners, their equity interest, and the name of the company in which
the equity is held.

4.

Did any resident company that is a subsidiary or branch of a nonresident
company own between 10 and 50 percent of the voting equity in thiscompany or its subsidiaries as of December 31, 20XX?
If the answer is yes, please give details.

A subsidiary is a company over which its owner can exercise control—that is, it owns more than 50 percent of the voting securities.

1

462

Balance of Payments and International Investment Position Compilation Guide

Part C. Ownership of Nonresident Branches and Companies
5.

Did this company or its subsidiaries have any nonresident subsidiaries orown 10 percent or more of voting equity in a nonresident company as ofDecember 31, 20XX?

Yes

[

]

No

[

]

[

]

No

[

]

Part D. International Trade in Goods in 2011
6.

Did this company or its subsidiaries export goods to or import goods fromabroad during 20XX?

Yes

If the answer is no, go to question 7.
6A. Please record the approximate value of goods exported and goods imported in 2011 by this company and its
subsidiaries combined:
Goods Exported

Goods Imported

Nil

[

]

Nil

[

]

ND1 to less than ND10,000[]

ND1 to less than ND10,000[]

ND10,000 to less than ND100,000[]

ND10,000 to less than ND100,000[]

ND100,000 to less than ND1 million[]

ND100,000 to less than ND1 million[]

ND1 million and more[]

ND1 million and more[]

6B. Please mark the categories for which the values of goods exported or imported exceeded ND100,000.

7.

Exports

Imports

Food, live animals, beverages, and tobacco

[

]

[

]

Minerals, fuels, and lubricants

[

]

[

]

Chemical, plastic, medical, pharmaceutical, and rubber products, andfertilizers

[

]

[

]

Wood, paper, and products thereof

[

]

[

]

Textiles, clothing, and footwear

[

]

[

]

Machinery, ofﬁce and communication equipment, and other electrical
goods, including spares

[

]

[

]

Vehicles and transport equipment, including spares

[

]

[

]

Metal and metal products not in other categories

[

]

[

]

All other goods

[

]

[

]

Yes

[

No

[

Did this company engage in merchanting—that is, buy and resell goods,
including gold, abroad without the goods entering Newland?

]]Model Survey Forms

Part E. International Trade in Services in 20XX
8.

Did this company or its subsidiaries sell services to or purchase services fromnonresidents during 20XX?
(including transactions with related nonresident companies)

Yes

[

]

No

[ ]

If the answer is no, go to question 9.
8A. Please record the approximate value of:Services Exported

Services Imported

Nil

[

]

Nil

[

]

ND1 to less than ND10,000[]

ND1 to less than ND10,000[]

ND10,000 to less than ND100,000[]

ND10,000 to less than ND100,000[]

ND100,000 to less than ND1 million[]

ND100,000 to less than ND1 million[]

ND1 million and more[]

ND1 million and more[]

8B. Please mark the categories for which the values of services exported or imported exceeded ND100,000.
Exports

Imports

Manufacturing (processing) services

[

]

[

]

Maintenance and repair services

[

]

[

]

Transportation services for passenger and freight

[

]

[

]

Operational leasing or rental without operators

[

]

[

]

Other transport services

[

]

[

]

Construction

[

]

[

]

Insurance

[

]

[

]

Pension services

[

]

[

]

Financial services

[

]

[

]

Charges for the use of intellectual property

[

]

[

]

Telecommunications, computer, and information services

[

]

[

]

Trade-related services

[

]

[

]

Other business services (specify)

[

]

[

]

Personal, recreational, and cultural services

[

]

[

]

If you are uncertain about the appropriate category, please describe the service

463

464

Balance of Payments and International Investment Position Compilation Guide

Part F. Employment of Nonresident Workers in 20XX
9.

Did this company or its subsidiaries employ any foreign workers in 20XX?
(Foreign workers include persons residing in Newland for less than 12
months.)

Yes

[

]

No

ND

,000

[

]

If the answer is no, go to question 10.
9A. What were the approximate wages and salaries (in thousands of
Newland dollars) paid to all such persons combined in 20XX?

Part G. External Financial Assets and Liabilities as of December 31, 20XX
10. Please record the approximate market value of shares and other liabilities of this company (and its subsidiaries) heldby nonresidents as of December 31, 20XX and ﬁnancial claims of this company (and its subsidiaries) on
nonresidents at that date.
10A. Please record the approximate value of:Shares Held by, and Other Liabilities to, Nonresidents

Claims on Nonresidents

Nil

[

]

Nil

[

]

ND1 to less than ND10,000[]

ND1 to less than ND10,000[]

ND10,000 to less than ND100,000[]

ND10,000 to less than ND100,000[]

ND100,000 to less than ND1 million[]

ND100,000 to less than ND1 million[]

ND1 million and more[]

ND1 million and more[]

10B. Please mark the categories for which the values of liabilities or assets exceeded ND100,000.
Liabilities

AssetsStocks (shares)

[

]

[

]

Investment fund shares or units

[

]

[

]

Other equity

[

]

[

]

Other (debt) securities

[

]

[

]

Loans

[

]

[

]

Accounts receivable and payable

[

]

[

]

Deposits

[

]

[

]

Notes and coin

[

]

[

]

Insurance and pension technical reserves and entitlements

[

]

[

]

Financial derivatives

[

]

[

]

Other (specify)

[

]

[

]

Model Survey Forms

465

Part H. Other Interactions with Nonresidents in 20XX
11. Did this company or its subsidiaries have any other interactions or positions with nonresidents in 20XX?
Ownership of land abroad

Yes

[

]

No

[

]

Payment of rent for ofﬁces abroad

Yes

[

]

No

[

]

Payment for licenses to explore or exploit natural resources abroad

Yes

[

]

No

[

]

If you are uncertain about the appropriate category, please describe the interaction

If the answer is yes, please give details.

Part I. Details of Subsidiary Companies in Newland
12. Please complete the following table if the answer to question 2 is yes.

Name of
Subsidiary

Name ofParent Company% Ownedby Parent
Company

Main Activityof Company

Ofﬁce
Use
Only

A
B
C
D

Part J. Final Questions
13. Please verify that the form has been completed correctly; indicate that you have done so by marking the following
boxes.
[]The name and address shown on page 1 are correct or have been corrected.

[]

The name and telephone number of the person who should be contacted regarding this form are entered on
page 1. The person who completed this form has signed his or her name on this page.

[]The answer to question 1 is yes, and the name and address of the primary parent company in the group are

Therefore, questions 2 through 12 have not been completed.
[]

The answer to question 1 is no, and questions 2 through 11 have been completed.

[]

The answer to question 2 is yes and question 12 has been completed.

[]

I have made a copy of this form for my records.

Name of person completing this form:
Signature:466

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 2—Company Register Form
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This company register form is used to record information about members (companies) of the populationof Newland, which in turn are used to compile Newland’s balance of payments and international investment position statistics.
These statistics are published quarterly in Newland: Balance of Payments and International Investment Position, which is available
from the Newland Ministry of Statistics.
Instructions: Information required by this form should be supplied for the company to which the form is addressed and forany subsidiaries located in Newland.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and IIP statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

467

Instructions for Form 2—Company Register Form
The company register form is used to record information about members (companies) of the population.
The information is subsequently used to conduct balance of payments and IIP surveys.
In part A, the reference number, the name of the top company in the group, and the address; the name and title of the contactofﬁcer in the company (e.g., the person who completed the exploratory form or the person who completes other collection
forms); and the contact’s telephone and facsimile numbers are recorded.
In part B, information on the enterprise group is entered. This section allows for both descriptive coding and an alphanumericcode. The type of information that may be stored here includes:

Type of Unit
This section shows whether the statistical unit is:
1. A single company unit
2. A multi enterprise group
3. A split enterprise group—that is, one that has been split according to sector.

Sector
1.
2.
3.
4.

5.

General government
Central bank
Other deposit-taking corporation
Other ﬁnancial corporation
4a. Money market fund (MMF)
4b. Non-MMF investment fund
4c. Other ﬁnancial intermediary (except insurance corporations and pension funds)
4d. Financial auxiliary
4e. Captive ﬁnancial institution or money lender
4f. Insurance corporation
4g. Pension fundNonﬁnancial corporation, household or nonproﬁt institution serving households (NPISH)
5a. Nonﬁnancial corporation
5b. Household
5c. NPISH

Public/private
1. Publicly owned company
2. Privately owned company(The ﬁrst category could be subdivided to distinguish among companies owned by central, state, or local governments.)

Types of Companies
1.
2.
3.
4.
5.

Direct investment enterprise, branch or subsidiary
Direct investment enterprise, associate
Direct investor
Both a direct investment enterprise and a direct investor
Neither a direct investment enterprise nor a direct investor

Direct investor is an entity resident in Newland that has acquired at least 10 percent of voting power of a company resident inanother economy.
Direct investment enterprise is a company resident in Newland in which a foreign direct investor owns 10 percent or more ofits voting power.
Immediate direct investment is when a direct investor directly owns 10 percent or more of voting power in a direct investment
enterprise.
Indirect direct investment is when a direct investor owns 10 percent or more of voting power in a direct investment enterprisethrough a chain of ownership.
A direct investor has control over a direct investment enterprise when it owns more than 50 percent of voting power in that
direct investment enterprise.

468

Balance of Payments and International Investment Position Compilation Guide

A direct investor has a signiﬁcant degree of inﬂuence over a direct investment enterprise when it owns from 10 to 50 percent ofvoting power in that direct investment enterprise.

Industry(This section contains whatever coding system is considered appropriate.)
In part C, the activities of the group (which are collected in the exploratory survey) are recorded. The size categories(consistent with the exploratory questionnaire) are:0
Nil
1
ND1 to less than ND10,000
2ND10,000 to less than ND100,000
3ND100,000 to less than ND1 million
4
ND1 million and more
Reporters are asked, on the exploratory form, to mark boxes for activities exceeding certain thresholds. The categories marked
should be recorded on the line labeled categories. These data are used to identify the target populations and the sizes of
population members for collection design purposes.
The categories for exports of goods and imports of goods are:
A Food, live animals, beverages, and tobacco
B Minerals, fuels, and lubricants
C Chemical, plastic, medical, pharmaceutical, and rubber products, and fertilizers
D Wood, paper, and products thereof
E Textiles, clothing, and footwear
F Machinery, ofﬁce and communication equipment, and other electrical goods, including spares
G Vehicles and transport equipment, including spares
H Metal and metal products not included elsewhereI
All other goods
For exports of services and imports of services, the categories are:
A Manufacturing services on physical inputs owned by others
B Maintenance and repair services
C Passenger and freight services
D Operational leasing or rental without operators
E Other transport services
F Travel
G Construction
H InsuranceI
Pension services
J
Financial
K Charges for use of intellectual property
L Telecommunication services
M Computer and information services
N Merchanting and other trade-related services
O Miscellaneous business, professional, and technical services
P Personal, cultural, and recreational services
For external ﬁnancial assets and external ﬁnancial liabilities, the categories are:
A Positions and shares
B Investment fund shares and units
C LandD Other equity
E Debt securities
F Loans
G Accounts receivable and payable
H Deposits
I
Notes and coinJ
Insurance and pension reserves and entitlements
K Financial derivatives
L OtherModel Survey Forms

469

For other income and transfers, the categories are:
A RentB Donations
C Debt forgiveness
D Licenses to explore or exploit natural resources
In part C, an additional line is included for other activities. This is a useful place for identifying activities (which may require
special targeting) such as merchanting and imports and exports of goods for processing or repair.
In part D, data are recorded on the source used to identify this unit and on the most recent exploratory survey in which thisunit was included.
In part E, details of subsidiary companies and any direct investment enterprises abroad are recorded. Including the name of theimmediate parent company makes it possible to identify the complete company structure when companies in the group are
subsidiaries of subsidiaries.
In part F, major shareholders are identiﬁed. Reference numbers should be allocated to these major shareholders, and a separate
record created for them, even if they are nonresident entities.

470

Balance of Payments and International Investment Position Compilation Guide

Form 2—Company Register Form
Part A. Identiﬁcation of Enterprise Group
Reference Number
and Name

Contact Name
and Title

Address

Telephone andFacsimile Numbers

Comments:

Part B. Description of Enterprise Group
Type of Unit

SectorPublic/Private

Type of Company

Industry

Foreign
AssetsOther Income
and Transfers

Description
Code
Comments:

Part C. Activities of the Group

Exports
Goods

Imports
Goods

Exports
Services

Imports
Services

Employs
Foreign
Workers

Yes/NoSize
Categories////////////

Other activities:

Part D. Population Maintenance Information
Company identiﬁed from (source):
Most recent exploratory survey in which the company was included:

Foreign
Liabilities

Model Survey Forms

471

Part E. Details of Direct Investment Enterprises Abroad (subsidiaries and associates)

Name of Direct
Investment Enterprise

Reference
NumberEconomySectorCode

Industry
Code

Reference
Number of
ParentCompany

Percent of Voting
Shares Held

Part F. Major Shareholders
Record details of any shareholder with an equity holding of 10 percent or more in the top enterprise of the group or any
subsidiary.

Name of Company

Reference Number

Shareholder’s Nameand Economy

Shareholder’sReference Number% of Shares
Held

Section G. Ofﬁcer Completing This Form
Name:

Date:

/

/20

472

Balance of Payments and International Investment Position Compilation Guide

Balance of Payments Survey
Form 3-1—ITRS—Payments and Receipts_________|_|_|_|_|_|_|_|_|_|______
Bank|_|_|_|_|_|_|____
Date: (day & month)|_|_|_|_|________
Transactor code:|_|_|_|_|_|_|_|_|For more information, please contact:

Reference Number

LOGO

Balance of Payments Division
Newland Ministry of Statistics
Archadia
Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com

General Notes on Form 3-1—ITRS—Payments and Receipts
1. Under the Statistics Act of Newland, residents are required to complete form 3-1 for any payment to a nonresident in excess
of ND 5,000; however, transactions involving a bank account with a nonresident bank are excluded. (The excluded
transactions are measured on Form 3-3—ITRS Companies.) Each person or company making payments to nonresidents inexcess of ND 5,000 is required to have a transactor code, which should be reported on Form 3-1.
2. A nonresident is any individual, company, or other organization ordinarily resident in an economy other than Newland.
Newland branches and subsidiaries of nonresident companies are residents of Newland. Similarly, foreign branches andsubsidiaries of Newland companies are nonresidents.
3. The information reported on this form is used to compile balance of payments statistics for Newland and is treatedconﬁdentially.
4. Completion of this form requires a copy of the Annex to Forms 3-1–3-5 for ITRS—Classiﬁcations. Copies may be obtained
from the bank that provided Form 3-1.
5. Responses to questions on form 3-1 should be printed clearly and a copy should be kept by the individual or company
representative completing the form.
6. ITRS Form 3-2—ITRS—Imports and Exports must also be completed if transactions reported on Form 3-1 are payments
for goods imported / receipts for goods exported into/from Newland. A copy of Form 3-2 is available from the bank thatprovided Form 3-1.

Completing Form 3-1—ITRS—Payments and Receipts
Codes: The reference number and bank code will be entered by the bank that provided Form 3-1. Individuals or company
representatives completing Form 3-1 should enter the month and day as a four-digit number (e.g., 0403 for April 3) and thetransactor code, if such a code has been assigned by the Newland Ministry of Statistics.
Question 1: To report the character of the transaction that is payment or receipt.
Question 2: Currency codes are included on the Annex to Forms 3-1–3-5 for ITRS—Classiﬁcations. All amounts should bereported in thousands of foreign currency units, or Newland dollars, for which entries should be left blank.
Question 3: To report the equivalent Newland dollar value (expressed in thousands), convert from the foreign currency byusing the midpoint of the buy and sell rates applicable on the date of the transaction.
Question 4: Consult the Annex to Forms 3-1–3-5 for ITRS—Classiﬁcations for the appropriate transaction code and describe
the transaction. If a number of codes are applicable to the transaction, provide the appropriate information in this item.
Multiple codes may be connected to a single settlement payment when: (1) more than one transaction code is applicable to thepayment (e.g., a loan repayment combined with interest); (2) partial netting exists (e.g., the actual payment is the difference
between ﬁnancing provided and fees charged); (3) or a settlement transaction occurs (i.e., the payment settles a number oftransactions). In each case, the underlying transactions should be recorded; use an attachment if space is insufﬁcient. When
individual underlying transactions are less than the equivalent of ND 5,000, entries may be amalgamated and the mostappropriate transaction code applied.
Question 5: Refer to the Annex to Forms 3-1–3-5 for ITRS—Classiﬁcations for a list of other party codes and economy codes.
Question 6: Please add any comments necessary to clarify answers to questions on Form 3-1 and/or note any difﬁculties
encountered in completing the form.

Model Survey Forms

473

Form 3-1—ITRS—Payments and Receipts
1.

Transaction’s character (1  payment, 2  receipt)

_
|_|

2.

Currency code and value of transaction

Currency code

__
|_|_|

_______

Value |_|_|_|_|_|_|_|
thousands

2.
3.

_______
Value |_|_|_|_|_|_|_|

Equivalent Newland dollar value
Transaction code and description (Please consult
Annex to Forms 3-1–3-5 for ITRS—Classiﬁcations forappropriate codes.)thousands___
Transaction code |_|_|_|

Description
4.

Is this transaction related to more than one transaction code or several offsetting
transactions?
(See instructions for question 4 for more information.)

Yes

[

]

No

[ ]

If the answer is yes, please enter the following information for the underlying transactions.

Transaction Code

Payments/Receipts in
Foreign Currency*(thousands)

Transaction Description* Record in Newland dollars if that was the currency of the payment.
5.

___

Please enter the name and the economy of residence of the other party to the transaction. Economy code |_|_|_|Name and economy

6.

Have you completed all questions on this form in accordance with thedeﬁnitions and instructions to this form?

Yes

If the answer is no, please add any additional information that may clarify your answers.

Person completing this form:

Telephone number: ()

Area code

Company (if applicable):

Facsimile number:()

Area code

[

]

No

[ ]

474

Balance of Payments and International Investment Position Compilation Guide

Balance of Payments Survey
Form 3-2—ITRS—Imports and Exports_________|_|_|_|_|_|_|_|_|_|______
Bank|_|_|_|_|_|_|____
Date: (day & month)|_|_|_|_|________
Transactor code:|_|_|_|_|_|_|_|_|For more information, please contact:

Reference Number

LOGO

Balance of Payments Division
Newland Ministry of Statistics
Archadia
Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com

Instructions for Completing Form 3-2—ITRS—Imports and Exports
1. Please enter, in the table provided, information on payments, which are recorded on form 3-2, for goods imported/exported
into/from Newland. Each shipment valued at ND 5,000 or more should be reported on a separate line. Smaller amounts
may be combined and reported on one line.
2. In columns A, please describe the import/export and, in column B, apply the appropriate code, which is to be found in the
Annex to Forms 3-1–3-5 for ITRS—Classiﬁcations.
3. In columns C, please enter the relevant code for the economy from/to which the goods were shipped. The codes can befound in the Annex to Forms 3-1–3-5 for ITRS—Classiﬁcations.
4. In columns D, please enter the month and year in which the goods arrived/left. The date should be entered as a four-digit
number (e.g., 0412 for April 2012).
5. In part A, in column E, the recorded value of goods should be consistent with that reported in response to question 3 on
Form 3-1. In column F, please record the type of valuation of the goods: on board the carrier at the port of entry to
Newland—that is, the c.i.f. (cost, insurance, and freight)—or on board ship at the point of departure from the exporting
economy—that is, the f.o.b. (free-on-board) value.
6. In part B, in column E, the recorded value of goods should be consistent with that reported in response to question 3 on
Form 3-1. In column F, please record the type of valuation of the goods—that is, the c.i.f. (cost, insurance, and freight) or
the f.o.b. (free-on-board) value.

Model Survey Forms

475

Form 3-2—ITRS—Imports and Exports
Part A. Supplementary Details of Goods Imported into Newland(Report in thousands of Newland dollars)

Description of Import

Import CodeEconomy ofConsignment

Month and Yearof Shipment

A

B

C

D

Value of Goods(as reported on
Form 3-1)
E

Type of valuation(c.i.f. or f.o.b.)
F

Part B. Supplementary Details of Goods Exported from Newland(Report in thousands of Newland dollars)

Description of Export

Export CodeEconomy of
Destination

Month and Yearof Shipment

A

B

C

D

Value of Goods(as Reported on
Form 3-1)
E

Please verify that codes in the top left-hand corner are identical to those on Form 3-2.
Please add any additional information that may clarify your answers.

Person completing this form:

Telephone number:Company (if applicable):

Facsimile number:Type of Valuation(c.i.f. or f.o.b.)F476

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 3-3—ITRS—Companies
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that, each month, a representative of the company to which thisform is addressed must complete and return Form 3-3—ITRS—Companies to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information from companies to be used in compiling Newland’s balance of payments
and international investment position statistics. These statistics are published quarterly in Newland: Balance of Payments andInternational Investment Position, which is available from the Newland Ministry Statistics.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

477

General Notes and Instructions for Form 3.3—ITRS—Companies
1. The international transactions reporting system (ITRS) collects data from companies via several forms. The main form isthe Form 3-3—ITRS—Companies, which companies are required to complete and return to the Newland Ministry of
Statistics each month. The Annex to Forms 3-1–3-5 for ITRS—Classiﬁcations contains the codes and descriptions necessary
to complete Form 3-3.
2. A nonresident is an individual, company, or other organization ordinarily domiciled in an economy other than Newland.
Newland branches and subsidiaries of nonresident companies are regarded as residents of Newland. Similarly, foreign
branches and subsidiaries of Newland companies are regarded as nonresidents.
3. Form 3-3—ITRS—Companies collects monthly data on balance of payments transactions from companies that conductconsiderable transactions with nonresidents through accounts at resident banks and/or with accounts at nonresident
banks. In addition, Form 3-3 collects data on other claims on, or liabilities to, nonresidents.
4. A separate Form 3-3 should be completed for each foreign currency account that your company has at a resident bankand each account at a nonresident bank—unless other arrangements have been made with the Newland Ministry of
Statistics.
5. Form 3-4 collects data on payments and receipts passing through particular bank accounts of your company. Separate
entries should be recorded for each transaction of ND 5,000 or more; smaller transactions may be combined. When severaltransaction codes apply to a receipt or a payment or result from payments being partly offset against receipts (or viceversa), the underlying gross transactions should be recorded. (See the Annex to Forms 3-1–3-5 for ITRS—Classiﬁcations
for more information on multipayment transactions.) Similarly, offset transactions (also described in the Annex) that do
not result in bank account entries but otherwise affect your company’s external asset or liability positions should also berecorded. Should your company conduct offset transactions denominated in currencies (including Newland dollars) for
which a Form 3.4 is not already being completed, you should record such transactions on a separate Form 3-3.
6. Form 3-3 can be used as a pro forma for supplying relevant data in computer readable format, or information may beentered on the form itself. If space to record all transactions is insufﬁcient, please be sure to attach the additional details.

Completing Form 3.3—ITRS—Companies
Part A
7. The company reference number is listed on page 1 of this form. The currency code classiﬁcation is included in the Annex
to Forms 3-1–3-5 for ITRS—Classiﬁcations. Month and year should be entered as a four-digit number (e.g., 0412 for April2012).

Part B
8. Day should be recorded as a two-digit number (e.g., 02 for the second day of the month). The number of the ﬁrst
transaction recorded each day should be 001; successive three-digit numbers should be used for subsequent transactions.
The transaction code, the transaction type, the other party code, and the economy code should be taken from the Annex
to Forms 3-1–3-5 for ITRS—Classiﬁcations.
9. To limit the reporting burden and processing costs, data should be reported in thousands or millions of currency units andsmall transactions should be combined. For certain types of transactions (namely, multipayment and offset transactions), it
is necessary to identify the underlying transactions and report them on a gross basis (see note 5).
10. In columns G and I where values should be expressed in Newland dollars, transactions should be converted at the
midpoint of the buy and sell rates applicable on the date of the transaction.

Parts C and D
11. Parts C and D facilitate reconciliation and veriﬁcation of data supplied in part B. Any signiﬁcant reconciliation amounts orunusual exchange rates should be explained.

478

Balance of Payments and International Investment Position Compilation Guide

Part E12. The asset/liability code should be selected from codes 710 through 790 for assets and 810 through 890 for liabilities fromthe transaction codes in the Annex to Forms 3-1–3-5 for ITRS—Classiﬁcation. The economy code should be taken fromthe relevant listing from the Annex [to be provided by the compiler]. The currency code should be taken from the relevant
listing from the Annex [to be provided by the compiler]. One line should be used for each asset/liability, economy, andcurrency combination. For example, if your company held a portfolio of equity securities in a nonbank company in the
United States and had long-term U.S. dollar loans from banks in the United States in U.S. dollars and United Kingdom inpounds, these three entries should be made:
A
710
850
850

B
001
001
002

C
USD
USD
GBP

13. In column A, 710 represents shares in nonresident companies, and 850 represents long-term loan liabilities to nonresidents.
In column B, 001 represents the United States and 002 represents the United Kingdom. In column C, USD represents the
U.S. dollar and GBP represents the Great Britain pound.
14. Not all of your company’s payments to, and receipts from, nonresidents will be reported in part B as some payments may
have been made through foreign exchange orders with domestic banks. These transactions should be reported on Form 31—ITRS—Payments and Receipts, which will be provided to you by your bank. However, for purposes of reconciliation,
any effect that these payments and receipts have on the external assets and liabilities of your company must be reported incolumns H and I.

Part F
15. This section of the form collects, for payments made through accounts covered by Form 3-3, information on goods
imported and exported during the month and on payments made during the month. As delivery and payments may occur
in different months, goods reported in columns D, E, and F may not correspond with those recorded in column G. As thevalue in your books may differ from the cost insurance and freight (c.i.f.) and the free on board (f.o.b.) values required forbalance of payments purposes, you are requested to provide these bases of valuation, even if some degree of estimation isrequired. Economy of consignment is the economy from which your imports were initially dispatched. Economy ofdestination is the economy to which you expect to make ﬁnal delivery of your exports. The relevant economy codes fromthe Annex should be used [to be provided by the compiler]. Please note that all amounts in foreign currencies should be
converted at the midpoint of the buy and sell rates applicable on the date of the transaction.

Part G
16. This section is included to assist you in checking the form before you return it.

Model Survey Forms

479

Form 3-3—ITRS—Companies
Part A. Reference Information
Company
Reference
NumberCompany Name

Account
NumberEconomy in WhichAccount Is HeldCurrency
Code

Month
and YearPart B. Payments and Receipts
1. All amounts reported in columns F, G, H, and I should be in thousands.
2. Small transactions—that is, transactions of less than the equivalent of ND 5,000—should be combined and reported as
single transactions. These should be coded with the most appropriate transaction code.
3. In the case of multipayment and offset transactions (see note 5 of the instructions for Form 3-3), underlying gross amounts
should be recorded.

Day

Number

A

B

Other
Party
Payment Payment Receipt
Receipt Other
Transaction Transaction Transaction (foreign (Newland (foreign (Newland Party Economy
Code
Code
DescriptionTypecurrency) dollars) currency) dollars) CodeCD

E///////////////////////////

F

G

H

I

J

K

//////////////////

001

Total

/////////Part C. Reconciliation with Bank Balance(Report in thousands of currency units)
Closing AccountBalance forThis Month(in foreign currency)
A

Closing AccountBalance forPrevious Month(in foreign currency)
B

Please explain any signiﬁcant reconciliation items

Total Payments(as recorded incolumn F of part B)
C

Total Receipts(as recorded incolumn H of part B)
D

Reconciliation(A  B  C  D)E

480

Balance of Payments and International Investment Position Compilation Guide

Part D. Exchange Rate Check
Please record the average implied exchange rates used in part B:
For payments(Total in column F/Total in column G)

For receipts(Total in column H/Total in column I)

Please explain any unusual exchange rate conversions.

Part E. Other External Assets and Liabilities Position
1. Report details of claims (other than accounts at nonresident banks) on, and liabilities to, nonresidents.
2. Report in thousands of currency units.
3. A separate line should be used to record each asset/liability code, nonresident party code, and economy code combination(see note 12 of the instructions for Form 3-3).

Asset/
Liability
Code

EconomyCode

Currency
Code

Closing
Position
for
This
Month

A

B

C

D

Closing
Positionfor
Previous
Month

Payments
Recordedin Part B

Receipts
Recordedin Part B

Payments
Made
Elsewhere

Receipts
fromElsewhere

Reconciliation
(a)

E

F

G

H

I

J

(a) For assets, J  D  E  F  G  H  I. For liabilities, J  D  E  F  G  H  I.
Please explain any signiﬁcant reconciliation items.

Model Survey Forms

481

Part F. Supplementary Data on Trade Transactions(Report in thousands of Newland dollars)

Descriptionof Goods
A

Import/Export
Code
B

Economy ofConsignment
or Destination
C

Value of Goods Shipped
Book Value (a)D

C.i.f. ValueE

F.o.b. ValueF

Payments Made
During MonthG

Imports of Goods

Exports of Goods//////////////////////////////////////////////////////(a) As recorded in your books.
Please verify that the totals of payments and receipts, which are recorded in column G, are equal to the total of the corresponding
amounts for goods recorded in columns G and I in part B.

Part G. Final Questions
Please verify that the form has been completed correctly and mark the following boxes.
[]

The information in part A of the form is correct.

[]

Part B of the form has been completed in accordance with instructions; in particular, multipayment and offset
transactions have been reported on a gross basis. The totals for columns F, G, H, and I have been entered.

[]Part C has been completed in accordance with instructions, and any signiﬁcant reconciliation items have been explained.

[]

Exchange rates have been calculated in part D, and the average exchange rates derived show that each transaction has
been converted correctly. Any unusual exchange rates have been explained.

[]

Part E has been completed in accordance with instructions, and any large reconciliations have been explained.

[]

Part F has been completed, and the total of import and export payments, which are recorded in column G, agree withthe values of goods reported in columns G and I in part B of the form.

[]

I have made a copy of this form for my records.

Person completing this form:

Telephone number:

Signature:

Facsimile number:

482

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 3-4—ITRS—Banks
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that, each month, a representative of the bank to which this form isaddressed must return Form 3-1—ITRS—Payments and Receipts (or records thereof) completed by clients. Form 3-4—ITRS—
Banks and Form 3-5—ITRS—Bank’s Record of Transactions to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information to be used in compiling Newland’s balance of payments and international
investment position statistics. These statistics are published quarterly in Newland: Balance of Payments and International
Investment Position, which is available from the Balance of Payments Division of the Newland Ministry of Statistics.
Instructions: Detailed instructions for the completion of ITRS forms appear on following pages.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

483

Notes and Instructions for Form 3-4 and Form 3-5
1. The international transactions reporting system (ITRS) collects information from banks via a number of forms.

Deﬁnitions of Residents and Nonresidents
2. A nonresident is an individual, company, or other organization ordinarily domiciled in an economy other than Newland.
Newland branches and subsidiaries of nonresident companies are regarded as residents of Newland. Similarly, foreign
branches and subsidiaries of Newland companies are regarded as nonresidents.

Form 3 Series
3. The basic form is the Form 3-1—ITRS—Payments and Receipts. These should be completed by residents of Newland who
make payments to, or receive payments from, nonresidents, in any currency. Supplementary Form 3-2—ITRS—Imports
and Exports is required for transactions involving goods arriving in or departing from Newland. To reduce reporting
burdens and processing costs associated with the Form 3 series, a number of exemptions are permitted. These include:(a) Transactions in the amount less than the equivalent of ND 5,000. However, transactions below this level are the subjectof small sample surveys (see note 8).
(b) Purchases and sales of travelers’ checks. These should be reported by your bank on Form 3-4—ITRS—Banks, part B,
at the time the traveler’s checks are settled with nonresident banks.
4. In accordance with ITRS collection arrangements, your bank is responsible for making resident bank customers aware of
their obligations to complete Form 3-1. In most cases, Form 3-1 should be completed when customers enter your bank toundertake the relevant transactions. (Some banks have combined the ITRS forms with bank forms on which payment
instructions are speciﬁed.) Persons or companies engaging in transactions valued at the equivalent of ND 100,000 or more
per year should register with the Newland Ministry of Statistics to obtain a transactor code.
5. Tracking the occurrence of payments made, in Newland dollars, by residents to nonresidents is more difﬁcult; resident
transactors may engage in such transactions without approaching a bank. When particular persons or companies regularly
conduct such transactions, the Newland Ministry of Statistics will make special arrangements for resident principals toreport the transactions directly to the ministry.
6. The staff of your bank should be familiar with Form 3-1 and with the Annex to Forms 3-1–3-5 for ITRS—Classiﬁcations,which is used by transactors to complete other forms. An ITRS training package is available from the Newland Ministry of
Statistics, or your bank may telephone for assistance at the numbers shown on page 1 (upper right-hand corner) of thisform.
7. Your bank should maintain a sufﬁcient supply of forms and should also, if customers complete forms regularly, encouragethem to maintain supplies of forms for their use. Your bank may order forms by contacting the Newland Ministry of
Statistics at the address shown on page 1 of this form.

ITRS Form 3-4—Banks
8. Form 3-4 primarily collects data on payments and receipts for your bank’s own accounts with nonresidents. Separate
entries should be recorded for each transaction of ND 5,000 or more; smaller transactions may be combined. When severaltransaction codes apply to a receipt or a payment or result from payments being partly offset against receipts (or viceversa), the underlying gross transactions should be recorded. (See Annex to Forms 3-1–3-5 for ITRS—Classiﬁcations forfurther information on multipayment transactions and offset transactions [to be provided by the compiler]) that do not
result in bank account entries but otherwise affect the banks’ external asset and liability position should also be recorded.
9. Form 3-4 can be used as a pro forma for supplying relevant data in computer-readable form, or information may beentered on the form itself. If space to record all transactions is insufﬁcient, please be sure to attach the additional details.

484

Balance of Payments and International Investment Position Compilation Guide

Completing ITRS Form 3-4—Banks
Part A
10. The bank reference number is listed on page 1 of this form. The currency code classiﬁcation is shown in the Annex toForms 3-1–3-5 for ITRS—Classiﬁcation [to be provided by the compiler]. Month and year should be entered as a fourdigit number (e.g., 0494 for April 1994).

Part B
11. The day should be recorded as a two-digit number (e.g., 02 would represent the second day of the month). Number is athree-digit code. The number 001 should be the ﬁrst number used each day. Subsequent numbers should be used for
subsequent transactions. The transaction code, the transaction type, the other party code, and the economy code should
be taken from Form 3-1.
12. To reduce the reporting burden and limit processing costs, data should be reported in thousands or millions of currency
units; and small transactions should be combined. For multipayment and offset transactions, it is necessary to identify theunderlying transactions, and these should be reported on a gross basis.
13. In columns G and I where values should be expressed in Newland dollars, transactions should be converted at the
midpoint of the buy and sell rates applicable on the date of the transaction.

Part C
14. Part C facilitates checking of the conversion rates used in part B. Any unusual conversion rates should be explained.

Parts D, E, and F
15. Parts D, E, and F facilitate reconciliation of positions and ﬂow data supplied in various forms. Data in part D represent asummary of Form 3-5, which is described subsequently. Any signiﬁcant reconciliation amounts reported in column E ofparts E or F should be explained. For transactions in Newland dollars, closing balances in part E, columns A and B should
be recorded as zero—unless the bank holds Newland dollar accounts with nonresident banks, in which case the balance of
these accounts should be recorded. See Form 3-1 for a list of economy codes.

Part G
16. The asset/liability code should be selected from codes 710 through 790 for assets and 810 through 890 for liabilities fromthe transaction code classiﬁcation shown on Form 3-1. The economy code should be selected from the economy
classiﬁcations shown in the Annex [to be provided by the compiler]. One line should be used for each asset/liability,
economy, and currency combination. For example, if your company held a portfolio of equity securities in a nonbank
company in the United States and had long-term U.S. dollar loans from banks in the United States in U.S. dollars andUnited Kingdom in pounds, these three entries should be made:
A
710
850
850

B
001
001
002

C
USD
USD
GBP

17. In column A, 710 represents shares in nonresident companies, and 850 represents long-term loan liabilities to nonresidents.
In column B, 001 represents the United States and 002 represents the United Kingdom. In column C, USD represents the
U.S. dollar and GBP represents the Great Britain pound.

Part H
18. This section is included to assist you in checking the form before you return it.

Other ITRS Forms
20. Your bank may encounter other special purpose ITRS collection forms requesting information on transactions that cannot
readily be collected by using Forms 3-1 to 3-5.

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485

Form 3-4—ITRS—Banks
Part A. Reference Information
Bank NameBank Reference Number

Currency CodeMonth and YearPart B. Bank’s Own Account Payments and Receipts(Including transfer of funds between accounts and the purchase and sale of foreign currency)
1. All amounts should be reported in thousands in columns F, G, H, and I.
2. Small transactions—that is, transactions of less than the value of ND 5,000—should be combined and included as a single
transaction. These should be given the most appropriate transaction codes.
3. In the case of multipayment and offset transactions (see instruction 8), the underlying gross amounts should be recorded.

Day

Number

A

B

Other
Party
Payment Payment Receipt
Receipt Other
Transaction Transaction Transaction (foreign (Newland (foreign (Newland Party Economy
Code
Code
DescriptionTypecurrency) dollars) currency) dollars) CodeCD

E///////////////////////////

F

G

H

I

J

K

//////////////////

001

Total

/////////Part C. Exchange Rate Check
Please record the average implied exchange rates used in part B:
For payments(Total in column F / Total in column G)

For receipts(Total in column H / Total in column I)

Please explain any unusual exchange rates.

486

Balance of Payments and International Investment Position Compilation Guide

Part D. Transaction Summary(Report in millions of currency units)
Payments
A

Description of Transaction

Receipts
B

1. Bank’s own account (column A  column F in part B andcolumn B  column H in part B)
2. Resident transactions—ND 5,000 or greater
3. Resident transactions—less than ND 5,000
4. Nonresident accounts—banks
5. Nonresident accounts—nonbanks
6. Total

Part E. Reconciliation with Nostro Balances(Report in millions of currency units)

Currency CodeA

Closing AccountBalance forThis Month(in foreign
currency)
B

Closing AccountBalance forPrevious Month(in foreign
currency)
C

Total Payments(as recorded incolumn A, row
6 of part D)D

Please explain the reconciliation item if it is signiﬁcant.

Please specify the amounts reported in columns B and C by economy.
Economy code
Value in column B
Value in column C

Total Receipts(as recorded incolumn B, row
6 of part D)
E

Reconciliation(B  C  D  E)
F

Model Survey Forms

487

Part F. Reconciliation of Accounts of Nonresidents(Report in millions of units of currency)

Currency CodeA

Closing AccountBalance forThis MonthB

Closing AccountBalance forPrevious MonthC

Total Receipts
Total Paymentsfrom Nonresident for Nonresident
Accounts
Accounts(as recorded in(as recorded incolumn A, rows 4 column A, rows 4
and 5, of part D) and 5, of part D)DEReconciliation(B  C  D  E)
F

Please explain the reconciliation item if it is signiﬁcant.

For the amounts reported in columns A and B, please indicate whether the account is held by a nonresident bank or nonbank
and record the relevant economy codes and amounts involved.
Bank/nonbank
Economy code
Value in column A
Value in column B

Part G. Other External Asset and Liability Positions
1. Report details of claims (other than nostro accounts) on and liabilities (other than vostro accounts and other deposits) tononresidents.
2. Report in thousands of currency units.
3. A separate line should be used to record each asset/liability code, economy code, and currency code.
Asset/
Liability
CodeA

EconomyCode
B

Currency
Code
C

Closing Position
for This MonthD

Closing Position
for Previous MonthE(a) For assets, H  D  E  F  G. For liabilities, H  D  E  F  G.
Please explain the reconciliation item if it is signiﬁcant.

Payments
Recordedin Part B
F

Receipts
Recordedin Part B
G

Reconciliation
(a)
H

488

Balance of Payments and International Investment Position Compilation Guide

Part H. Final Questions
Please verify that the form has been completed correctly and mark the following boxes.
[]

The information in part A of the form is correct.

[]

Part B of the form has been completed in accordance with instructions. In particular, multipayment and offset
transactions have been reported on a gross basis. The totals for columns F, G, H, and I have been entered.

[]

The exchange rates in part C have been calculated, and the average exchange rates derived show that each transaction
has been converted correctly. Any unusual conversion rates have been explained.

[]

Parts D, E, and F have been completed in accordance with instructions, and any signiﬁcant reconciliation items havebeen explained.

[]

Part G has been completed in accordance with instructions, and any signiﬁcant reconciliations have been explained.

[]

I have made a copy of this form for my records.

Name of person completing this form:

Telephone number:

Signature:

Facsimile number:Model Survey Forms

LOGO

Pleasecorrect any
errors inthis label

489

Balance of Payments Survey
Form 3-5—ITRS—Bank’s Record of Transactions
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that, each month, a representative of the bank to which this form isaddressed must return Form 3-1—ITRS—Payments and Receipts (or records thereof) completed by clients, Form 3-4—ITRS—
Banks, and Form 3-5—ITRS—Bank’s Record of Transactions to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information to be used in compiling Newland’s balance of payments and international
investment position statistics. These statistics are published quarterly in Newland: Balance of Payments and International
Investment Position, which is available from the Balance of Payments Division of the Newland Ministry of Statistics.
Instructions: Detailed instructions for the completion of ITRS forms appear on following pages.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

490

Balance of Payments and International Investment Position Compilation Guide

Notes and Instructions for Form 3-5—ITRS—Bank’s Record of Transactions
In accordance with ITRS collection arrangements, your bank should, for transactions that pass through the bank, maintain arecord of all transactions with nonresidents. A copy of these records should be sent to the Newland Ministry of Statistics,
within six days of the end of the reference month, on Form 3-5—ITRS—Bank’s Record of Transactions. Entries in some table
cells are not required (note //// marks). For example, in columns E, F, and G, only currency code, payments and receipts, andvalue are required. For column A (bank’s own transactions), greater detail is required on the Form 3-4—ITRS—Banks; thiscolumn is included in the table on Form 3-5 to show the coverage provided by Form 3-4. Form 3-5 can be regarded as a pro
forma for supplying data in computer readable form.

Model Survey Forms

491

Form 3-5—ITRS—Bank’s Record of Transactions
Bank NameBank Reference Number

Own AccountTransactionsof Bank
A

Large
Transactionsof Residents (a)BMonth and Year

Small
Transactionsof Residents (b)CNonresident
Accounts—
Banks
D

Nonresident
Accounts—
Nonbanks
E

Day and month////////////////////////

Reference number of transaction////////////////////////////////////////////////

Currency code
Payments
Receipts

Resident transactor code
Value(a) Transaction of ND 10,000 or larger.
(b) Transaction of less than ND 10,000.

////////

492

Balance of Payments and International Investment Position Compilation Guide

Annex to Forms 3-1–3-5 for ITRS—Classiﬁcations
Transaction Codes
1. Goods
exported and imported
110 Goods arriving in or leaving Newland
120 Merchanting
130 Nonmonetary gold
140 Goods supplied to ships in port
2. Transport and travel services
Freight services
211 Sea transport
212 Air transport
213 Other transport
Passenger services (international routes)
221 Sea transport
222 Air transport
223 Other transport
Other transport services
231 Sea transport
232 Air transport
233 Other transport
240 Postal and courier services
Travel services
251 Business travel
252 Personal travel
3. Other services
310 Manufacturing services
320 Maintenance and repair services
330 Construction
341 Insurance premiums
342 Insurance claims
343 Financial services
350 Charges for use of intellectual property (royalties
and fees)
361 Telecommunication
362 Computer services
363 Information service
371 Research and development services
372 Professional and management consulting services
373 Technical, trade-related, and other businessservices
374 Audiovisual and related services
375 Personal, cultural, and recreational services
380 Services to foreign governments, n.i.e.

4. Income410 Dividends
420 Distribution of proﬁts
430 Interest
440 Taxes, subsidies, rent
5. Remittances
510 Compensation of employees
520 Workers’ remittances
530 Other personal transfers
540 Transfers through money transfer operators notincluded above
6. Transfers
610 Development assistance
620 Technical assistance
630 Other grants
640 Other current transfers
7. Transactions in claims on nonresidents
710 Equity
711 Purchase of real estate abroad
720 Debt instruments between afﬁliated companies
731 Long-term debt securities (bonds, notes)
732 Short-term debt securities
740 Options, futures, warrants, swaps, etc.
751 Loans, long-term
752 Loans, short-term
760 Deposits
770 Other equities
780 Other
8. Transactions in liabilities to nonresidents
810 Equity
811 Sale of real estate to nonresidents
820 Debt instruments between afﬁliated companies
831 Long-term debt securities (bonds, notes)
832 Short-term debt securities
840 Options, futures, warrants, swaps, etc.
851 Loans, long-term
852 Loans, short-term
860 Deposits
870 Other equities
880 Other
9. Transfer of funds between accounts
900 Transfer of funds between accounts

Model Survey Forms

Transaction Type
(Required to complete Forms 3-3, 3-4, and 3-5)
1. Single payment transaction: The payment is applicable
to only one transaction code, and no netting or
settlement is involved.
2. Multipayment transaction: Payments apply to morethan one transaction code (e.g., a loan repayment iscombined with interest), result from partial netting(e.g., actual payment is the difference between ﬁnancing
acquired and fees paid), or are settlement transactions,in which a payment settles a number of transactions. In
each case, underlying transactions should be recorded.

3. Offset transactions: These transactions do not result incash payments through bank accounts and should berecorded so that all gross transactions are measured.
Offset entries could result from, for example, theacquisition of ﬁnancing to pay for goods and services;the provision of goods, services, and ﬁnancial assets inlieu of interest and dividends; debt to equity swaps; orthe issue of shares to pay for goods. In each case, botha payment and a receipt entry should be recorded. If
several transaction categories are involved, several
payment and receipt entries may have to be recorded.
4. Transfer of funds between accounts: The othercurrency involved should be recorded in column D.

Other Party Codes
1. Nonresident head ofﬁce, nonresident parent company,
major shareholder, or companies related to or
associated with these

4. An international institution

2. Nonresident branch or subsidiary of transactor or ancompany in which this company (or a subsidiary or
associate company) has a major shareholding

6. A nonresident bank

3. Foreign government

8. A resident company or person

5. A nonresident central bank

7. Another nonresident company or person

Note: In items 1 and 2, a major shareholder is one with 10
percent or more equity interest.

Economy Codes
To be provided by the compiler

Currency Codes
To be provided by the compiler

Export/Import Codes(Required to complete Form 3-2 and part F of Form 3-3)
A. Food, live animals, beverages, and tobacco
B. Minerals, fuels, and lubricants
C. Chemical, plastic, medical, pharmaceutical, and rubber
products, and fertilizers
D. Wood, paper, and products thereof
E. Textiles, clothing, and footwear

F. Machinery, ofﬁce and communication equipment, andother electrical goods, including spares
G. Vehicles and transport equipment, including spares
H. Metal and metal products not included elsewhere
I. All other goods

493

494

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 4—Goods
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information that will be used in compiling Newland’s balance of payments statistics
on exports and imports of goods. These statistics are published quarterly in Newland: Balance of Payments and International
Investment Position, which is available from the Newland Ministry of Statistics.
Due date: Please return the completed form by MM DD, YYYY
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: Some of the data requested may not be readily available from your records. In these cases, careful estimates will
sufﬁce.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and international investment position
statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

495

Instructions for Completing Form 4—Goods
Reporting Instructions
Form 4 should be completed for the company (and any subsidiaries in Newland) listed on page 1 of the form—unless different
arrangements have been made with the Newland Ministry of Statistics.

Residents and Nonresidents
A nonresident is any individual, company, or other organization domiciled in an economy other than Newland. Newland
subsidiaries of nonresident companies are residents of Newland. Similarly, foreign subsidiaries of Newland companies are
nonresidents.

Conversion to Newland Dollars
All values should be reported in thousands of Newland dollars. Foreign currencies should be converted to Newland dollars at
the midpoint of the buy and sell rates applicable on the date of the transaction.

Structure of Form 4
Form 4 collects information on the goods transactions of this company and its Newland subsidiaries with nonresidents.
Parts A and B collect data on exports and imports—that is, goods sold to nonresidents (exports) and goods purchased fromnonresidents (imports).
Part C covers repairs by nonresidents to goods owned by your company.
Parts D (exports) and E (imports) measure signiﬁcant differences between date of sale and date of shipment.
Parts F (imports) and J (exports) are concerned with the ﬁnancing of trade.

Completing Part A (Exports of Goods)
In column A, enter a description of the commodity exported by your company (and its subsidiaries), and in columns E to I thecountries in which ﬁnal delivery of the goods is expected. One row should be completed for each commodity. Please note thatthe sum of columns E through I should equal column D. The free on board (f.o.b.) value is the value of goods at the point of
departure from the exporting economy (in this case, Newland), and the f.o.b. value includes the cost of loading the goods prior
to transportation. If the response to item 6 is ND 500 or less, record a dash (—).

Completing Part B (Imports of Goods)
Record the free on board (f.o.b.) value and the cost, insurance, and freight (c.i.f.) values for each commodity group that yourcompany (and its subsidiaries) imports. The f.o.b. value is the value of goods when they leave the exporting economy; the f.o.b.
value includes also the cost of loading the goods prior to transportation. The c.i.f. value is the value of goods delivered to theborder of the importing economy (in this case, Newland). If you are in doubt about the commodity group for a particularimport, please contact the Newland Ministry of Statistics or describe details in the space provided on the form. The economy
from which the goods were initially dispatched (consigned) should be entered in the heading for columns C through G, andthe sum of the values recorded in those columns should equal column B. If the answer to question 11 or 12 is ND 500 or less,record a dash (—).

Completing Part C (Repairs to Goods)
A separate line should be completed for each commodity and economy. In column D, any associated transportation andinsurance costs should be reported separately.

Completing Parts D and E (Consignment Trade)
A separate line should be completed for each commodity and economy combination. In part D, please report details about
goods sent abroad on consignment, including value of goods sent abroad during the period, value of goods sold, value of goods
destroyed or wasted, value of goods returned and values of goods held. Please verify that the total value of goods held at theend of the period (column D) equals the beginning value (column C) plus the value of goods sent (column E), less the value ofgoods sold (column G), less goods returned (column F), less goods wasted or destroyed (column H). Details of commissions
paid to nonresident agents should also be reported. Similarly, in part E, please report details about goods held domestically on
consignment and commissions received from nonresidents for the sale of consignment goods.

Completing Parts F and G (Trade Payables and Receivables)
A separate line should be completed for each economy. In part F, please report any advances paid on goods yet to be imported,
payments made on goods imported in previous periods, and goods imported where payment was made in a previous period oris yet to be made. In part G, please report any advances received on goods yet to be exported, payments received on goods
exported in previous periods, and goods exported where payment was received in a previous period or is yet to be received.

496

Balance of Payments and International Investment Position Compilation Guide

Form 4—Goods
Part A. Goods Sold to Nonresidents and Exported from Newland during the Quarter(Report in thousands of Newland dollars and, where appropriate, specify quantity)
VolumeF.o.b. Value

Commodity
Description

AmountUnits (specify)

Total

A

B

C

D

Economy of Final Delivery
E

F

G

H

I

1.
2.
3.
4.
5.
6. Please report, for the quarter, the value of any goods exported from Newland but lost before delivery.

ND ’000

Part B. Goods Purchased from Nonresidents and Imported to Newland during the Quarter(Report in thousands of Newland dollars)Commodity Group

F.o.b. Value

C.i.f.
Value

Total

A

B

Economy of Initial Dispatch (specify)
C

D

E

F

G

////////////////////////////////////////

1. Food, live animals, beverages, and tobacco
2. Mineral, fuels, and lubricants
3. Chemical, plastic, medical, pharmaceutical, andrubber products, and fertilizers
4. Wood, paper, and products thereof
5. Textiles, clothing, and footwear
6. Machinery, ofﬁce and communications equipment,
and other electrical goods, including spare parts
7. Vehicles and transport equipment, including spareparts
8. Metal and metal products not included elsewhere
9. All other goods
Total

If you are unable to assign goods to a particular commodity, please provide details.
10. Of the amount reported in row Total, column A, how much was for insurance premiums?

ND ’000

11. How much was received in respect of insurance claims for goods purchased abroad and lost
before arrival in Newland?

ND ’000

Model Survey Forms

497

Part C. Value of Fees for Repairs to Goods Paid to Nonresidents during the Quarter(Report in thousands of Newland dollars)Commodity Description

Economy in Which Goods
Were Repaired

Value of Repairs

Transportation Costs Paid
to Nonresidents

A

B

C

D

1.
2.
3.

Part D. Consignment Trade—Goods Consigned Abroad during the Quarter(Report in thousands of Newland dollars)
Value of Goods
Held Abroad

Goods Shipped
during the Period

Commodity
Description

Economy ofConsignment

Opening
Position

Closing
Position

Sent
Abroadc.i.f.

A

B

C

D

E

Returned
f.o.b.
F

Value of
Goods
Wasted or
Destroyed
Value of
Goods Sold during the
PeriodAbroadG

Commissions
Paid toNonresident
Agents

H

I

1.
2.
Total

///////Part E: Consignment Trade—Goods Held Domestically on Consignment during the Quarter(Report in thousands of Newland dollars)
Value of
Goods Held

Goods Shipped
during the Period

Commodity
Description

Economy ofOriginOpening
Position

Closing
Position

ReceivedfromAbroadc.i.f.

A

B

C

D

E

1.
2.
Total

///////

Returned
f.o.b.
F

Value of
Goods
Wasted or
Destroyed
Value of
Goods Sold during the Commissions
PeriodReceived
Domestically
G

H

I

498

Balance of Payments and International Investment Position Compilation Guide

Part F. Trade Finance—Imports(Report value in thousands of Newland dollars)
Finance ExtinguishedFinance Extended

Economy (specify)

Imports Received—
Payment to be Made

Advances Paid—
Goods Yet to Be Received

Imports Received—
Payment Made inPrevious Period

Payments Made—
Goods Received inPrevious Period

A

B

C

D

E

1.
2.
Total

Part G. Trade Finance—Exports(Report value in thousands of Newland dollars)
Finance ExtinguishedFinance Extended

Economy (specify)

Exports Sent—
Payment to Be Made

Advances Received—
Goods Yet to Be Sent

Exports Sent—
Payment Received inPrevious Period

Payments Received—
Goods Sent inPrevious Period

A

B

C

D

E

1.
2.
Total

Part H. Revisions to Previously Reported Data
Please provide details of any signiﬁcant revisions to data previously reported incorrectly.

Part I. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out the inappropriate phrases.
[]

The name of the company shown on page 1 is correct. / I have corrected the name and address on page 1.

[]

Details about the contact person have been entered on page 1.

[]

Responses cover all transactions in goods of the company named on page 1 and its subsidiaries in Newland. / The
following activities have not been included:[]

The information in part A of the form has been completed in accordance with instructions.

[]

The information in part B of the form has been completed in accordance with instructions.

[]

The information in part C of the form has been completed in accordance with instructions.

[]

The information in parts D and E of the form has been completed in accordance with instructions.

[]

The information in parts F and G of the form has been completed in accordance with instructions.

[]

There are no signiﬁcant revisions to data for previous periods. / Details of signiﬁcant revisions to data for previous
periods have been included in part H.

[]

I have made a copy of this form for my records.

Name of person completing this form:
Signature:Model Survey Forms

LOGO

Pleasecorrect any
errors inthis label

499

Balance of Payments Survey
Form 5—Goods for Merchanting
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information on purchases and resales of goods under merchanting, which will be usedin compiling Newland’s balance of payments statistics. These statistics are published quarterly in Newland: Balance of Payments
and International Investment Position, which is available from the Newland Ministry of Statistics.
Description of activity: Merchanting transactions consist of the purchase of goods by a resident (your company) fromnonresidents combined with the subsequent resale of the same goods to another nonresident without the goods entering
Newland. Part A covers the merchanting activity undertaken by your company. In the case where the physical form of thegoods purchased from abroad is changed during the period they are owned by your company (e.g., as a result of processing,assembly, labeling, and packaging), then the activity should be reported as manufacturing services (see Form 7). Manufacturingservices include the processing, assembly, labeling, and packing of goods that are owned by a resident of another economy. The
value of the manufacturing service is the fee charged for manufacturing—it does not take into account the value of the goods
or the change in their value due to the manufacturing. Part B requests details on signiﬁcant revisions to data for previous
periods (if any), and part C includes questions for verifying the comprehensiveness of the competed data.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: Some of the data requested may not be readily available from your records. In these cases, careful estimates will sufﬁce.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and international investment position
statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

500

Balance of Payments and International Investment Position Compilation Guide

Form 5—Goods for Merchanting
Part A. Goods for Merchanting
Is your company undertaking merchanting activity abroad?
[

]

Yes

[

]

No

If the response to the above question is “yes,” please complete the tables below with information regarding the goods acquired
and resold under merchanting.
Goods Acquired from Abroad under Merchanting(Report in thousands of Newland dollars)Commodity Description

Economy From Which Goods
Were Purchased

Value of Goods Purchased Abroad
during the Period

A

B

C

1.
2.
3.
4.
Total

///////////////////

Goods Sold Abroad under Merchanting(Report in thousands of Newland dollars)
Value of Goods Sold during the Period(including goods purchased in previous periods)

Commodity Description

Economy to WhichGoods Were Sold

Margin on Purchase and
Resale of Goods(i.e., merchanting)Selling Price

A

B

C

D

1.
2.
3.
4.
Total

///////////////////Part B. Revisions to Previously Reported Data
Please provide details of any signiﬁcant revisions to data previously reported incorrectly.

Model Survey Forms

Part C. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name of the company shown on page 1 is correct. / I have corrected the name and address on page 1.

[]

Details about the contact person have been entered on page 1.

[]

The information in part A has been completed in accordance with the instructions.

[]

There are no signiﬁcant revisions to data for previous periods. / Details of signiﬁcant revisions to data for previous
periods have been included in part B.

[]

I have made a copy of this form for my records.

Name of person completing this form:

Signature:

501

502

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 6—International Trade in Services
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information that will be used in compiling Newland’s balance of payment statistics oninternational transportation transactions. These statistics are published quarterly in Newland: Balance of Payments andInternational Investment Position, which is available from the Newland Ministry of Statistics.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: Some of the data requested may not be readily available from your records. In these cases, careful estimates will
sufﬁce.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and international investment position
statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

503

Instructions for Completing Form 6—International Trade in Services
Reporting Instructions
Form 6 should be completed for the company (and any subsidiaries in Newland) listed on page 1 of the form—unless different
arrangements have been made with the Newland Ministry of Statistics.

Residents and Nonresidents
A nonresident is any individual, company, or other organization ordinarily domiciled in an economy other than Newland.
Newland subsidiaries of nonresident companies are residents of Newland. Similarly, foreign subsidiaries of Newland companies are
nonresidents.

Conversion to Newland Dollars
All values should be reported in thousands of Newland dollars. Foreign currencies should be converted to Newland dollars at the
midpoint of the buy and sell rates applicable on the date of the transaction.

Structure of Form 6
Form 6 collects quarterly information on selected international service transactions of this company and its subsidiaries.
Parts A and B cover services (except insurance, pension, transportation, and travel services) provided to and received fromnonresidents. International insurance transactions should be reported in part C, and international pension payments should bereported in part D. Details of transportation and travel transactions are collected through other survey forms. The activities ofresident insurance companies and pension funds are collected through other survey forms.

EconomyEach question seeks information on the economy of transaction. Record the economy of residence of the nonresident transactor.

Services Included
Services, which are products other than tangible goods, include communications, advertising, accounting, and management
consulting. Services do not include wages, proﬁts, dividends, or interest. Transportation and travel services should not be included
as information on these items is collected through other survey forms.
Services provided to nonresidents include those for which payment is made directly to your company by a nonresident entity(including a foreign afﬁliate of your company). Record services provided by your company, its employees abroad, or some otherresident entity on whose behalf your company receives payment. Exclude services that are provided to nonresidents by yourcompany and paid for through other unrelated resident entities; however, report the names and addresses of these entities in yourresponse to question 39.
Services received from nonresidents include all services provided by nonresidents and paid for directly by your company, its
subsidiaries, or its employees. Exclude services that are provided by nonresidents to your company or its subsidiaries and paid for,on your behalf, by other unrelated resident entities; however, record the names and addresses of these entities in your response toquestion 39.
Because form 6 seeks information on transactions between residents and nonresidents, you should not report services provided tononresidents by nonresident companies owned by your company. However, you should report services provided by your company
to related companies abroad and services provided by related companies abroad to your company. If determinations between
branch activities and head ofﬁce activities prove difﬁcult, or if you are uncertain about whether a particular transaction should be
included, please call (XXX) XXX-XXXX for assistance.

Individual Service Categories
Maintenance and Repair Services: These services include fees charged for the maintenance and repair and the value of any partsor material included in the repair fee. Where parts or materials are separately charged, they are excluded from the value of theservice.
Postal and Courier Services: These services include the pickup, transport, and delivery of letters, newspapers, periodicals,brochures, other printed matter, parcels, and packages. They also include post ofﬁce counter services, such as sales of stamps andmailbox rental services.
Financial Services: These services include fees for intermediation services such as lending, ﬁnancial leasing, letters of credit,bankers’ acceptances, lines of credit, foreign exchange transactions, and traveler’s check transactions; commissions and fees
associated with security brokerage, placements of issues, underwriting, redemptions, swaps, options, and commodity futures; andportfolio and other ﬁnancial management fees.

504

Balance of Payments and International Investment Position Compilation Guide

Charges for the Use of Intellectual Property: These include fees associated with the use of patents, copyrights, trademarks,
industrial processes, franchises, and so forth, and licensing agreements associated with manuscripts, paintings, sculptures, and soforth, as well as other outcomes of research and development. Included are also charges for licenses to reproduce and/or distribute(e.g., copyright on books and manuscripts, computer software, cinematographic work, and sound recordings and related rights,
such as for recording of live performances, television, cable or satellite). However, outright purchases/sales of such marketing assets(e.g., franchises and trademarks) are recorded as transactions in assets (see Part E).
Telecommunications Services: These services include broadcast or transmission of sound, images, data, or other information by
telephone, telex, telegram, radio and television cable transmission, radio and television satellite, electronic mail and networking,teleconferencing, and similar services.
Computer Services: These services include data base development, storage, and online time series facilities; data processing,tabulation, processing services (on a time-share or speciﬁc basis), and processing management services; hardware consultancy;
software design, development, and customized implementation and programming; maintenance and repair of computers andperipheral equipment; and computer-related online downloads.
Information Services: This category includes news agency services, database services, and Web search portals. Also included are
direct nonbulk subscriptions to newspapers and periodicals, whether by mail, electronic transmission, or other means; other online
content provision services (except for software or audio, e-books, and video); and library and archive services.
Research and Development: These activities cover those services that are associated with basic research, applied research, andexperimental development of new products and processes (e.g., research associated with the physical and social sciences,humanities, etc.).
Professional and Management Consulting Services: These services include legal advice, representation, and documentation;accounting, auditing, bookkeeping, and tax-related services; planning, organization, cost projecting, and human resource
management; and public relations. They also include advertising services; trade fair exhibition services; market research; and public
opinion polling services.
Architecture, Engineering, and Other Technical Services: These services include architectural design of urban and otherdevelopment projects; planning, project design, and supervision of dams, bridges, airports, turnkey projects, and so forth; andsurveying, product testing and certiﬁcation, and technical inspection services.
Waste Treatment and Depollution, Agricultural, and Mining Services: This category includes services associated with thetreatment of radioactive and other waste and cleanup of pollution and spills and restoring the environment; services associatedwith agricultural crops—for example, protection against insects and disease, increasing of harvest yields, and so forth; forestry andﬁshing services; mining, oil and gas-related services—for example, analysis of ores and so forth.
Operating Leasing: Operating leasing includes leasing of buildings, machinery and equipment—other than transportationequipment with crew—and excludes items under ﬁnancial lease.
Trade-Related Services: These services include commissions on goods and services associated with commodity brokerage, auction
sales, sales of ships and aircraft, and so forth.
Other Business Services: These services include distribution services related to water, steam, gas, and other petroleum products
and air-conditioning supply (where identiﬁed separately from transmission services); security and investigative services, translationand interpretation, photographic services, building cleaning, placement of personnel, real estate services, and so forth.
Personal, Cultural, and Recreational Services: These services include fees received by actors, directors, and producers associatedwith the production of motion picture and television ﬁlms; downloading of mass-produced audiovisual products (movies andmusic, including recordings of live performances); health services, education services, heritage and other cultural services, andsporting and other recreational services.
Note: Services, including education and health services, provided to nonresidents visiting Newland are considered to be travel
services and should not be reported on this form.

Insurance Transactions to Be Reported in Part C
Details of insurance premiums and claims for insurance placed directly abroad by Newland residents (other than insurancecompanies) and by Newland insurance agents and brokers on behalf of Newland residents should be recorded. Insurancecompanies, unless such companies also act as brokers or agents, should not complete this part of the form. Companies that use a
resident agent or broker to place insurance abroad should not report these transactions as the transactions will be reported by thebroker or agent.

Pension Transactions to Be Reported in Part D
Details of pension contributions on behalf of resident employees into nonresident pension funds and on behalf of nonresident
employees should be recorded.

Model Survey Forms

505

Form 6—International Trade in Services
Part A. Selected Services Provided to Nonresidents(Report in thousands of Newland dollars)
Total
A
1. Maintenance and repair services
2. Postal and courier services
3. Financial services
4. Charges for the use of intellectual property
5. Telecommunications services
6. Computer services
7. Information services
8. Research and development
9. Professional and management consulting services
10. Architecture, engineering, and other technical services
11. Waste treatment and depollution, agricultural and mining
services
12. Operating leasing
13. Trade-related services
14. Other business services
15. Personal, cultural, and recreational services
16. Other (specify)

Transactions by Economy (specify)
B

C

D

E

F

506

Balance of Payments and International Investment Position Compilation Guide

Part B. Selected Services Received from Nonresidents(Report in thousands of Newland dollars)
Total
ATransactions by Economy (specify)
B

C

D

E

F

17. Maintenance and repair services
18. Postal and courier services
19. Financial services
20. Charges for the use of intellectual property
21. Telecommunications services
22. Computer services
23. Information services
24. Research and development
25. Professional and management consulting services
26. Architecture, engineering, and other technical services
27. Waste treatment and depollution, agricultural, and mining
services
28. Operating leasing
29. Trade-related services
30. Other business services
31. Personal, cultural, and recreational services
32. Other (specify)

Part C. Insurance Transactions of Newland Companies, Brokers, and Agents with Nonresidents(Report in thousands of Newland dollars)This section should NOT be completed by insurance companies.
Total
A
33. Insurance of goods

Premiums paid
Claims received

34. Other casualty insurance

Premiums paid
Claims received

35. Life insurance

Premiums paid
Claims received

Transactions by Economy (specify)
B

C

D

E

F

Model Survey Forms

507

Part D. Pension Contributions on Behalf of Resident and Nonresident Employees by Brokers and Agents
36. Does this company, or its subsidiaries in Newland, pay pension
contributions:a.

on behalf of resident employees into nonresident pension funds?

[

]

Yes

[

]

No

b.

on behalf of nonresident employees into resident pension funds?

[

]

Yes

[

]

No

[

]

No

If yes, please give the name and address of the resident pension fund receiving payments.

c.

on behalf of nonresident employees into nonresident pension funds?

[

]

Yes

If the answer to question 36 (a), (b), and (c) is no, please go to question 38.
(Report in thousands of Newland dollars)
On behalf of resident employees

On behalf of nonresident employees

Economy of fund

Economy of fund

A

B

C

D

E

F

37. Contributions madePart E. Purchase and Sale of Marketing Assets
38. Did the company buy or sell brand names, mastheads, trademarks, logos or
domain names (without buying or selling the company that owned themarketing assets)?

[

]

Yes

a.

value of marketing assets purchased from nonresidents?

NDb.

value of marketing assets sold to nonresidents?

ND

[

] No

Part F. Payments for Services Settled through Other Resident Organizations andLong-Term Construction Activity
39. Does this company, its subsidiaries in Newland, or its employees working
abroad:a.

provide services to nonresidents that are paid for on your behalf byanother resident entity?

[

]

Yes

[

] No

b.

receive services from nonresidents for which payment is received onyour behalf by another resident entity?

[

]

Yes

[

] No

c.

engage in long-term construction activity abroad?

[

]

Yes

[

]

d.

engage a nonresident company for long-term construction activity in
Newland?

[

]

Yes

[

] No

No

If the answer to question 39 (a) or (b) is yes, please give the name and address of the resident company making or receiving
payments.

508

Balance of Payments and International Investment Position Compilation Guide

Part G. Revisions to Previously Reported Data
Please provide details of any signiﬁcant revisions to data previously reported incorrectly.

Part H. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name of the company shown on page 1 is correct. / I have corrected the name and address on page 1.

[]

Details about the contact person have been entered on page 1.

[]

The information in parts A through F has been completed in accordance with the instructions.

[]

There are no signiﬁcant revisions to data for previous periods. / Details of signiﬁcant revisions to data for previous
periods have been included in part G.

[]

I have made a copy of this form for my records.

Name of person completing this form:
Signature:Model Survey Forms

LOGO

Pleasecorrect any
errors inthis label

509

Balance of Payments Survey
Form 7—Manufacturing Services
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects quarterly information that will be used in compiling Newland’s balance of payments
statistics on manufacturing services. These statistics are published quarterly in Newland: Balance of Payments and International
Investment Position, which is available from the Newland Ministry of Statistics.
Description of activity: Manufacturing services include the processing, assembly, labeling, and packing of goods that are owned
by a resident of another economy. Part A covers the data on manufacturing (processing) that is undertaken by your company
on goods owned by nonresidents; Part B covers the data on manufacturing (processing) that is undertaken by a foreign
economy on goods owned by your company. Included in Part B are only manufacturing services that change the condition of
the goods. Manufacturing services that do not change the condition of the goods are included in Part A. The value of the
manufacturing service is the fee charged for manufacturing—it does not take into account the value of the goods or the change
in their value due to the manufacturing. Part C requests details on signiﬁcant revisions to data for previous periods (if any),and part D includes questions for verifying the comprehensiveness of the competed data.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: Some of the data requested may not be readily available from your records. In these cases, careful estimates will
sufﬁce.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

510

Balance of Payments and International Investment Position Compilation Guide

Form 7—Manufacturing Services
Part A. Manufacturing Services Undertaken by Your Company
In the period covered by this survey, did your company perform manufacturing (processing) services on goods belonging toforeign owners?
[

]

Yes

[

]

No

If your response to the above question is “yes,” pleasea. Provide a short description of i) the goods received for manufacturing and ii) the manufactured (ﬁnished) goods;
b. Complete the table below with information regarding the manufacturing of these goods.

Information on Manufacturing Services Sold by Your Company(Report in foreign currency or Newland dollars)
Value of Goods Received/Dispatched
During the Quarter

Value of Manufacturing Services
During the Quarter

Goods Dispatchedto Nonresidents
after
Manufacturing*of which
Payment in Kind
Total

(Estimated Valueof Goods)

Value of Goods
Sold in Newland
on Behalf of theForeign Owner

C-2

D-1

D-2

E

Economy ofOriginCurrency

Goods Received
from Nonresidents
for Manufacturing

A

B

C-1

Total

X

X

*Final value of manufactured goods that takes into account any concessions granted (e.g., special taxes and custom regulations).

Part B. Manufacturing Services Undertaken by Nonresidents Abroad for Your Company
In the period covered by this study, did your company send goods for manufacturing (processing) abroad?
[

]

Yes

[

]

No

If your response to the above question is “yes,” pleasec.

Provide a short description of i) the goods sent abroad for manufacturing and ii) the returned manufactured(ﬁnished) goods;d.

Complete the table below with information regarding the manufacturing abroad of these goods.

Model Survey Forms

511

Information on Manufacturing Services Purchased Abroad(Report in foreign currency or Newland dollars)
Value of Goods Dispatched/Received
during the Quarter

Economy of
Manufacturing

Currency

A

B

Total

Goods Received
Goods Dispatchedto Nonresidents for from Nonresidents
Manufacturing After Manufacturing
C-1

Value of Manufacturing Services
during the Quarter
Value of
Manufactured
Goods Sold
(Estimated Value Abroad on Behalfof Your Company
of Goods)of which
Payments in Kind
Total

C-2

D-1

D-2

X

E

X

Part C. Revisions to Previously Reported Data
Please provide details of any signiﬁcant revisions to data previously reported incorrectly.

Part D. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name of the company shown on page 1 is correct. / I have corrected the name and address on page 1.

[]

Details about the contact person have been entered on page 1.

[]

The information in parts A through B has been completed in accordance with the instructions.

[]

There are no signiﬁcant revisions to data for previous periods. / Details of signiﬁcant revisions to data for previous
periods have been included in part C.

[]

I have made a copy of this form for my records.

Name of person completing this form:
Signature:

512

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 8—Resident Transport Operators
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information that will be used in compiling Newland’s balance of payments andinternational investment position statistics on international transportation transactions. These statistics are published quarterly
in Newland: Balance of Payments and International Investment Position, which is available from the Newland Ministry of
Statistics.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: Some of the data requested may not be readily available from your records. In these cases, careful estimates will
sufﬁce.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and international investment position
statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

513

Instructions for Completing Form 8—Resident Transport Operators
Reporting Instructions
Form 8 should be completed for the company (and any subsidiaries in Newland) listed on page 1 of the form—unless different
arrangements have been made with the Newland Ministry of Statistics.

Residents and Nonresidents
A nonresident is any individual, company, or other organization domiciled in an economy other than Newland. Newland
subsidiaries of nonresident companies are residents of Newland. Similarly, foreign subsidiaries of Newland companies are
nonresidents.

Conversion to Newland Dollars
All values should be reported in thousands of Newland dollars. Foreign currencies should be converted to Newland dollars at
the midpoint of the buy and sell rates applicable on the date of the transaction.

Structure of Form 8
Form 8 collects information on the international transportation activities of this company and its Newland subsidiaries. Part A
collects selected earning and expense data. Part B collects information on expected purchases of large equipment. Part C
requests selected details of ticket sales to resident travelers on international routes.

Partner Economy
Part A of form 8 requests information on earnings and expenses by economy. The countries in which earnings or expenses
were incurred should be indicated. (Transactions with residents of Newland should be recorded as such in sections 2a and 2bof part A.) Part C requests information on amounts of revenue earned by other nonresident airlines on passenger ticket sales
by your company. The economy of residence of the nonresident transport operator should be recorded.

Passenger Fares (Item 1)
Amounts reported should include passenger fares earned, for the categories of persons shown in the table, by your company
and its subsidiaries. Earnings from the charter of transport equipment with crew (to carry passengers) and from accompanied
luggage (excess baggage) should be included. Earnings should be recorded on a gross basis—that is, before any deduction ofcommissions on ticket sales. Such commissions should be regarded as expenses and reported in item 11.

Freight Services (Item 2)
Amounts reported should include earnings by this company and its subsidiaries from the carriage of goods (freight) and fromthe charter of transport equipment with crew (to carry goods). Earnings should be recorded on a gross basis—that is, before
any deduction of commissions to freight agents. Such commissions should be regarded as expenses and reported in item 12.

Charter of Equipment without Crew (Items 3b and 13)
Amounts reported should cover payments associated with charter of transport equipment without crew—except for transport
equipment under a ﬁnancial lease.

Agent Fees on Passenger Fares (Item 11)
Amounts reported should include fees paid to nonresidents in respect of passenger fares earned.

Passenger Fare Ticket Sales to Residents (Part C)
These data are required to estimate earnings and associated expenses of nonresident operators on passenger services provided
to resident travelers. In item 17, data on ticket sales (less refunds) to resident travelers for international routes should bereported. In item 18, revenue paid to nonresident operators on tickets sold by your company should be reported. All amounts
should be reported before deduction of commissions on ticket sales. Commissions earned by your company on revenue
reported in item 18 should be recorded in item 19 rather than item 3.

514

Balance of Payments and International Investment Position Compilation Guide

Form 8—Resident Transport Operators
Part A. Selected Earnings and Expenses(Report in thousands of Newland dollars)
Total

Earnings and Expenses by Economy (specify)

A

B

C

D

E

F

/////////////////////////////////////////////

Selected Transportation Earnings
1. Passenger fares earned from:a. Nonresident travelers on international routes
b. Nonresident travelers on domestic routes
c. Resident travelers on international routes
2. Earnings from freight services on:a. Imports to Newland
b. Exports from Newland
c. Operations in Newland for nonresidents
d. Other foreign routes
3. Other selected earnings from abroad:a. Inward mailb. Charter of equipment without crew (leasing)c. Other (specify)
Selected Transportation Expenses Abroad

4. Fuel (bunkers)
5. Provisions (catering)
6. Loading and unloading charges (stevedoring)
7. Repairs and maintenance of transport equipment
8. Cleaning charges
9. Crew layover expenses
10. Port charges, taxes, and landing fees
11. Agent fees on passenger fares
12. Other agent fees
13. Charter of vessels without crew (leasing)
14. Advertising abroad
15. Other expenses abroad (specify)

Model Survey Forms

515

Part B. Expected Equipment Purchases
16. Please give details of any purchases of large equipment (e.g., aircraft, ships) that you expect to take delivery of in thenext two years. Include information on the type of acquisition of equipment, whether under ﬁnancial lease or otherarrangements (please specify).

Part C. Passenger Fare Ticket Sales to Residents on International Routes(Report in thousands of Newland dollars)

Total
A
17. Ticket sales (less refunds) made, during the quarter, toresident travelers on international routes

Economy of Residence of Nonresident Operator(specify)
B

C

D

E

F

/////////////////////////////////////////////

18. Revenue earned, during the quarter, by nonresident
transport operators on tickets issued by your company
19. Commission earned by your company on amounts reported
in item 18

Part D. Revisions to Previously Reported Data
Please provide details of any signiﬁcant revisions to data previously reported incorrectly.

Part E. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name of the company shown on page 1 is correct. / I have corrected the name and address on page 1.

[]

Details of the contact person have been entered on page 1.

[]

The information in parts A, B, and C has been completed in accordance with the instructions.

[]

There are no signiﬁcant revisions to data for previous periods. / Details of signiﬁcant revisions to data for previous
periods have been included in part D.

[]

I have made a copy of this form for my records.

Name of person completing this form:
Signature:516

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 9—Transactions with Nonresident Transport Operators
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information from the companies providing goods and services to nonresident
transport operators and revenue earned by branch ofﬁces or agencies representing the nonresident transport operators in
Newland. The data collected through this form will be used in compiling Newland’s balance of payments and international
investment position statistics. These statistics are published quarterly in Newland: Balance of Payments and International
Investment Position, which is available from the Balance of Payments Division of the Newland Ministry of Statistics.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: Some of the data requested may not be readily available from your records. In these cases, careful estimates will
sufﬁce.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and international investment position
statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

517

Instructions for Completing Form 9—Transactions with Nonresident Transport Operators
Reporting Instructions
Form 9 should be completed for the company (and any subsidiaries in Newland) listed on page 1 of the form—unless different
arrangements have been made with the Newland Ministry of Statistics.

Residents and Nonresidents
A nonresident is any individual, company, or other organization domiciled in an economy other than Newland. Newland
subsidiaries of nonresident companies are residents of Newland. Similarly, foreign subsidiaries of Newland companies are
nonresidents.

Conversion to Newland Dollars
All values should be reported in thousands of Newland dollars. Foreign currencies should be converted to Newland dollars at
the midpoint of the buy and sell rates applicable on the date of the transaction.

Structure of Form 9
Form 9 collects information on the transactions of this company with nonresident transport operators, including foreign
airlines, ships, railways, ﬁshing vessels, and so forth (if the company is unafﬁliated with nonresident operators to whom services
are provided) or on transactions of the branch ofﬁces or agencies representing the nonresident transport operators with or on
behalf of its nonresident parent company.
Part A, which is divided into two subsections, collects data on goods and services provided to nonresident transport operators.
In items 1 through 10, report goods and services that your company provides to nonresidents and for which your company
arranges settlement directly with a nonresident transport operator or the nonresident agent thereof. Information on settlements
made through other resident companies will be collected directly from them. In items 11 through 20, report goods and services
that are acquired by nonresident transport operators from other residents and for which settlement is made through yourcompany or its subsidiaries.
Part B collects data on the ticket sales on behalf of nonresident transport operators and revenue earned by nonresident
transport operators. This part should be completed by branch ofﬁces or agencies representing nonresident transport operatorsfor nonresident transport operators.
Part C collects data on selected earnings, such as those from the provision of freight services within Newland (inland freight),
of nonresident transport operators and other payments to nonresident operators—apart from passenger services and freight
services provided on imports and exports). This part should be completed by branch ofﬁces or agencies reprinting nonresident
transport operators for nonresident transport operators.

EconomyThe economy of residence of the nonresident transport operator should be recorded in several sections of form 9.

Passenger Fares (Items 21 and 22)
Item 21 requests data on the value of ticket sales (less refunds) made by nonresident transport operators to Newland resident
travelers. Item 22 requests information on passenger revenue earned by nonresident transport operators from tickets sold(irrespective of which operator sold the ticket) to residents of Newland. (A ticket sold by one operator may be used on anotheroperator’s service and thereby generate revenue for the second operator.) If your company is a branch or agent of the ﬁrst
operator, the ticket sale should be reported in item 21. If your company is a branch or agent of the second operator, the ticket
sale should be reported in item 22. Fares should be recorded on a gross basis—that is, before deduction of commissions.
Commissions paid by nonresident transport operators on ticket sales should be recorded in part A. Revenue includes earnings
from the charter of transport equipment with crew (to carry passengers) and from accompanied luggage (excess baggage).

518

Balance of Payments and International Investment Position Compilation Guide

Form 9—Transactions with Nonresident Transport Operators
Part A. Goods and Services Provided to Nonresident Transport Operators(Report in thousands of Newland dollars)
Total
A

Economy of Residence of Operator (specify)
B

C

D

E

F

Provided by Your Company and Settlements Made Directly with Nonresidents
1. Fuel (bunkers)
2. Provisions (catering)
3. Loading and unloading charges (stevedoring)
4. Port charges, taxes, and landing fees
5. Repairs and maintenance of transport equipment
6. Cleaning services
7. Agent fees on passenger ticket sales
8. Other agent fees
9. Advertising
10. Other (please specify)

Provided by Other Resident Companies and Settlements Made through Your Company
11. Fuel (bunkers)
12. Provisions (catering)
13. Loading and unloading charges (stevedoring)
14. Repairs and maintenance of transport equipment
15. Cleaning services
16. Port charges, taxes, and landing fees
17. Agent fees on passenger ticket sales
18. Other agents’ fees
19. Advertising
20. Other (please specify)

Part B. Passenger Revenue Earned by Nonresident Transport Operators from Carriage of Resident Travelers(Report in thousands of Newland dollars)
Total
A
21. Passenger ticket sales (less refunds) made during the quarteron behalf of nonresident transport operators to resident
travelers in the quarter
22. Passenger fare revenue earned during the quarter by
nonresident transport operators

Economy of Residence of Operator (specify)
B

C

D

E

F

Model Survey Forms

519

Part C. Selected Earnings of Nonresident Transport Operators from Residents(Report in thousands of Newland dollars)
Total
A

Economy of Residence of Operator (specify)
B

C

D

E

23. Inland freight—that is, the carriage of imported goods,
including those carried to and from the border, within
Newland
24. Inland freight—that is, the carriage of exported goods,
including those carried to and from the border, within
Newland
25. Mail
26. Other (excluding freight, passenger, and charter services)
Please specify:

Part D. Revisions to Previously Reported Data
Please provide details of any signiﬁcant revisions to data previously reported incorrectly.

Part E. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name of the company shown on the page 1 is correct. / I have corrected the name and address on page 1.

[]

Details of the contact person have been entered on page 1.

[]

The information in parts A, B, and C has been completed in accordance with the instructions.

[]

There are no signiﬁcant revisions to data for previous periods. / Details of signiﬁcant revisions to data for previous
periods have been included in part D.

[]

I have made a copy of this form for my records.

Name of person completing this form:
Signature:

F

520

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 10—International Travel
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information that will be used in compiling Newland’s balance of payments andinternational investment position statistics on international travel transactions. These statistics are published quarterly in
Newland: Balance of Payments and International Investment Position, which is available from the Newland Ministry of Statistics.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: Some of the data requested may not be readily available from your records. In these cases, careful estimates will
sufﬁce.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and international investment position
statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

521

Instructions for Completing Form 10—International Travel
Reporting Instructions
Form 10 should be completed for the company (and any subsidiaries in Newland) listed on page 1 of the form—unlessdifferent arrangements have been made with the Newland Ministry of Statistics.

Residents and Nonresidents
A nonresident is any individual, company, or other organization ordinarily domiciled in an economy other than Newland.
Newland subsidiaries of nonresident companies are residents of Newland. Similarly, foreign subsidiaries of Newland companies
are nonresidents.

TravelersTravelers are persons who stay, for work and other purposes (e.g., tourism, education, health), in countries other than those inwhich they are residents. Normally, a person staying in an economy for less than 12 months should be regarded as a traveler.
Students and medical patients should, regardless of their length of stay in the host economy, be regarded as travelers. Ofﬁcialsof foreign governments stationed at embassies and similar institutions are not regarded as travelers.

Conversion to Newland Dollars
All values should be reported in thousands of Newland dollars. Foreign currencies should be converted to Newland dollars at
the midpoint of the buy and sell rates applicable on the date of the transaction.

Structure of Form 10
Form 10 collects information on the international travel transactions of this company.
Part A should be completed by companies issuing credit and debit cards or by companies making settlements abroad for credit
and debit card transactions.
Part B should be completed by companies issuing travelers’ checks and making settlements abroad for traveler’s checktransactions.
Part C should be completed by tour wholesalers and companies making or receiving prepayments, advances, or travel
settlements. Amounts for passenger fares for travel on international routes should be excluded.
Part D should be completed by hotels that provide lodging or other services to international travelers. Part D should include
amounts received from supplementary hotel operations (such as gift shops) and amounts received from nonresident travelers
and used to acquire, on behalf of these travelers, goods and services from other resident companies.

EconomyIn parts A, B, and C, you are requested to classify transactions by economy of the nonresident counterparty. In part D, you
should report the economy of residence of the nonresident travelers.

Credit and debit card and traveler’s checks transactions
Traveler’s checks and credit and debit card transactions should be recorded at the face value of the transaction. Any fees earnedor paid abroad should be separately recorded.

522

Balance of Payments and International Investment Position Compilation Guide

Form 10—International Travel
Part A. Selected Credit and Debit Card Transactions(Report in thousands of Newland dollars)
Total
ATransactions by Economy (specify)
B

C

D

E

F

1. Expenditure by nonresident travelers in Newland during thequarter
2. Expenditure by Newland residents traveling abroad during
the quarter
3. Earnings from abroad on credit and debit card transactions
during the quarter4. Fees paid abroad on credit and debit card transactions
during the quarter

Part B. Selected Traveler’s Check Transactions(Report in thousands of Newland dollars)
Total
A
1. Traveler’s checks issued abroad on behalf of your company
and used in Newland by nonresidents during the quarter
2. Traveler’s checks issued in Newland by your company andpresented for collection by nonresident banks during thequarter
3. Traveler’s checks issued (less refunds) in Newland on behalfof nonresident banks during the quarter
4. Traveler’s checks issued abroad by nonresident companies,
purchased by your company, and sent for collection tononresident banks during the quarter
5. Earnings from abroad on traveler’s checks transactions
during the quarter6. Fees paid abroad for traveler’s checks transactions during thequarter

Transactions by Economy (specify)
B

C

D

E

F

Model Survey Forms

523

Part C. Prepaid and Advance Purchase Tours and Other Travel Settlements(Report in thousands of Newland dollars)
Amounts in respect of international airline travel should be excluded.

Total

Of Which,
Settled with
Credit/Debit
Cards orTraveler’s
ChecksA

B

Transactions by Economy (specify)
C

D

E

F

G

1. Amounts received from abroad during thequarter for prepaid and advance purchasetours
2. Amounts paid abroad during the quarter for
prepaid tours and advance purchase tours
3. Amounts received from abroad during thequarter for other travel settlements (please
specify)
4. Amounts paid abroad during the quarterfor other travel settlements (please
specify)

5. Commissions received from abroad during
the quarter6. Commissions paid abroad during quarter

Part D. Nonresident Travelers Staying at Hotels(Report in thousands of Newland dollars)
Total
A
1. Number of nonresident travelers lodging at the hotel during
the quarter
2. Number of nights that nonresident travelers lodged at thehotel during the quarter
3. Amount paid, during the quarter, for accommodation by
nonresident travelers
4. Amount paid, during the quarter, for other goods andservices provided by the hotel to nonresident travelers
5. Amount paid, during the quarter, by the hotel to otherresident companies for goods and services provided tononresident travelers

Economy of Residence of Traveler (specify)
B

C

D

E

F

524

Balance of Payments and International Investment Position Compilation Guide

Part E. Revisions to Previously Reported Data
Please provide details of any signiﬁcant revisions to data previously reported incorrectly (previous quarters).

Part F. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name of the company shown on page 1 is correct. / I have corrected the name and address on page 1.

[]

Details about the contact person have been entered on page 1.

[]

The information in parts A through D has been completed in accordance with the instructions.

[]

There are no signiﬁcant revisions to data for previous periods. / Details of signiﬁcant revisions to data for previous
periods have been included in part E.

[]

I have made a copy of this form for my records.

Name of person completing this form:
Signature:Model Survey Forms

LOGO

Pleasecorrect any
errors inthis label

525

Balance of Payments Survey
Form 11—Construction Services
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects quarterly information on construction activities that will be used in compiling
Newland’s balance of payments statistics. These statistics are published quarterly in Newland: Balance of Payments andInternational Investment Position, which is available from the Newland Ministry of Statistics.
Description of activity: This activity covers construction services provided abroad on a short-term basis (up to one year) and/or under long-term construction and installation projects (one year and longer) undertaken abroad by your company. It may
include engineering construction, such as roads, bridges, dams, and so forth, buildings, land improvement, installation andassembly work, repairs and maintenance on buildings, and so forth. It includes also the construction and installation activity
undertaken in Newland by nonresidents for your company. It excludes construction and related-installation work provided
abroad by nonresident branches and subsidiaries of your company, and construction work performed in your economy byresident branches and subsidiaries of a foreign construction company. Please complete Part A if your company is undertaking
construction work abroad. Please complete Part B if your company is the beneﬁciary of construction work undertaken in
Newland by nonresident companies. Part C requests details on signiﬁcant revisions to data for previous periods (if any), andpart D includes questions for verifying the comprehensiveness of the competed data.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: Some of the data requested may not be readily available from your records. In these cases, careful estimates will sufﬁce.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and international investment position
statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code526

Balance of Payments and International Investment Position Compilation Guide

Form 11—Construction Services
Part A. Export of Construction Services (excludes construction services executedby branches and subsidiaries of your company incorporated abroad)Has your company undertaken construction work paid by a nonresident in the past quarter?
[

]

Yes

[

]

No

If your response to the above question is “yes,” pleasea.

Provide a short description of the type of construction work undertaken for the major projects.

b.

Complete the table below with information regarding the construction activity. Please complete a line for eachongoing contract with your foreign customers.

Information on Construction Execution by Quarter(Report in foreign currency or Newland dollars)Counterpart
EconomyContract
Dates
Start

End

Currency
in Which
the Contract Was
Concluded

Value ofContract

Construction Equipment Sent
to theConstruction Siteduring theQuarter

Contract Value Executed during the Quarter of Which:Salaries Paid to
Employeesof YourCompany
from
Newland

Goods and Services Purchased

Foreign
Employees

in Newland in Economy
and Used
Where
for ConConstrucstruction
tion IsWork
Conducted
Abroadin a Third
EconomyTaxes
PaidAbroadOther
Expenses

Contract
Balance atthe End of
Quarter

Report this section in foreign currency or Newland dollars(please indicate using a note for each contract)

A

B1

B2

C

D

E

F1

F2

G1

G2

G3

H

I

J

Model Survey Forms

527

Part B. Import of Construction Services (excludes construction services provided
by branches and subsidiaries of foreign companies located in Newland)
Has your company commissioned construction work from a foreign company in the past quarter?
[

]

Yes

[

]

No

If your response to the above question is “yes,” pleasea.
b.

Provide a short description of the type of construction work commissioned from the foreign company.
Complete the table below with information regarding the construction activity. Please complete a line for eachongoing contract with your foreign provider.

Information on Construction Execution by Quarter(Report in foreign currency or Newland dollars)Counterpart
EconomyContract Dates
Start

End

Currency in
Which theContract Was
Concluded)

Value ofContract

Construction
Equipment
Brought to theConstruction
Site during
the Quarter

Contract
Value
Executed
during theQuarter

Goods
Purchasedin Newland
for This
Construction
Project by theNonresident
Counterpart

Contract
Balance atthe End of
Quarter

Report this section in foreign currency
or Newland dollars (please indicate
using a note for each contract)
A

B1

B2

C

D

E

F

G

H

Part C. Revisions to Previously Reported Data
Please provide details of any signiﬁcant revisions to data previously reported incorrectly.

Part D. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name of the company shown on page 1 is correct. / I have corrected the name and address on page 1.

[]

Details about the contact person have been entered on page 1.

[]

The information in parts A through B has been completed in accordance with the instructions.

[]

There are no signiﬁcant revisions to data for previous periods. / Details of signiﬁcant revisions to data for previous
periods have been included in part C.

[]

I have made a copy of this form for my records.

Name of person completing this form:
Signature:528

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 12—International Insurance Transactions
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information, which will be used in compiling Newland’s balance of payments statistics
on international insurance service transactions. These statistics are published quarterly in Newland Balance of Payments andInternational Investment Position, which is available from the Newland Ministry of Statistics.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: Some of the data requested may not be readily available from your records. In these cases, careful estimates will
sufﬁce.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

529

Instructions for Completing Form 12—International Insurance Transactions
Reporting Instructions
Form 12 should be completed for the company (and any subsidiaries in Newland) listed on page 1 of the form—unlessdifferent arrangements have been made with the Newland Ministry of Statistics.

Residents and Nonresidents
A nonresident is any individual, company, or other organization ordinarily domiciled in an economy other than Newland.

Conversion to Newland Dollars
All values should be reported in thousands of Newland dollars. Foreign currencies should be converted to Newland dollars at
the midpoint of the buy and sell rates applicable on the date of the transaction.

Structure of Form 12
Part A collects information associated with nonlife insurance contracts between your resident insurance company andnonresident policyholders; reinsurance between your resident insurance company and nonresident insurance companies; andinformation associated with life insurance contracts between your resident insurance company and nonresident policyholders.
The requested information refers to the following:
Direct written premiums are the amounts charged to and physically paid by the nonresident policyholders during theaccounting (“risk”) period for insurance coverage.
Important: Direct written premium amounts should not be adjusted for reinsurance premiums—that is, the part of the premiums
that is ceded to reinsurers should be left included; any assumed premiums from other direct insurers should be excluded. These ceded
or assumed premiums should be shown separately under cross border reinsurance transactions.
Premiums earned refer to the proportion of actual premiums that relate to the accounting period (independent of whether
they were paid during current or previous quarters) and that cover the risks incurred during the current accounting period.
Paid claims/beneﬁts occur when actual payments of cash have been made to nonresident claimants for insured events of thecurrent or previous periods.
Claims/beneﬁts due/outstanding are claims that became due, in the current quarter, after the eventualities that gave rise to theclaims—that is, the cost of claims is assigned to the relevant period. It should include claims that have been reported but not
yet settled, and claims that have been reported and settled but not yet paid at the end of the accounting period.
Claims due on extraordinary events are claims on catastrophic events including earthquakes, tsunami, ﬂoods, cyclones,
hurricanes, hail storms, bush ﬁres, and so forth, where these events are not periodic and not considered part of normal
business.
Ceding commission is paid by the reinsurer to reimburse the ceding company for its acquisition expenses and other costs
incurred to place the business with the reinsurer.
Proﬁt commission represents a predetermined percentage of the proﬁt realized by the reinsurer on the contracts ceded by the
primary insurance companies and the cedants’ share of such proﬁts.
Income earned refers to income from the investment of reserves held against unearned premiums and unpaid claims (i.e.,from investing policyholders’ funds) during the period.
Part B collects data on technical reserves due to nonresidents by type of insurance.
Insurance technical reserves include details of premiums paid and not yet earned and claims due but not yet paid. Theseamounts refer to reserves set aside on the balance sheet for future commitments that arise out of nonlife insurance contracts(including any related administration expenses, taxes, etc.).
a.

b.

Unearned premium reserves are that part of premiums written that apply to the unexpired part of the policy
period. Please provide the position of unearned premium reserves vis-à-vis nonresident policyholders at the
beginning and at the end of the accounting period.
Please provide the position of estimated reserves for claims incurred vis-à-vis nonresident policyholders but notreported and provisions set aside to meet the estimated costs of settling claims that have occurred up to the end of
the accounting period from policies currently in force and policies written in the past, after the deduction ofamounts already paid. This amount would include funds for unpaid claims, claims adjustment and handling530

Balance of Payments and International Investment Position Compilation Guidec.

d.

expenses known but not yet settled, and estimates for claims incurred but not yet notiﬁed (so called IBNR, Incurred
But Not Reported) by the balance sheet date.
Insurance technical reserves for life insurances comprise reserves for unearned premiums and against outstanding
insurance claims, and, in addition, actuarial reserves for life insurance and with-proﬁt insurance set aside forpayments of beneﬁts in future.
Additional information:
Changes in life insurance actuarial reserves vis-à-vis nonresident policyholders refers to the changes in the present
value of the future expected cash ﬂows of an insurance policy.

Part B collects information on payments for insurance services settled through other resident companies (if any).

EconomyEach question seeks information on the economy of transaction. Record the economy of residence of the nonresident
transactor.

Model Survey Forms

531

Form 12—International Insurance Transactions
Part A. International Insurance Transactions of Newland Insurance Companies(Report in thousands of Newland dollars)
Total
ATransactions by Economy (specify)
B

C

D

Nonlife Insurance Provided to Nonresidents
1. Premiums writtenof which to afﬁliates
1

Premiums earned during accounting period
Claims paid
Claims due during accounting period
Of which:
Claims due on extraordinary events
Reinsurance Accepted from Nonresident Insurers (not included above)
2. Premiums writtenof which to afﬁliates
Premiums earned
Of which:“Ceding commission” withhold by nonresident insurer(if applicable)
Claims paid
Claims due “Proﬁt commission” ceded to nonresident insurer
Of which:
Claims due on extraordinary events
Reinsurance Business Ceded to Nonresident Insurers (not included above)
3. Premiums paidof which to afﬁliates
Of which: “ceding commission” deducted prior to remitting
premiums (if applicable)
Claims received“Proﬁt commission” received from nonresident reinsurer(if not included in claim receipt)
Of which:
Claims due on extraordinary events
Life Insurance Provided to Nonresidents
4. Premiums written
Premiums earned by the end of accounting period2

Beneﬁts paid
Beneﬁts due by the end of accounting period
Investment income allocated to nonresident beneﬁciaries inthis period
Of which: allocated to individual actuarial reserves and added
directly to insurance technical reserves

1. Including premiums ceded to reinsurers, and excluding premiums assumed from other direct insurers.
2. Including premiums received for cross border beneﬁciaries of group insurances.

E

F

532

Balance of Payments and International Investment Position Compilation Guide

Part B. Technical Reserves Due to Nonresident Policyholders(Report in thousands of Newland dollars)

Net Changes Due Exchange rate andOpening Position to Transactions
Other Changes
A

B

Closing Position

Income Earnedon Investmentof Reserves

D

E

C

Insurance Provided to Nonresidents
Premiums
ClaimsReinsurance Accepted from Nonresident Insurers
Premiums
ClaimsLife Insurance Provided to Nonresidents
Premiums
ClaimsChanges in life insurance
reserves (actuarial reserves
and reserves for withproﬁt insurance)

Part C. Payments for Services Settled through Other Resident Companies
Does this company, or its subsidiaries in Newland:a.

provide services to nonresidents that are paid for on your behalf by anotherresident entity?

[

]

Yes

[

]

No

b.

receive services from nonresidents for which payment is received on yourbehalf by another resident entity?

[

]

Yes

[

]

No

If the answer to question 10 (a) or (b) is yes, please give the name and address of the resident company making or receiving
payments.

Part D. Revisions to Previously Reported Data
Please provide details of any signiﬁcant revisions to data previously reported incorrectly.

Model Survey Forms

Part E. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name of the company shown on page 1 is correct. / I have corrected the name and address on page 1.

[]

Details about the contact person have been entered on page 1.

[]

The information in parts A through C has been completed in accordance with the instructions.

[]

There are no signiﬁcant revisions to data for previous periods. / Details of signiﬁcant revisions to data for previous
periods have been included in part D.

[]

I have made a copy of this form for my records.

Name of person completing this form:
Signature:

533

534

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 13—International Pension Services
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information that will be used in compiling Newland’s balance of payments statistics
on international pension fund transactions. These statistics are published quarterly in Newland: Balance of Payments andInternational Investment Position, which is available from the Newland Ministry of Statistics.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: Some of the data requested may not be readily available from your records. In these cases, careful estimates will
sufﬁce.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXX, or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

535

Instructions for Completing Form 13—International Pension Services
Reporting Instructions
Form 13 should be completed for the company (and any subsidiaries in Newland) or government entity listed on page 1 of theform—unless different arrangements have been made with the Newland Ministry of Statistics.

Residents and Nonresidents
A nonresident is any individual ordinarily domiciled in an economy other than Newland.

Conversion to Newland Dollars
All values should be reported in thousands of Newland dollars. Foreign currencies should be converted to Newland dollars at
the midpoint of the buy and sell rates applicable on the date of the transaction.

Structure of Form 13
Form 13 collects quarterly information on selected international pension fund transactions and positions of this company or
government entity.
Part A collects quarterly and/or annual information associated with pension contributions and beneﬁts between the resident
pension fund and nonresident individuals. Information is also requested pertaining to contributions received from domestic
companies on behalf of their nonresident employees (e.g., short-term nonresident employees or employees working long-term
abroad on behalf of the company).
The requested information refers to the following:
Part A: Cross border transactions and positions regarding deﬁned contribution schemes
Actual contributions paid into individual accounts of nonresident beneﬁciaries include (domestic or nonresident) companies’(i.e., employers’) contributions paid on behalf of their employees, and contributions received directly from nonresident
employees/beneﬁciaries during the accounting period.
Beneﬁts paid refer to actual payments made in the accounting period to nonresident retirees.
Please provide the pension entitlements in deﬁned contribution schemes vis-à-vis nonresident beneﬁciaries at the beginningand at the end of the accounting period. Factors that trigger changes in pension entitlements in the current accounting period
are contributions receivable for nonresident employees/beneﬁciaries, beneﬁts payable to current retirees abroad, and any
holding gains and losses arising from the investment of the cumulated pension entitlements vis-à-vis nonresidents that
contribute to the current market value of the pension fund’s assets.
Income earned on cumulated pension entitlements attributable to nonresidents refers to actual income (i.e., interest,
dividends, rents) earned on the plan assets attributable to nonresident beneﬁciaries during the accounting period.
Part B: Cross border transactions and positions regarding deﬁned beneﬁt schemes
Actual contributions paid into individual accounts of nonresident beneﬁciaries include (domestic or nonresident) companies’(i.e., employers’) contributions paid on behalf of their employees, and contributions received directly from nonresident
employees/beneﬁciaries during the accounting period.
Beneﬁts paid refer to actual payments made in the accounting period to nonresident retirees.
Please provide the Projected Beneﬁt Obligations (PBO) attributable to nonresident employees/beneﬁciaries at the beginningand the end of the accounting period. Factors that trigger changes in pension entitlements vis-à-vis nonresident employees/
beneﬁciaries during the accounting period are service costs, interest costs, actuarial gains/losses, contributions to the deﬁned
beneﬁt scheme, and payments of beneﬁts.
Please provide information regarding the increase of the PBO in the accounting period due to service costs for nonresident
employees/beneﬁciaries—that is, the additional liability the nonresident employees/beneﬁciaries earned during the previous
accounting period.
Please provide information regarding the increase of the PBO in the accounting period due to interest costs for nonresident
employees/beneﬁciaries—that is, the additional liability created during the accounting period because nonresident employees
are X amount of time (e.g., one year) closer to retirement.
Please provide information regarding the increase/decrease of the PBO in the accounting period due to actuarial gains andlosses from the difference between expected estimates and actual values in nonresident employees’/beneﬁciaries’ pension
plan.

536

Balance of Payments and International Investment Position Compilation Guide

EconomyEach question seeks information on economy of transaction. Record the economy of residence of the nonresident transactor. If
this is not feasible, please provide aggregate information.

Other
Because form 12 seeks information on pension transactions between residents and nonresidents, you should not reporttransactions provided to nonresidents by nonresident branches and subsidiaries of your company. If distinguishing between
activities of the head ofﬁce and nonresident branches and subsidiaries of your company proves difﬁcult, or if you are uncertain
about whether a particular transaction should be included, please call (XXX) XXX-XXX for assistance.
Pension contributions made by companies on behalf of their employees are treated as if the contributions are made by theemployees themselves.

Model Survey Forms

537

Form 13—International Pension Services
Part A. Cross Border Transactions and Positions Regarding
Deﬁned Contribution Schemes of Newland Pension Funds(Report in thousands of Newland dollars)
Total
ATransactions by Economy (specify)
B

C

D

E

Pension Contributions Received from Nonresidents or from Resident Employers
Paying on Behalf of Their Nonresident Employees
1. Pension contributions received directly from nonresident
individuals
2. Pension contributions received from resident companies onbehalf of nonresident employees
3. Pension contributions received from nonresident companies
on behalf of nonresident employees
Pension Beneﬁts Paid to Nonresidents
4. Pension beneﬁts paid to nonresident retirees
Pension Entitlements/Liabilities in Deﬁned Contribution Schemes vis-à-vis Nonresident Beneﬁciaries
5. Opening position
6. Changes in the current accounting period due tocontributions receivable for nonresident employees/
beneﬁciaries
7. Changes in the current accounting period due to beneﬁts
payable to retirees abroad
8. Changes in the current accounting period due to holding
gains and losses earned from the investment of the
cumulated pension entitlements vis-à-vis nonresidents that
contribute to the current market value of the pension fund’s
assets
9. Closing position
10. Income earned from investment of cumulated pension fundentitlements attributable to nonresident employees/
beneﬁciaries due to actual interest, dividends, and rent
earned on the plan assets. Exclude holding gains and losses.

F

538

Balance of Payments and International Investment Position Compilation Guide

Part B. Cross Border Transactions and Positions regarding
Deﬁned Beneﬁt Schemes of Newland Pension Funds(Report in thousands of Newland dollars)
Total
ATransactions by Economy (specify)
B

C

D

E

F

Pension Contributions Received from Nonresidents or from Resident Employers
Paying on Behalf of Their Nonresident Employees
1. Pension contributions received directly from nonresident
individuals
2. Pension contributions received from resident companies onbehalf of nonresident employees
3. Pension contributions received from nonresident companies
on behalf of nonresident employees
Pension Beneﬁts Paid to Nonresidents
4. Pension beneﬁts paid to retirees
PBO (Projected Beneﬁt Obligations) in Deﬁned Beneﬁt Schemes vis-à-vis Nonresident Beneﬁciaries
5. Opening position
6. Changes in the current accounting period due tocontributions receivable for nonresident employees/
beneﬁciaries
6. Changes in the current accounting period due to beneﬁts
payable to retirees abroad
7. Increase of the PBO in the accounting period due to service
costs for nonresident employees/beneﬁciaries
8. Increase of the PBO in the accounting period due to interest
costs1
9. Please provide information regarding the increase/decrease of
the PBO in the accounting period due to actuarial gains andlosses from the difference between expected estimates andactual values in nonresident employees’/beneﬁciaries’
pension plan.
9. Closing position

Part C. Revisions to Previously Reported Data
Please provide details of any signiﬁcant revisions to data previously reported incorrectly.

1. In most widely followed ﬁnancial accounting rules, interest costs are calculated as interest rate multiplied by the PBO at the beginningof the accounting period. The interest rate may be an estimated discount rate reﬂecting the market rate currently used to settle beneﬁtsdue, or a rate based on the expected return on high-quality ﬁxed income securities (e.g., long-term government bonds).

Model Survey Forms

Part D. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name of the company shown on page 1 is correct. / I have corrected the name and address on page 1.

[]

Details about the contact person have been entered on page 1.

[]

The information in parts A through B has been completed in accordance with the instructions.

[]

There are no signiﬁcant revisions to data for previous periods. / Details of signiﬁcant revisions to data for previous
periods have been included in part C.

[]

I have made a copy of this form for my records.

Name of person completing this form:
Signature:

539

540

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 14—Foreign Embassies and International Institutions
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information that will be used in compiling Newland’s balance of payments statistics
on transactions associated with foreign embassies and international institutions located in Newland. These statistics are
published quarterly in Newland: Balance of Payments and International Investment Position, which is available from the Newland
Ministry of Statistics.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: Some of the data requested may not be readily available from your records. In these cases, careful estimates will
sufﬁce.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and international investment position
statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

Form 14—Foreign Embassies and International Institutions
Part A. Average Number of Staff Employed during the Quarter
1. Diplomatic, consular, and other foreign staff
2. Locally engaged staff

Part B. Operating and Capital Expenditure in Newland during the Quarter(Report, except for item 4(b), in thousands of Newland dollars)
3. Local staff(a) Wages and salaries paid to local staff (including payments in kind and before deduction ofincome taxes)(b) Employer’s contribution to social security
4. Diplomatic, consular, and other foreign staff(a) Wages and salaries paid to staff (including any expenses paid on behalf of staff directly by yourorganization to other organizations in Newland)(b) Of the amount recorded in (a), what percentage do you estimate was spent in Newland?
5. Other operating expenditure in Newland (including expenditure on ofﬁce supplies and equipment,
fuel and utilities—such as electricity and telephone services, rates, rents, ofﬁcial entertainment
expenses, and rental and operation of cars)
6. Capital expenditure in Newland(a) Purchase of land(b) Purchase of buildings and expenditure on construction and improvements to buildings(c) Other (please specify)
7. Other (please specify)

Part C. Capital Receipts in Newland during the Quarter(Report in thousands of Newland dollars)
8. (a) Sales of land(b) Sales of buildings(c) Other (please specify)

541

542

Balance of Payments and International Investment Position Compilation Guide

Part D. Grants and Other Assistance Provided to Newland during the Quarter(Report in thousands of Newland dollars)
9. Ofﬁcial cash grants(a) Recurrent expenditure(b) Project ﬁnancing(c) Other (specify)
10. Other assistance(a) Goods(b) Technical assistance(c) Debt forgiven(d) Education scholarships(e) Other services(f) Other (please specify)
11. Military assistance (please specify)
12. (To be completed by embassies, if information is available) Estimated value of grants and aid
provided to Newland by private institutions (such as foreign development assistance agencies,
humanitarian organizations, and churches) in your economy

Part E. Ofﬁcial Loans to Residents of Newland(Report in thousands of currency units)

Name of Borrower

Currency
of LoanPosition at
Beginningof Quarter

A

B

C

Drawings
during theQuarter

Repayments
during theQuarter

Other
Changes in
Position

Position at
End of theQuarterInterest
Paid
by theBorrower

D

E

F

G

H

Loans

Arrears

Please note: Repayments and interest due during the quarter and not paid should be shown under Loans as repayments andinterest and under Arrears as drawings. Debt forgiven to residents of Newland should be shown as a repayment (while debt written
off should be shown as an other change); debt forgiven should also be shown at 10(c).
Please supply details of any amounts reported in column FModel Survey Forms

543

Part E. Revisions to Previously Reported Data
Please provide details of any signiﬁcant revisions to data previously reported incorrectly.

Part F. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name and address shown on page 1 is correct. / I have corrected the name and address on page 1.

[]

Details about the contact person have been entered on page 1.

[]

Parts A through D of the form have been completed.

[]In part E, amounts in column G  amounts in columns C  D  E  F. / Amounts due but not paid for loan
repayments and interest have been reported as per instruction in the Arrears section of Part E. / Amounts in column F
have been explained.

[]

There are no signiﬁcant revisions to data for previous periods / Details of signiﬁcant revisions to data for previous
periods have been included in part E.

[]

I have made a copy of this form for my records.

Name of person completing this form:
Signature:544

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 15—Private Aid and Charitable Organizations
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information that will be used in compiling Newland’s balance of payments andinternational investments position statistics on transactions associated with private aid organizations and charitableorganizations. These statistics are published quarterly in Newland: Balance of Payments and International Investment Position,
which is available from the Newland Ministry of Statistics.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: Some of the data requested may not be readily available from your records. In these cases, careful estimates will
sufﬁce.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and IIP statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

545

Instructions for Completing Form 15—Private Aid and Charitable Organizations
Reporting Instructions
Form 15 should be completed for the organization listed on page 1 of the form—unless different arrangements have been madewith the Newland Ministry of Statistics.

Residents and Nonresidents
A nonresident is any individual, company, or other organization ordinarily domiciled in an economy other than Newland.
Newland branches and subsidiaries of nonresident companies are residents of Newland. Similarly, foreign branches andsubsidiaries of Newland companies are nonresidents. Foreign aid and charitable organizations associated with resident aid andcharitable organizations are nonresidents.

Conversion to Newland Dollars
All values should be reported in thousands of Newland dollars. Foreign currencies should be converted to Newland dollars at
the midpoint of the buy and sell rates applicable on the date of the transaction.

Structure of Form 15
Form 15 collects quarterly information on selected foreign activities and relationships of this organization and its related
resident operations.
Part A collects information on related foreign operations of this organization and the funding between this company and therelated foreign operations.
Part B collects information on the nonresidents who work for this organization in Newland and abroad.
Part C collects information on the foreign sources of income for this organization.
Part D collects information on the grants and disbursements made by this organization abroad.

EconomyEach question seeks information on the economy of transaction. Record the economy of residence of the nonresident
transactor.

546

Balance of Payments and International Investment Position Compilation Guide

Form 15—Private Aid and Charitable Organizations
Part A. Related Foreign Operations(Report in thousands of Newland dollars)
Does this organization have related operations abroad?

Yes

[

]

No

[

]

Yes

[

]

No

[

]

If the answer is no, go to part B.
Are the foreign operations long-term (more than one year) or expected tobe?

Transactions by EconomyABCa. Funding provided to related operations abroadb. Funding received from related operations abroad

Part B. Nonresidents Working for This Organization(Report in thousands of Newland dollars)Working in Newland (specify
economy of residence of workers)A
1. Number of foreign employees
2. Wages and salaries paid:a. In cash
b. Into accounts with resident banksc. Into accounts with foreign banksd. In kind (such as food, housing, and othernoncash beneﬁts)
3. Employer’s contribution to social security
schemes
4. Termination payments

B

C

Working abroad (specify
economy of residence of workers)
DE

F

Model Survey Forms

547

Part C. Investments Abroad(Reports in thousands of Newland dollars)

EconomyCurrency

A

B

Withdrawals of
Deposits and OtherNew Deposits, Loans
Investments and
Other
Position at
Position at and Other Investments
Repayments on Loans Changes in End of the
Extended during
Beginning
during the Period
Position
Quarterthe Periodof Period
C

D

E

F

G

IncomeReceived
during the
PeriodH

Nonresident Bank Accounts

Loans to Nonresidents

Other Foreign Investments

Please supply details of any amounts reported in column F

Part D. Grants and Other Assistance Provided during the Period, by Economy(Report in thousands of Newland dollars)
Economy A
1. Disbursements of aid(a) Cash(b) In kind(c) Other (specify)
2. Capital donations(a) Investment grants(b) Technical assistance(c) Other (please specify)

Economy B

Economy C

.....

548

Balance of Payments and International Investment Position Compilation Guide

Part E. Revisions to Previously Reported Data
Please provide details of any signiﬁcant revisions to data previously reported incorrectly.

Part F. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name and address shown on page 1 are correct. / I have corrected the name and address on page 1.

[]

Details about the contact person have been entered on page 1.

[]

Parts A through D of the form have been completed.

[]In part C, item 8, amounts in column G  amounts in columns C  D  E  F. / Amounts in column F have been
explained.

[]

There are no signiﬁcant revisions to data for previous periods / Details of signiﬁcant revisions to data for previous
periods have been included in part E.

[]

I have made a copy of this form for my records.

Name of person completing this form:
Signature:Model Survey Forms

LOGO

Pleasecorrect any
errors inthis label

549

Balance of Payments Survey
Form 16—Current Transfers, Grants, and Technical Assistance
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information that will be used in compiling Newland’s balance of payments statistics.
These statistics are published quarterly in Newland: Balance of Payments and International Investment Position, which is available
from the Newland Ministry of Statistics.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and IIP statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

550

Balance of Payments and International Investment Position Compilation Guide

Instructions for Completing Form 16—Current Transfers, Grants, and Technical Assistance
Reporting Instructions
Form 16 should be completed by government entities, nongovernmental organizations (NGO), international or local donor
entities respectively, as listed on page 1 of the form—unless different arrangements have been made with the Newland Ministryof Statistics.

Residents and Nonresidents
A nonresident is any individual, company, or other organization ordinarily domiciled in an economy other than Newland.
Newland local NGOs are residents of Newland. International donor agencies or international organizations are considerednonresidents of Newland.

Conversion to Newland Dollars
All values should be reported in thousands of Newland dollars. Please convert amounts in foreign currencies to Newland
dollars. All amounts for transactions should be converted at the midpoint of the buy and sell rates applicable on the date of thetransaction.

Structure and Scope of Form 16
Form 16 sets out information that should be reported quarterly/annually on transfers from nonresidents, in cash or in kind,received by the Newland government entities or by the private sector (including local companies and NGOs).
Furthermore, information is collected on foreign sponsored technical assistance in form of staffed missions sent to Newland for
project work. The total costs for such projects and all individual components are relevant for Newland’s balance of payments.
The cost components include administrative expenses incurred in the nonresident donor economy, costs incurred in Newland(e.g., for transport, administrative arrangements), and the salaries paid to short-term expatriates as well as long-term personnel
and local staff. A rough breakdown of the main technical assistance services provided to Newland (e.g., consulting, accounting,administration, management training, trade-related services) is appreciated.
If the reporter is the government entity, the report should include transfers in cash and in kind, and technical assistancereceived directly by the Government or provided to private sector under the Government’s monitoring.
If the reporter is a private entity (including NGOs), the report should include transfers in cash and in kind received directly by
the private entity.
In part A, you should report details on received transfers in cash and in kind. .
In part B, you should report details on received technical assistance in form of project work/staffed missions.
If you are unsure what should actually be reported, please call (XXX) XXX-XXXX.

Economy codes[An economy code list should be supplied by the compiler.]Model Survey Forms

551

Form 16—Current Transfers, Grants, and Technical AssistancePart A. Transfers in Cash and in Kind Received by Newland Resident Entities(Report in thousands of Newland dollars)

Transfers and Grants, Except Technical AssistanceTotal
for Year

Quarter 1

Quarter 2

Quarter 3

Quarter 4

A

B

C

D

E

F

1. Cash grants received by the government

1

Total transfers in form of cash grants received:2
a. for ﬁnancing current expenditures (e.g.,administrative expenses, salaries)
b. for acquiring ﬁxed assets (investment projects,
construction, capital formation)
2. Transfers in kind received by the government
Total transfers in kind received:
a. in-kind supply for current consumption (ofﬁce
supplies, medication, etc.)
b. in-kind supply for gross capital formation (includes
provision of computers, construction material,machinery)
3. Cash received by the private sector, including NGOs
Total transfers in form of cash grants received:a. for ﬁnancing current expenditures (e.g.,administrative expenses, salaries)
b. for acquiring ﬁxed assets (investment projects,
construction, capital formation)
4. Transfers in kind received by the private sector, including NGOs
Total transfers in kind received:
a. in-kind supply for current consumption (ofﬁce
supplies, medication, etc.)
b. in-kind supply for gross capital formation (includes
provision of computers, construction material,machinery)

1. If the reporter is a private entity, sections 1 and 2 should be skipped.
2. If in the same period grants are aimed at ﬁnancing both current expenditures and capital formation, please try to split the total
accordingly.

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Balance of Payments and International Investment Position Compilation Guide

Part B. Technical Assistance in Form of Project Work/Staffed Missions Received by Newland Resident Entities(Report in thousands of Newland dollars)

Technical AssistanceTotal
for Year

Quarter 1

Quarter 2

Quarter 3

Quarter 4

A

B

C

D

E

F

1. Technical assistance received by the government
Total cost of the project (incl. planning, costs incurredin the reporting economy, salaries paid)
Of whicha. Total costs incurred in the reporting economy (e.g.,
for transport in the reporting economy,administrative arrangements, business services)
Please provide rough breakdown of the incurred costs (please add rows if needed)•••b. Funds in cash directly transferred to the projects
accounts
c. Total salaries paid within the project:• salaries paid to local staff (provide estimates if
possible)• salaries paid to foreign staff resident in reporting
Newland economy (residing in Newland for morethan 1 year)• salaries paid to short-term experts (foreign experts
who will reside in the reporting economy less than
1 year)3
2. Nature of technical assistance
Please provide a rough (percentage) breakdown of themain technical assistance services provided to thereporting economy (e.g., consulting, teaching,administration, health management, trade-related
services).

Part C. Revisions to Previously Reported Data
Please provide details of any revisions to data previously reported incorrectly.

3. It sufﬁces to provide an estimate for the number and average duration of short-term staff working in the reporting economy.

Model Survey Forms

Part D. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name of the entity shown on page 1 is correct. / I have corrected the name and address on page 1.

[]

Details about the contact person have been entered on page 1.

[]

The information in parts A and B of the form has been completed in accordance with instructions.

[]

There are no signiﬁcant revisions to data for previous periods. / Details of signiﬁcant revisions to data for previous
periods have been included in part C.

[]

I have kept a copy of this form for my records.

Name of person completing this form:
Signature:

553

554

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 17—Financial Claims on and Liabilities to Nonresidents
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects quarterly information that will be used in compiling Newland’s balance of payments
and international investment position statistics. These statistics are published quarterly in Newland: Balance of Payments andInternational Investment Position, which is available from the Newland Ministry of Statistics.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: Some of the data requested may not be readily available from your records. In these cases, careful estimates will
sufﬁce.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

555

Instructions for Completing Form 17—Financial Claims on and Liabilities to Nonresidents
Reporting Instructions
Form 17 should be completed for the company (and any subsidiaries in Newland) listed on page 1 of the form—unlessdifferent arrangements have been made with the Newland Ministry of Statistics.

Residents and Nonresidents
A nonresident is any individual, company, or other organization ordinarily domiciled in an economy other than Newland.
Newland branches and subsidiaries of nonresident companies are residents of Newland. Similarly, foreign branches andsubsidiaries of Newland companies are nonresidents.
Your foreign direct investment enterprises are:•nonresident companies in which your company or its subsidiaries in Newland have voting equity of more than 50
percent; these are branches and subsidiaries, controlled by your company;•

nonresident companies in which your company or its Newland subsidiaries have voting equity of between 10 and 50
percent: these are associates, signiﬁcantly inﬂuenced by your company;•

nonresident subsidiaries or associates of the immediate direct investment enterprises of your company, in a chain ofcontrol or inﬂuence.

A nonresident direct investor is a nonresident entity (or group of related nonresidents) that owns voting equity of 10 percent
or more in this company. Nonresident companies that control or signiﬁcantly inﬂuence the immediate nonresident direct
investor are also considered nonresident direct investors in your company, in a chain of control or inﬂuence. Common
examples of nonresident direct investors are foreign head ofﬁces (for branches) and foreign parent companies (for subsidiaries).
An company may have more than one direct investor, and these direct investors may reside in different countries. An investor
need not have the largest shareholding to be considered a direct investor.
Fellow enterprises are nonresident companies that are under the control or inﬂuence of the same immediate or indirect
investor, but neither controls or inﬂuences the other (that is to say fellows have less than 10 percent (if any) equity ownershipin each other).
Other nonresidents are those that are not direct investors, direct investment enterprises, or fellow enterprises.
The deﬁnitions and treatments of direct investment are complex. If you are uncertain about the application of deﬁnitions,please call (XXX) XXX-XXXX or e-mail bop@stat.com for assistance.

Structure of Form 17
Form 17 collects quarterly information regarding the ﬁnancial claims of your company and its subsidiaries on nonresidents andthe liabilities of your company and its subsidiaries to nonresidents. The form requests data on positions (stocks), ﬁnancialtransactions, reconciliation items (other changes in stocks), income, and associated ﬁnancial fees and withholding taxes.
Form 17 consists of ten parts. Part A collects basic data on ﬁnancial assets; part B collects information on ﬁnancial assets
classiﬁed by economy of the nonresident debtor. Parts C and D collect similar data for liabilities. Part E collects information on
ﬁnancial fees and withholding taxes; part F collects information on the valuation of direct investment; and parts G and H
collect information on retained earnings and proﬁts. Part I requests details on signiﬁcant revisions to data for previous periods(if any), and part J includes questions for verifying the comprehensiveness of the completed data.

Financial Instruments
Equity and investment fund shares include stocks (shares) and other equity, such as investment in branches. Nonvoting
preferred stock (preference shares) should be recorded under long-term debt securities.
Long-term and short-term debt securities include bonds, debentures, commercial paper, promissory notes, certiﬁcates ofdeposit, and other tradable nonequity securities other than ﬁnancial derivatives. Long-term debt securities include instruments
issued with original maturities of more than 12 months. Instruments with original maturities of 12 or fewer months areincluded in short-term debt securities. In parts A and C, long-term and short-term debt securities should be included in therespective category.
Financial derivatives (other than reserves) and employee stock options include all tradable ﬁnancial derivatives or secondary
market instruments such as options, futures, and forward contracts.
Loans include loans and ﬁnancial leases. Long-term loans are those with original maturities of more than 12 months.

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Balance of Payments and International Investment Position Compilation Guide

Deposits include checking accounts, savings accounts, and other time deposits.
Trade credit and advances are commercial credits extended by exporters to importers and prepayments made by importers toexporters.
Other includes all other ﬁnancial assets and liabilities, not included in any of the speciﬁed instruments.

Positions, Transactions, Other Changes, and Income
Opening position refers to the value of the claims (part A and B) and liabilities (part C and D) of your company and its
subsidiaries at the beginning of the quarter. The opening positions you report should agree with the closing positions youreported for the previous quarter. If this is not the case, details should be given in part I. The closing position refers to thevalue of the claims and liabilities of your company and its subsidiaries at the end of the quarter.
Financial transactions are transactions relating to the acquisition or disposal of your company’s ﬁnancial claims on, or
liabilities to, nonresidents. Purchases of stock made by your company (and its subsidiaries) in nonresident companies,
purchases of your company’s shares by nonresidents, issuances and purchases of long- and short-term debt securities, increased
deposits in bank accounts, and drawdowns of loans are examples of transactions that increase assets or liabilities. Sales of stockby your company (and its subsidiaries) in nonresident companies, sales of your company’s shares by nonresidents, redemptions
and sales of long- and short-term debt securities, withdrawals from bank accounts, and repayments of loans are examples oftransactions that decrease assets or liabilities.
Income refers to: (1) income receivable by your company from its ownership of claims on nonresidents; and (2) income
payable by your company as a result of its liabilities to nonresidents. Common forms of income are dividends, distributions of
proﬁt, and interest.
Dividends and distributions of proﬁt refer to income received from the ownership of stock (shares) or equivalent equity interestin companies. These amounts should be recorded on the basis of dividend (or remittance) payments dates. Interest relates toincome earned from the ownership of ﬁnancial assets other than equity assets. Income includes discounts. A discount is thedifference between the value of a ﬁnancial instrument when it issued and its ﬁnal redemption value. Interest should berecorded on an accrual basis. The difference between income accrued and income payable should be recorded as a ﬁnancialtransaction in the instrument to which the interest relates.
For direct investments (see deﬁnition provided previously), undistributed income (reinvested earnings) should be reported inparts G and H. (See the subsequent instruction for completing these parts.)

Valuation
All values should be reported in thousands of Newland dollars. Please convert amounts expressed in foreign currencies to
Newland dollars.
Financial transactions and income denominated in foreign currencies should be converted to Newland dollars by using the
midpoint of the appropriate buy and sell rates applicable on the date of the transaction. Financial transactions and income
should be recorded on a gross basis—that is, before the deduction of commissions on receipts (or addition of commissions on
payments), brokerage fees, and withholding taxes, which are to be recorded in part E if paid to or received from a nonresident.
Positions denominated in foreign currencies should be converted to Newland dollars at the midpoint of the appropriate buy
and sell exchange rates applicable on the reference dates.
All valuations should be made at market values. For valuing equity positions at market value, one of the following methods
may be used:• the midpoint of the stock market buy and sell rates on the reference date
• a recent transaction value• own funds at book value• directors’ value• net asset value
Net asset value equals total assets, including intangibles, less liabilities and the paid-up value of nonvoting stock. Assets andliabilities should be recorded at current, rather than historical, values. Own funds at book value (OFBV) involves valuing acompany using book values that contain major attributes of International Accounting Standards (inclusion of cumulative
reinvested earnings; revaluation of most ﬁnancial instruments in current period prices; and inclusion of cumulative
depreciation of plant and equipment, including write-offs of worthless assets).

Model Survey Forms

557

Relationships between Data Items
Information reported in parts A and C should reﬂect the following relationships:
closing position opening position  change in positionchange in position

 net ﬁnancial transactions  other changes

net ﬁnancial transactions  increases (transactions relating to the acquisition of assets or liabilities)  decreases(transactions relating to the disposal of assets or liabilities)
other changes

 valuation changes (caused by exchange rate changes, and market price changes)  residuals(caused by reclassiﬁcation of items, write-downs, and arithmetical errors)

Amounts reported in parts B and D should be consistent with relevant amounts in parts A and C, respectively.

Liabilities Held by Resident Nominees and Other Financial Intermediaries on Behalf of Nonresidents
Certain liabilities (such as securities issued in Newland) of your company may be held by nonresidents through ﬁnancial
intermediaries in Newland, and the details of these liabilities may not be known to you. Information on these liabilities iscollected by the Ministry of Statistics from the ﬁnancial intermediaries.

Treatment of Transactions with Related Banks
All ﬁnancial transactions involving debt or ﬁnancial derivatives and positions with related banks should be included as claims
on, or liabilities to, other nonresidents rather than as claims on, or liabilities to, direct investors or direct investment
enterprises.

Treatment of Hedges
Financial instruments that are hedged by the use of derivatives (such as currency swaps) should be recorded according to theterms of the contract and without regard to the hedge. The details of the hedge, if it is with a nonresident, should be reported
under the ﬁnancial derivative instrument. For example, for a long-term loan that is the subject of a swap, information on theunhedged position, principal repayments, and interest should be recorded in the appropriate columns for long-term loans. The
market value of the swap and the actual payments on the swap agreement (excluding underlying instrument) should berecorded under the appropriate position and transaction columns in the row for ﬁnancial derivatives (other than reserves) andemployee stock options.

Economy Classiﬁcation
Economy refers to the economy of residence of the creditor or debtor. In parts B and C, if the opening and closing positions
for particular countries are less than ND1 million, the amounts relating to these countries may be consolidated and attributed
to the largest economy.
Transactions with international institutions, such as the Asian Development Bank, should be recorded as INT.

Retained Earnings (Parts G and H)
Parts G and H seek information on retained earnings. Part G should be completed for the foreign direct investment enterprisesof your company (and its subsidiaries), and part H should be completed in respect of your company. Part H should becompleted only if your company has nonresident direct investors.
Operating proﬁt is proﬁt from the operations of companies. When operating proﬁt is calculated, depreciation should bedetermined on the basis of replacement cost. Exchange rate gains and losses, special tax provisions (such as accelerated
depreciation), and any extraordinary items should be excluded from the calculation.
Net income received equals interest, dividends, and any undistributed proﬁts from the ownership of subsidiaries and associates
attributable to the company(s) concerned, less interest payable by the company(s).
Taxes on proﬁts should be recorded when due and without penalty.

558

Balance of Payments and International Investment Position Compilation Guide

Form 17—Financial Claims on and Liabilities to Nonresidents
Part A. Claims on Nonresidents(Report in thousands of Newland dollars)
Change in Position
Transactions
Opening
PositionA

Increases Decreases
B

Other Changes
Net

Exchange
Rate

Other

D

E

F

C

Closing
Position Income
G

H

Claims on Direct Investment Enterprises
1. Equity and investment fund shares
2. Debt instruments (a)(b)
Claims on Direct Investors

3. Equity and investment fund shares
4. Debt instruments (a)(b)
Claims on Fellow Enterprises

5. Equity and investment fund shares
6. Debt instruments (a)(b)
Claims on Other Nonresidents

7. Equity and investment fund shares
8. Long-term debt securities
9. Short-term debt securities
10. Long-term loans
11. Short-term loans
12. Deposits
13. Financial derivatives (other thanreserves) and employee stock
options////////

14. Trade credit and advances
15. Other
16. Total claims(a) For banks, debt claims on afﬁliated ﬁnancial institutions should be reported in the appropriate item in Claims on Other
Nonresidents. For nonbanks’ claims on nonresidents and banks’ claims on nonresident nonbanks, include long- and short-term
debt securities, notes, ﬁnancial derivatives (other than reserves) and employee stock options, loans, trade credit and advances,and other claims.
(b) Excludes ﬁnancial derivatives.

Model Survey Forms

559

Part B. Claims on Nonresidents by Economy of Nonresident Debtor and by Currency(Report in thousands of Newland dollars)
Closing Position

Net Transactions
Equityandinvestment
EconomyfundFinancialof Debtor Currency
sharesderivatives(specify)
Code
A

B

Other
C

Equityandinvestment
fund
Financialsharesderivatives
DE

IncomeOther
F

On
equity andinvestment
On
fund
ﬁnancial
sharesderivatives
G

H
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)

Total
claims(a) Income on ﬁnancial derivatives should be reported as zero (interest does not accrue on such instruments).

(a)

On
other
I

560

Balance of Payments and International Investment Position Compilation Guide

Part C. Liabilities to Nonresidents(Report in thousands of Newland dollars)
Change in Position
Transactions
Opening
PositionA

Increases Decreases
B

Other Changes
Net

Exchange
Rate

Other

D

E

F

C

Closing
Position Income
G

H

Liabilities to Direct Investors
1. Equity and investment fund shares
2. Debt instruments (a)(b)
Liabilities to Direct Investment Enterprises

3. Equity and investment fund shares
4. Debt instruments (a)(b)
Liabilities to Fellow Enterprises

5. Equity and investment fund shares
6. Debt instruments (a)Liabilities to Other Nonresidents
7. Equity and investment fund shares
8. Long-term debt securities
9. Short-term debt securities
10. Long-term loans
11. Short-term loans
12. Deposits
13. Financial derivatives (other thanreserves) and employee stock
options////////

14. Trade credit and advances
15. Other
16. Total liabilities(a) For banks, debt liabilities on afﬁliated ﬁnancial institutions should be reported in the appropriate item in Liabilities to Other
Nonresidents. For nonbanks’ liabilities to nonresidents and banks’ liabilities to nonresident nonbanks, include long- and shortterm debt securities, notes, ﬁnancial derivatives, loans, trade credits, and other claims.
(b) Excludes ﬁnancial derivatives.

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561

Part D. Liabilities to Nonresidents by Economy of Nonresident Creditor and by Currency(Report in thousands of Newland dollars)
Closing Position

Net Transactions
Equityandinvestment
EconomyfundFinancialof Debtor Currency
sharesderivatives(specify)
Code
A

B

Other
C

Equityandinvestment
fund
Financialsharesderivatives
DE

IncomeOther

Onequity andinvestment
On
fund
ﬁnancial
sharesderivatives

F

G

H

On
other
I

(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
Total
claims(a)(a) Income on ﬁnancial derivatives should be reported as zero (interest does not accrue on such instruments).

Part E. Fees for Financial Services and Withholding Taxes(Report in thousands of Newland dollars)
Economy of Nonresident Party (specify)
Total

Economy 1

Economy 2

Economy 3

Fees for Financial Services
Receivable from nonresidents
Payable to nonresidents
Withholding Taxes
Paid by your company, on
behalf of nonresidents, to the
Newland government
Paid by nonresidents, onbehalf of your company, toforeign governments

Economy 4

Economy 5

Economy 6

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Balance of Payments and International Investment Position Compilation Guide

Part F. Valuation of Direct Investment Equity
Please record the method of valuation (e.g., stock market valuation of shares, recent transactions value, own funds at bookvalue, directors’ valuations, net asset value based on current values, net asset value based on book values) used in part A, item
1G and part C, item 1G.
Part A item 1G
Part C item 1G
What were the corresponding book values on your own books?
Part A item 1G

ND’000Part C item 1G

ND’000Part G. Retained Earnings of immediate Foreign Direct Investment Enterprises(For all items except 5, report in thousands of Newland dollars)
Economy of Residence of Direct Investment Enterprises (specify)
Economy 1

Economy 2

Economy 3

Economy 4

Economy 5

1. Operating proﬁt plus net income during quarter
2. Taxes (on proﬁts) due for payment during quarter
3. Dividends paid or proﬁts remitted during quarter
4. Retained earnings (1  2  3)
5. Percentage equity owned by reporting company at
end of period (%)
6. Retained earnings attributable to reporting company(4 * 5 / 100)

Part H. Retained Earnings of Reporting Company(For all items except 5, report in thousands of Newland dollars)This section should be completed only by companies having direct investors.

Total for All
Shareholders
1. Operating proﬁt plus net income during quarter
2. Taxes (on proﬁts) due for payment during quarter
3. Dividends paid or proﬁts remitted during quarter
4. Retained earnings (1  2  3)
5. Percentage of equity owned by immediate direct investors at
end of period (%)////////

6. Retained earnings attributable to direct investors (4 * 5 / 100)////////

Foreign Direct Investors(specify economy)
Economy 1

Economy 2

Economy 3

Model Survey Forms

563

Part I. Revisions to Previously Reported Data
Please provide details of any signiﬁcant revisions to data previously reported incorrectly.

Part J. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name of the company shown on page 1 is correct. / I have corrected the name and address on page 1.

[]

Details about the contact person have been entered on page 1.

[]

The questions answered cover all the external assets and liabilities of the company named on page 1 and its subsidiaries
in Newland. The following activities have not been included:[]

In parts A and C, row 14 has been completed and for all completed rows, the change in position (columns G  A)
equals net transactions (column D  B  C) plus other changes (columns E  F).

[]

In part B, the total claims row has been completed, and the information reported corresponds with information
reported in part A. For example, the total of column A in part B should equal the sum of items 1D, 3D, and 5D inpart A.

[]In part D, the total liabilities row has been completed, and the information reported corresponds with information
reported in part C. For example, the total of column A in part D should equal the sum of items 1D, 3D, and 5D inpart C.

[]The economy columns information in part E sums to the total column.

[]

The information in part F has been completed.

[]

Parts G and H have been completed in accordance with the instructions.

[]

There are no signiﬁcant revisions to data for previous periods. / Details of signiﬁcant revisions to data for previous
periods have been included in part I.

[]

I have made a copy of this form for my records.

Name of person completing this form:
Signature:

564

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 18—Foreign Direct Investment
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information to provide reliable and up-to-date information on direct investment in
Newland, which will be used in compiling Newland’s balance of payments and international investment position (IIP) statistics
on Newland’s external assets and liabilities. These statistics are published quarterly in Newland: Balance of Payments andInternational Investment Position, which is available from the Newland Ministry of Statistics.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and international investment position
statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

565

Instructions for Completing Form 18—Foreign Direct Investment
Reporting Instructions
Form 18 should be completed for the company listed on page 1 of the form—unless different arrangements have been madewith the Newland Ministry of Statistics. Please take time to review the survey questionnaire before completing it. Do nothesitate to call (XXX) XXX-XXXX if you have any difﬁculty understanding or completing the survey.

Conversion to Newland Dollars
All values should be reported in thousands of Newland dollars. Please convert amounts in foreign currencies to Newland
dollars. All amounts for ﬁnancial transactions, dividends, interests, and withholding taxes should be converted at the midpointof the buy and sell rates applicable on the date of the transaction; all amounts for opening and closing positions should bereported at the midpoint of the buy and sell rates applicable on the reference dates.

Structure and Scope
Form 18 collects information about Newland’s direct investment that should be reported quarterly/annually including following
issues:Part A: General information on your company
Part B: Investments between your company and your foreign direct investors (i.e., foreign companies that own 10 percent
or more of the voting equity in your company) and investments with nonresident fellow enterprises (i.e., selected
investments with foreign companies that have your same direct investors but less than 10 percent equity ownership (if any)in each other ).
Part C: Investment between your company and your foreign direct investment enterprises (i.e., nonresident companies inwhich your company directly or indirectly holds 10 percent or more of the voting equity) and investment with nonresident
fellow enterprises (i.e., investment with foreign companies that are owned by your same owner).
Part D: Income, ﬁnancial transactions, and assets and liabilities positions between your company and your foreign direct
investor(s) (i.e., the foreign company(s) that owns (own) 10 percent or more of the voting equity in your company) andwith nonresident fellow enterprises (i.e., investments with foreign companies that have the same owner as your company).
Part E: Income, ﬁnancial transactions, and assets and liabilities positions between your company and foreign company(s)abroad in which your company owns 10 percent or more of the voting equity, and with nonresident fellow enterprises (i.e.,
investments with foreign companies that have the same owner as your company).
Part F: Information on positions in ﬁnancial assets and liabilities between your company and nonresidents (International
Investment Positions)
If audited data are not available, unaudited estimates are acceptable.

Deﬁnitions of entities in the questionnaire:
Direct investor:
A direct investor is a company, resident in an economy that directly or indirectly holds 10 percent or more of the equity in anonresident direct investment enterprise.
Units are viewed as residents of Newland if they have resided (or intend to reside) for a year or more in Newland. A direct
investor’s local enterprise group includes the resident company that directly owns a foreign direct investment enterprise (seebelow for deﬁnition), the resident companies that directly or indirectly control this company, and the resident companies thatany of these companies directly or indirectly control in their own economy.
Direct investment enterprise:
A direct investment enterprise is a company, resident in one economy, in which a company, resident in another economy,holds 10 percent or more of the equity, either directly or indirectly.
Units are viewed as residents of Newland if they have resided (or intend to reside) for a year or more in Newland. A direct
investment enterprise’s local enterprise group includes the resident company that is at least 10 percent directly owned by aforeign direct investor (see above for deﬁnition), and the resident companies that it directly or indirectly controls in its own
economy.
All of these companies should be included in direct investment whether you report data for them on a single report for the
local enterprise group or you report data on separate reports.

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Balance of Payments and International Investment Position Compilation Guide

Units are viewed as nonresidents of Newland if they have resided (or intend to reside) abroad for a year or more. If you are
not sure of the residence of a company, please contact us so that we may determine its status.
A fellow enterprise is a nonresident that has a common (immediate or indirect) parent with your company but neither yourcompany nor the fellow enterprises hold 10 percent or more of the equity in the other.
An unrelated company is one that does not meet the above criteria.

Valuation of data reported in Parts B–E:
Please provide all data in thousands of Newland dollars and according to the following guidelines:

Positions
Currency:
Report all data in thousands of Newland dollars. If the currency(ies) of denomination of any of your company’s foreign assets
and liabilities is (are) not in Newland dollars, please use the end-of-year foreign currency exchange rates to convert to Newland
dollars.

Owners’ equity:
Please report owners’ equity (i.e., net worth) as the claims on your foreign direct investment enterprise’s, or fellow enterprise’s,
net worth consisting of:(1) paid-up capital (excluding any shares on issue that the company holds in itself and including share premium accounts) or
equivalent for unincorporated companies(2) all types of reserves identiﬁed as equity in the company’s balance sheet (including investment grants when accounting
guidelines consider them a component of owners’ equity)(3) cumulated retained earnings (which may be negative)(4) holding gains and losses
Similarly, please include the above three items in calculating the value of reverse equity investment—that is, of your direct
investment enterprise’s, or of your fellow enterprise’s, claim on your own net worth.
In determining your net worth (and therefore in determining your foreign direct investor’s or fellow company’s claims on yournet worth), most ﬁnancial assets should be reﬂected at an estimate of their current fair values; cumulative reinvested earnings
should be included; and depreciation on items of property, plant, and equipment should be deducted. If your normal
bookkeeping or accounting rules do not value these items as described above, please adjust their values before calculating theamounts to enter in Sections B–E.

Debt instruments:
Loans, trade credit and other accounts payable
Please report on a nominal value basis (after allowing for any changes that may result from changes in exchange rates).
Nominal value represents the value of funds advanced less any repayments plus any outstanding accrued interest.

Debt securities
Please report the market value of the securities, as of the balance sheet date.

Transactions
Transactions should be recorded at the value at the time of the transaction. If the transaction is in a foreign currency, please
use the rate of exchange on the day of the transaction, or a weighted average rate for the reporting period if transactions (suchas interest receipts and payments) occur continually over the period.
For interest, please report the total value of interest (payable and receivable) that accrued during 20XX, even if some payment
were made during the year.
For dividends, please record the total value of dividends received and receivable (and paid and payable) during 20XX.

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567

Form 18—Foreign Direct Investment
Part A. General Information on Your Company
1.1. Name of your company
1.2. Name/position of person completing form

1.3. Name/position of alternative contact person

1.4. Postal address
1.5. Telephone number

1.6. Fax number

1.8. If the questionnaire is being completed for the company
by an agent (such as its accounting ﬁrm), please provide thename, postal and e-mail addresses, and phone number.

1.7. E-mail address
1.9. The information provided on this form is correct.
Signed (senior company ofﬁcer or company agent)Date

1.10. If your company is part of a local group (see deﬁnition in Section B), please list the other companies in the group that
operate in Newland and indicate if the data in Section C include these companies (please tick the columns below accordingly).
Name of other resident companies in your local enterprise group(Please indicate if data for these companies are included in section C)

Not included

Included

1.11. Indicate the principal area of activity of the reporting company or local enterprise group, based on turnover (tick one):A. Agriculture, forestry, and ﬁshingK2. Finance and insurance, except ﬁnancial intermediary

B. Mining and quarrying

L. Real estate activities

C. Manufacturing

M. Professional, scientiﬁc, and technical

D. Electricity, gas, steam and air-conditioning supply

N. Administrative and support services

E. Water supply, sewerage, waste management andremediation activities

O. Public administration

F. Construction

P. Education

G. Wholesale and retail

Q. Human health and social work

H. Transport and storage

R. Arts, entertainment, and recreationI.

Accommodation and food service

S. Other services activities

J.

Information and communication

T. Activities of households as employers of domestic
personnel; undifferentiated goods and services–
producing activities of private households for own use

K1. Financial intermediary

U. Activities of extraterritorial organizations and bodies

568

Balance of Payments and International Investment Position Compilation Guide

Part B. Asset and liability positions of the direct investment enterprise with its foreign direct investor(Section B.1), and of the resident fellow enterprise with its fellow enterprises abroad (Section B.2),
by economy of the foreign units with whom the accounts are held.
Please report in thousands of Newland dollars, using the valuation guidelines described above, the opening balances, anytransactions during the period, any other changes on the balance sheet that are not the result of transactions, and the closingbalances, between your company and your direct investment enterprise(s) and fellow enterprises abroad. If none, please report“N/A,” as appropriate.

Section B.1. Direct investment enterprise’s positions with its foreign direct investors (immediate and indirect)
Positions as of(insert date to which the information refers)
Equity and debt claims on foreign direct
investor (so-called “reverse investment”)

Equity and debt liabilities
to foreign direct investor
Economy oflocation of foreign
direct investor

Equity owned by direct
investor—report the valueof your direct investor’s
claims on your net worth

Debt liabilities todirect investor

Debt claims on
direct investor

Equity claims on direct
investor—report yourclaims on your direct
investor’s net worth

If your company has no such assets or liabilities, please indicate N/A and continue.

Section B.2. Your company’s positions with fellow enterprises abroad
If your company has no positions with nonresident fellow enterprises, please indicate N/A and do not complete the section
below.
If you are a fellow enterprise, please indicate below the residence of the ultimate controlling parent of your company—that is,the company at the top of the control chain:
Residence of ultimate controlling parent of your company (please tick one case and see note below)
Resident of your own economy
Nonresident of your own economy
Do not knowNote:
If you are a resident fellow enterprise, and your ultimate controlling parent is a nonresident of your own economy, asset andliability positions with fellow enterprises abroad are regarded as inward direct investment. If your ultimate controlling parent is
a resident of your own economy, asset and liability positions with fellow enterprises abroad are regarded as outward direct
investment. If it is unknown whether your ultimate controlling parent is a resident or a nonresident of your own economy,
then asset positions with fellow enterprises abroad are regarded as outward direct investment, and liability positions with fellow
enterprises abroad are regarded as inward direct investment. For convenience, all positions with fellow enterprises abroad may
be reported either in part B (inward direct investment), or in part C (outward direct investment), but please do not reportsuch positions in both part B and C.
Positions as of(insert date to which the information refers)

Model Survey Forms

Equity and debt claims on
fellow enterprise abroad

Equity and debt liabilities
to fellow enterprise abroad

Economy oflocation of fellow
enterprise abroad

Equity owned by fellow
enterprise abroad—reportthe value of your fellow
enterprise abroad claims on
your company’s net worth

Debt liabilities tofellow enterpriseabroad569

Debt claims on
fellow enterpriseabroadEquity claims on fellow
enterprise abroad—reportyour company’s claims on
the net worth of yourfellow enterprise abroad

Part C. Asset and liability positions of the direct investor with its foreign direct investment
enterprises abroad by economy of the foreign units with whom the accounts are held
Please report in thousands of Newland dollars, using the valuation guidelines described above, the opening balances, anytransactions during the period, any other changes on the balance sheet that are not the result of transactions, and the closingbalances, between your company and your direct investment enterprise(s) and fellow enterprises abroad. If none, please report“N/A,” as appropriate.
Direct investor’s positions with its direct investment enterprises abroad (immediate and indirect)
Positions as of(insert date to which the information refers)
Liabilities of direct investors(so-called “reverse investment”)

Equity and debt claims of direct investor

Economy oflocation of direct
investment
enterprise

Equity claims (assets) on
direct investment enterprise(for directly owned direct
investment enterprisesonly)—report yourcompany’s claims on the
Debt claims (assets)
net worth of your direct
on direct investment
investment enterpriseenterprise

Debt liabilities todirect investment
enterprise

If your company has no such assets or liabilities, please indicate N/A and continue.

Equity liabilities to direct
investment enterprise570

Balance of Payments and International Investment Position Compilation Guide

Part D. Inward Direct Investment Positions, Transactions, and Other Changes
Section D.1. Equity and Debt Outstanding Balances, Financial Transactions, and Other Changes in Assets andLiabilities between Your Company and Your Direct Investor(s) and Fellow Enterprise(s) Abroad (see Note at
Part B2)
Please report in thousands of Newland dollars, using the valuation guidelines described above, the opening balances, anytransactions during the period, any other changes on the balance sheet that are not the result of transactions, and the closingbalances, between your company and your direct investment enterprise(s) and fellow enterprises abroad. If none, please report“N/A,” as appropriate.
EquityCounterpart
economy (list Opening
separately)balance(1)

Equity claims of your company
on related companies abroad

Equity liabilities of your company
to related companies abroad

Financial transactions Other
during periodchangesduringIncreases Decreases period
(4)
(2)
(3)

Financial transactions Other
during periodchangesduringOpeningbalance Increases Decreases period
(9)
(6)
(7)
(8)

Closingbalance(5)

Closingbalance(10)Direct investor(s)Fellow company(/ies)

Percent of your company’s equity held by your direct investor(s)Economy of direct investor

Percentage held at the beginning of period(see Section B)(11)

Percentage held at the end of the period(see Section B)(12)

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571

Debt
Short- and long-term debt claimsof your company on related companies abroad
Counterpart
economy (listseparately)

Openingbalance(13)

Financialtransactions(net) during
period(14)

Otherchangesduringperiod(15)

Closingbalance(16)

Short- and long-term debt liabilitiesof your company to related companies abroad

Openingbalance(17)

Financialtransactions(net) during
period(18)

Otherchangesduringperiod(19)

Closingbalance(20)

Direct investor(s)Fellow enterprise(s)Section D.2. Income Payable and Receivable between Your Company and Your Direct Investor(s) and Fellow
Enterprise(s) Abroad and Withholding Taxes Payable
Please report in thousands of Newland dollars, using the valuation guidelines described in Section B. If none, please report“N/A,” as appropriate.
Gross
Gross
dividends,
dividends,
or grossor gross
distribution
distribution
Interest
Interestof earnings,
of earnings,
receipts frompayments
payable toreceivable
relatedWithholding
to related
Withholding
relatedWithholding from related Withholding
nonresident taxes on (21), nonresident taxes on (23), nonresident taxes on (25), nonresident taxes on (27),Counterpart
company
if any, during
company,
if any, during
company,
if any, during
company,
if any, during
economyduring period
periodduring period
periodduring period
periodduring period
period(list separately)
(21)
(22)
(23)
(24)
(25)
(26)
(27)
(28)

Direct investor(s)Fellow enterprise(s)Net income, realized and unrealized holding gains (losses) of your company, and other changes in equity investment
position“Other changes” during period
Please specify the amount of changes in equity (items 4 and 9) intercompany debt assets and liabilities (item 15 and 19) in
Section D.1 above that did not arise from transactions. A transaction is an interaction between two units that occurs by mutual
agreement. The following are common examples of changes in balances arising from valuation adjustments: changes in foreign
currency exchange rates; and write-ups, write-downs, or write-offs of assets (ﬁnancial and nonﬁnancial) and debt liabilities.

572

Balance of Payments and International Investment Position Compilation Guide

Realized and unrealized holding gains (losses): Item 30
Please specify realized and unrealized holding gains (losses) included in net income resulting from the sale or disposition ofﬁnancial and nonﬁnancial assets (such as securities, land, other property, plant, equipment); goodwill impairment; write-downs
or write-offs or assets or liabilities; extraordinary, unusual, or infrequently occurring items that are material, such as losses
from disasters or accidental damage; and gains and losses resulting from remeasuring foreign currency-denominated assets andliabilities due to changes in foreign exchange rates during the period.
Other changes in equity investment position: Item 31
Please specify the amount of the change in the equity investment position in the resident direct investment enterprise or
resident fellow enterprise (item 4) or investment in the nonresident direct investor or nonresident fellow company (item 9)that did not arise from transactions and is not reported on item 30 (certain realized and unrealized gains (losses) of resident
company excluded from net income and taken directly to the owners’ equity account). A common example of a change in equity
investment arising from a valuation adjustment that is not reported in item 30 is from the acquisition, or sale, of a direct
investment company for an amount that exceeds (or is less than) the value of the direct investment company according to thebooks of the direct investment company. Report the difference between the transaction value and the carrying amount in theequity investment position in this item.

Net income during period(29)

Certain realized and unrealized holding
gains (losses) included in net income
during period(30)

Other changes in equity investment
position during the period(31)Part E. Outward Direct Investment Positions, Transactions, and Other Changes
Please report for the 12-month period ending 20XX in thousands of Newland dollars, using the valuation guidelines describedabove, the opening balances, any transactions during the period, any other changes on the balance sheet that are not the resultof transactions, and the closing balances, between your company and your direct investment enterprise(s) and fellow
enterprises abroad (see note in Part B2). If none, please report “N/A,” as appropriate.

Section E.1. Equity and Debt Outstanding Balances, Financial Transactions, and Other Changes in Assets andLiabilities between Your Company and Your Direct Investment Enterprise(s) and Fellow Enterprise(s) Abroad
EquityCounterpart
economy (list Opening
separately)balance(1)

Equity claims of your company
on related companies abroad

Equity liabilities of your company
to related companies abroad

Financial transactions Other
during periodchangesduringIncreases Decreases period
(4)
(2)
(3)

Financial transactions Other
during periodchangesduringOpeningbalance Increases Decreases period
(9)
(6)
(7)
(8)

Closingbalance(5)Direct investment enterprise(s)Fellow enterprise(s)Closingbalance(10)Model Survey Forms

573

Percent of equity your company holds in your direct investment enterprise(s) and your fellow enterprise(s) abroad
Economy of direct investment
enterprise

Percentage held at the beginning of period(see Section B)(11)

Percentage held at the end of the period(see Section B)(12)

Economy of fellow enterprise
Debt
Short and long-term debt claimsof your company on related companies abroad
Counterpart
economy (listseparately)

Openingbalance(13)

Financialtransactions(net) during
period(14)

Otherchanges(15)

Closingbalance(16)

Short and long-term debt liabilitiesof your company to related companies abroad

Openingbalance(17)

Financialtransactions
(net)
(18)

Other
Changesduringperiod(19)

Closingbalance(20)

Direct investment enterprise(s)Fellow enterprise(s)Section E.2. Income Payable and Receivable between Your Company and Your Direct Investment
Enterprise(s) and Fellow Enterprise(s) Abroad and Withholding Taxes Payable
Please report in thousands of Newland dollars, using the valuation guidelines described in Section B. If none, please report“N/A,” as appropriate.
Gross
Gross
dividends,
dividends,
or grossor gross
distribution
distribution
Interest
Interestof earnings,
of earnings
receipts frompayments
receivablepayablerelatedWithholding
to related
Withholding from related Withholding
to related
WithholdingCounterpart
nonresident taxes on (21), nonresident taxes on (23), nonresident taxes on (25), nonresident taxes on (27),economycompany
if any, during
company,
if any, during
company,
if any, during
company,
if any, during(list separately) during period
periodduring period
periodduring period
periodduring period
period
(21)
(22)
(23)
(24)
(25)
(26)
(27)
(28)

Direct investment enterprise(s)Fellow enterprise(s)574Balance of Payments and International Investment Position Compilation Guide

Section E.3. Net income, realized and unrealized holding gains (losses) of your direct investment enterprise or
fellow enterprise abroad, and other changes in equity investment position“Other changes” during period
Please specify the amount of changes in equity (items 4 and 9) intercompany debt assets and liabilities (item 15 and 19) in
Section C.1 below that did not arise from transactions. A transaction is an interaction between two units that occurs by mutual
agreement. The following are common examples of changes in balances arising from valuation adjustments: changes in foreign
currency exchange rates; and write-ups, write-downs, or write-offs of assets (ﬁnancial and nonﬁnancial) and debt liabilities.
Realized and unrealized holding gains (losses): Item 30
Please specify realized and unrealized holding gains (losses) included in net income resulting from the sale or disposition ofﬁnancial and nonﬁnancial assets (such as securities, land, other property, plant, equipment); goodwill impairment; write-downs
or write-offs or assets or liabilities; extraordinary, unusual, or infrequently occurring items that are material, such as losses
from disasters or accidental damage; and gains and losses resulting from remeasuring foreign currency-denominated assets andliabilities due to changes in foreign exchange rates during the period.
Other changes in equity investment position: Item 31
Please specify the amount of the change in the equity investment position in your direct investment enterprise or investment or
fellow enterprise abroad (item 4) or investment in your company by your direct investment enterprise or fellow enterpriseabroad (item 9) that did not arise from transactions and is not reported on item 30 (certain realized and unrealized gains(losses) of a resident company excluded from net income and taken directly to the owners’ equity account). A common
example of a change in equity investment arising from a valuation adjustment that is not reported in item 30 is from theacquisition, or sale, of a direct investment enterprise for an amount that exceeds (or is less than) the value of the direct
investment enterprise according to the books of the direct investment enterprise. Report the difference between the transaction
value and the carrying amount in the equity investment position in this item.

Net income during period(29)

Certain realized and unrealized
holding gains (losses) included in
net income during period(30)

Other changes in equity
investment during the period(31)

Direct investment enterprise(s)Part F. International Investment Positions
Closing balances of assets and liabilities between your company and nonresidents
Deﬁnitions of entities in Part F:
Equity comprises all instruments and records that acknowledge claims on the residual value of a corporation or quasicorporation, after the claims of all creditors have been met. Ownership of equity in legal entities is usually evidenced by shares,
positions, participations, depository receipts, or similar documents.
Other equity is equity that is not in the form of securities. Equity is treated as a liability of the issuing institutional unit(a corporation or other unit).
Debt instruments are those instruments that require the payment of principal and/or interest at some point(s) in the future.
Debt instruments comprise:
Currency: Currency consists of notes and coins that are of ﬁxed nominal values and are issued or authorized by central banks
or governments.
Deposits: Deposits include all claims that are (1) on the central bank, deposit-taking corporations other than the central bank,and, in some cases, other institutional units; and (2) represented by evidence of deposit. A deposit is usually a standard
contract.
Debt securities: Debt securities are negotiable instruments serving as evidence of a debt.

Model Survey Forms

575

Loans: Loans are ﬁnancial assets that (1) are created when a creditor lends funds directly to a debtor, and (2) are evidenced bydocuments that are not negotiable.
Insurance, pension, and standardized guarantee schemes: Insurance, pension, and standardized guarantee schemes comprise:(1) Nonlife insurance technical reserves(2) Life insurance and annuity entitlements(3) Pension entitlements, claims of pension funds on sponsors, and entitlements to nonpension funds(4) Provisions for calls under standardized guarantees
Trade credit and advances: trade credit and advances comprises (1) credit extended directly by the suppliers of goods andservices to their customers and (2) advances for work that is in progress (or is yet to be undertaken) and prepayment bycustomers for goods and services not yet provided.
Other accounts receivable/payable: Other accounts receivable/payable include accounts receivable or payable other than thoseincluded in trade credit and advances or other instruments.
A ﬁnancial derivative contract: A ﬁnancial derivative contract is a ﬁnancial instrument that is linked to another speciﬁc
ﬁnancial instrument or indicator or commodity and through which speciﬁc ﬁnancial risks (such as interest rate risk, foreignexchange risk, equity and commodity price risks, credit risk, etc.) can be traded in their own right in ﬁnancial markets.
Employee stock options: Employee stock options are options to buy the equity of a company, offered to employees of thecompany as a form of remuneration.
Valuation of data to be reported in Part F:
Please report data according to the following guidelines:
Currency:
Report all data in [thousands of units of domestic currency]. If the currency(ies) of denomination of any of your company’s
foreign assets and liabilities is (are) not in [domestic currency], please use the end-of-year foreign currency exchange rates toconvert to [domestic currency].
Owners’ equity:
For (related and unrelated) listed entities: Market value, if available; otherwise, a proxy for market value (such as net asset
value)For (related and unrelated) unlisted companies, please report the value of outstanding owners’ equity (i.e., net worth) as at
year-end on the following basis.
For related entities: The sum of your foreign direct investor’s or fellow enterprise’s (see below for deﬁnitions) claims on yournet worth, consisting of:(1) Paid-up capital (excluding any shares on issue that the company holds in itself and including share premium
accounts) or equivalent for unincorporated companies(2) All types of reserves identiﬁed as equity in the company’s balance sheet (including investment grants when accounting
guidelines consider them a component of owners’ equity)(3) Cumulated retained earnings (which may be negative)
Similarly, please include the above three items in calculating the value of your company’s equity claim on your direct investor,
direct investment enterprise, or fellow enterprise (see below for deﬁnition). Do not use the carrying value on your books.
In determining your company’s net worth, most ﬁnancial assets should be reﬂected at an estimate of their current fair values;
cumulative reinvested earnings should be included; and depreciation on items of property, plant, and equipment should be
included. If your normal bookkeeping or accounting rules do not value these items as described above, please adjust theirvalues before calculating the amounts to enter in Section F.
Debt instruments:
Loans and trade credit and other accounts payable
Please report on a nominal value basis (after allowing for any changes that may result from changes in exchange rates).
Nominal value represents the value of funds advanced less any repayments plus any outstanding accrued interest.
Debt securities

576

Balance of Payments and International Investment Position Compilation Guide

Please report the market value of the securities, as of the balance sheet date.

Section F.1. Assets with related entities (direct investor(s), direct investment enterprise(s), and fellow
enterprise(s))
Please report in thousands of Newland dollars, using the valuation guidelines described above, the equity and debt asset closingbalances, between your company and related nonresidents, by type (direct investor, direct investment enterprise, fellow
enterprise). If none, please report “N/A,” as appropriate.
Closing Positions as ofCounterpart
economy (name)(insert date to which the information refers)

Debt
Debt
Debt
EquityEquityEquityResident direct Resident direct Resident fellow Resident direct Resident direct Resident fellow
enterprise debt
investment
enterprise equity investor debt
investment
investor equity
claims on
claims on direct enterprise debt
claims on
claims on direct enterprise equity
nonresident
claims on direct
investment
nonresident
claims on direct
investment
fellow
investorenterprise
fellow
investorenterpriseenterpriseabroadabroadenterpriseabroadabroadSection F.2. Assets with unrelated nonresident entities
Please report in thousands of Newland dollars, using the valuation guidelines described above, the equity and debt asset closingbalances, by instrument, between your company and unrelated nonresident entities. If none, please report “N/A,” asappropriate.
Closing Positions as ofCounterpart
economy(name)

Equitysecurities(insert date to which the information refers)

Other
equityDebt
securities

Currency
anddeposits

Loans

Trade
credit andadvances

Financial
Insurance, derivatives
andpension, andstandardized employee
Other
stock
guarantee
accounts
optionsschemesreceivable

Model Survey Forms

577

Section F.3. Liabilities (including owners’ equity) to related entities (direct investor(s), direct investment
enterprise(s), and fellow enterprise(s))
Please report in thousands of [local currency], using the valuation guidelines described in Section B, the equity and debt liability
closing balances, between your company and nonresidents, by type (direct investor, direct investment enterprise, fellow
enterprise). If none, please report “N/A,” as appropriate.
Closing Positions as ofCounterpart
economy (name)(insert date to which the information refers)

Debt
Debt
Debt
EquityEquityEquityResident direct Resident direct Resident fellow Resident direct Resident direct Resident fellow
enterprise debt
investor debt
investment
investor equity enterprise equity
investment
liability toenterprise debt liability to direct
liability toenterprise equity liability to direct
nonresident
investment
liability tononresident
investment
liability tofellow
enterprise
direct investor
fellow
enterprise
direct investor
enterpriseabroadabroadenterpriseabroadabroadSection F.4. Liabilities to unrelated nonresident entities
Please report in thousands of [local currency], using the valuation guidelines described in Section B, the equity and debt liability
closing balances, between your company and unrelated nonresident entities. If none, please report “N/A,” as appropriate.
(insert date to which the information refers)

Closing Positions as ofCounterpart
economy(name)

Equitysecurities

Other
equityDebt
securities

Currency
anddeposits

Loans

Trade
credit andadvances

Financial
Insurance, derivatives
andpension, andstandardized employee
Other
stock
guarantee
accounts
optionsschemesreceivable578

Balance of Payments and International Investment Position Compilation Guide

Part G. Revisions to Previously Reported Data
Please provide details of any revisions to data previously reported incorrectly.

Part H. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name of the company shown on page 1 is correct. / I have corrected the name and address on page 1.

[]

Details about the contact person have been entered on page 1.

[]

The questions answered cover all the foreign direct investments of the company. / The following foreign direct
investments have not been included:[]

The information in parts A, B, C, D, E, and F of the form has been completed in accordance with instructions.

[]

There are no signiﬁcant revisions to data for previous periods. / Details of signiﬁcant revisions to data for previous
periods have been included in part G.

[]

I have kept a copy of this form for my records.

Name of person completing this form:
Signature:Model Survey Forms

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 19—International Securities
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information that will be used in compiling Newland’s balance of payments statistics
on Newland’s external assets and liabilities. These statistics are published quarterly in Newland: Balance of Payments andInternational Investment Position, which is available from the Newland Ministry of Statistics.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and international investment position
statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

579

580

Balance of Payments and International Investment Position Compilation Guide

Instructions for Completing Form 19—International Securities
Reporting Instructions
Form 19 should be completed for the company (and any subsidiaries in Newland) listed on page 1 of the form—unlessdifferent arrangements have been made with the Newland Ministry of Statistics.

Residents and Nonresidents
A nonresident is any individual, company, or other organization ordinarily domiciled in an economy other than Newland.
Newland subsidiaries of nonresident companies are residents of Newland. Similarly, foreign subsidiaries of Newland companies
are nonresidents.

Conversion to Newland Dollars
All values should be reported in thousands of Newland dollars. Please convert amounts in foreign currencies to Newland
dollars. All amounts for ﬁnancial transactions, income, fees, and withholding taxes should be converted at the midpoint of the
buy and sell rates applicable on the date of the transaction; all amounts for opening and closing positions should be reported at
the midpoint of the buy and sell rates applicable on the reference dates.

Structure and Scope of Form 19
Form 19 sets out information that should be reported quarterly by this company in respect of international security
transactions undertaken on its own account or on behalf of clients. As arranged with your company, information in respect ofparts A and B should be submitted by electronic means and accompanied by completed parts C through E of form 19.
In part A, you should report details on securities issued in Newland (a) by residents and held or traded by your company onbehalf of nonresident clients and (b) by nonresidents and held or traded by your company on behalf of resident clients or on
your own account.
In part B, you should report details on securities issued abroad (a) by residents and held or traded by your company on behalfof nonresident clients; (b) by nonresidents and held or traded by your company on behalf of resident clients or on your own
account, and (c) by residents and held or traded by your company on behalf of resident clients or on your own account. For
all categories, separate details should be reported for each unique security reference number (column A) and owner code
(column B) combination. If you are unsure what should actually be reported, please call (XXX) XXX- XXXX.
In part C, you should report details of your company’s claims on, or liabilities to, nonresident clients in respect of accounts
outstanding for security transactions, income, fees, and so forth.

Security Reference Numbers and Owner Codes
A standard security reference number should be used for each security. When such numbers do not exist—particularly forsecurities issued abroad—you should create your own codes and provide a list of these codes to the Newland Ministry of
Statistics. The list should show, for each code, the type of security, the economy of issue, the currency of denomination, theindustry (activity) of the issuer, and the sector (international institution, government, central bank, other bank, other) of theissuer. (International institutions are organizations, such as Asian Development Bank and the European Investment Bank,
whose members are governments.)
The nonresident owner code should consist of four digits. The ﬁrst digit of the code should describe the sector of thenonresident client (1-international institution, 2-government, 3-central bank, 4-other bank, and 5-other). The last threecharacters should be the economy of residence code of the nonresident client. Economy codes are provided at the conclusionof these instructions.
The resident owner code should be a four-digit alphanumeric code that is determined by your organization. A separate codeshould be allocated to each company (business) client. A list of these codes, showing the industry (activity) and sector(government, central bank, other bank, other ﬁnancial institution, and other) of each owner should be provided to the
Newland Ministry of Statistics. Clients who are individuals rather than companies should be assigned the code HOUS.

Model Survey Forms

581

Positions, Transactions, Other Changes, Income, Fees, and Withholding Taxes
The information reported in parts A, B, and C should have the following relationships:
Closing Position  Opening Position  Financial Transactions  Other Changes.
Opening and closing positions should be reported via market prices prevailing at the reference dates.
Financial transactions are transactions relating to the acquisition (including issues) or disposal (including redemptions) of asecurity. Financial transactions should be recorded before the deduction of fees.
Other changes are valuation changes, such as those caused by exchange rates (in the case of securities denominated in foreign
currencies) and market price changes.
Income refers to dividends and interest. Dividends should be recorded on the ex-dividend date. Interest includes discounts. A
discount is the difference between the value of a ﬁnancial instrument when it is issued and its ﬁnal redemption value. Interest
should be recorded on an accrual basis. The difference between income accrued and income payable should be recorded as aﬁnancial transaction in the instrument to which the interest relates. If you are unsure how to record these types of transactions,please call (XXX) XXX- XXXX.
Income should be recorded before the deduction of any fees and withholding taxes.
Fees are amounts payable by nonresident clients for services provided by your company.
Withholding Taxes refer to—in the case of securities issued by residents—taxes payable to the Newland government by yourcompany on behalf of nonresident clients and—in the case of securities issued by nonresidents—taxes withheld by foreign
governments on securities held by your company on behalf of resident clients or on your own account.

Economy Codes[An economy code list should be supplied by the compiler.]

582

Balance of Payments and International Investment Position Compilation Guide

Form 19—International Securities
Part A. Securities Issued in Newland(Report in thousands of Newland dollars)
Financial Transactions

Reference

Owner

Opening

Other

Closing

Currency of

NumberCode

PositionIssuesRedemptions

Purchases

Sales

Changes

Position

Denomination

Income

Fees

Taxes

A

B

C

D

E

F

G

H

I

J

K

L

M

Withholding(a) Securities Issued by Residents and Owned by Nonresidents(b) Securities Issued by Nonresidents and Owned by Residents////////////////////////////////////////

Model Survey Forms

583

Part B. Securities Issued Abroad(Report in thousands of Newland dollars)
Financial Transactions

Reference

Owner

Opening

Other

Closing

Currency of

NumberCode

PositionIssuesRedemptions

Purchases

Sales

Changes

Position

Denomination

Income

Fees

Taxes

A

B

C

D

E

F

G

H

I

J

K

L

M

Withholding(a) Securities Issued by Residents and Owned by Nonresidents(b) Securities Issued by Nonresidents and Owned by Residents////////////////////////////////////////
Supplementary item: Fees collected from nonresidents not included in parts A or B above

ND’000Part C. Claims on and Liabilities to Nonresident Clients(Report in thousands of Newland dollars)
Type of Investment

Opening Position

Transactions

Other Changes

Closing Position

A

B

C

D

E

Claims on Nonresidents
Securities
Fees
IncomeOthersLiabilities to Nonresidents
Securities
Fees
IncomeOthers584

Balance of Payments and International Investment Position Compilation Guide

Part D. Revisions to Previously Reported Data
Please provide details of any revisions to data previously reported incorrectly.

Part E. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name of the company shown on page 1 is correct. / I have corrected the name and address on page 1.

[]

Details about the contact person have been entered on page 1.

[]

The questions answered cover all the security activities of the company named on page 1. / The following activities havenot been included:[]

The information in parts A, B, and C of the form has been completed in accordance with instructions.

[]

There are no signiﬁcant revisions to data for previous periods. / Details of signiﬁcant revisions to data for previous
periods have been included in part D.

[]

I have kept a copy of this form for my records.

Name of person completing this form:
Signature:Model Survey Forms

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 20—Holdings of and Transactions in Financial Derivatives
Contracts with Nonresidents
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information that will be used in compiling Newland’s balance of payments andinternational investment position statistics. These statistics are published quarterly in Newland: Balance of Payments andInternational Investment Position, which is available from the Newland Ministry of Statistics.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and international investment position
statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

585

586

Balance of Payments and International Investment Position Compilation Guide

Instructions for Completing Form 20—Holdings of and Transactionsin Financial Derivatives Contracts with Nonresidents
Reporting Instructions
Form 20 should be completed for all resident companies (and any subsidiaries in Newland) that have derivative contracts withnonresidents—unless different arrangements have been made with the Newland Ministry of Statistics.

Residents and Nonresidents
A nonresident is any individual, company, or other organization ordinarily domiciled in an economy other than Newland.
Newland branches and subsidiaries of nonresident companies are residents of Newland. Similarly, foreign branches andsubsidiaries of Newland companies are nonresidents. Transactions and positions should be reported for the economy in which
the direct counterparty resides. Please do not report transactions and positions based on currency of denomination of the
instrument, the economy of the parent institution of the counterparty (i.e., nationality), the economy of issuance of the
instrument, or the economy of a guarantor (i.e., ultimate risk).

Conversion to Newland Dollars
All values should be reported in thousands of Newland dollars. Please convert amounts in foreign currencies to Newland
dollars. All amounts for ﬁnancial transactions, income, fees, and withholding taxes should be converted at the midpoint of the
buy and sell rates applicable on the date of the transaction; all amounts for opening and closing positions should be reported at
the midpoint of the buy and sell rates applicable on the reference dates.

Reporting of Positions
In Parts A, B and C, positions reported should be the balances outstanding at the close of business as of the last day of thecalendar quarter covered by the report. Financial derivatives are valued at market prices prevailing on the balance sheetrecording dates. If market price data are unavailable, other fair value methods (such as option models or present values) may
be used to value them. Positions data should be reported on a gross basis. However, multiple contracts with a single
counterparty may be reported on a net basis if a master netting agreement is in place and if the contracts are carried out at net
values in the reporting company’s accounting records and statements of ﬁnancial position.

Structure and Scope of Form 20
The purpose of this form is to gather timely and reliable information on transactions in, and holdings of, derivatives contracts
with foreign residents, categorized by the economy of the foreign resident. The data are collected according to the derivative
instruments: options, futures and forwards, and swaps. The value of commodities, securities, other noncash and cash (forforeign exchange currency swaps) assets received or delivered to settle derivatives contracts of any type should not be includedin the reporting of transactions and positions. Employee stock options (ﬁnancial instruments that may have similar
characteristics as call options) should not be included in the reporting of transactions and positions.
Part A—Options: For transactions (columns B and C), report premiums paid or received on options. In columns D and E,
report the receipts or payments of cash upon exercise of options that are settled only in cash. End-quarter positions are to bereported in columns F (Assets) and G (Liabilities).
Part B—Futures Transactions and Forward Agreements: For transactions in futures and forwards (columns B and C), report
the cumulative payments or receipts (usually daily for futures) that arise from the change in value of the futures contracts (the“variation margin”). Also include the ﬁnal cash settlement of futures and forwards contracts. For forward rate agreements,
report cash received or paid upon maturity or settlement of forward agreements (including foreign exchange contracts). Do notreport the amount received or paid upon settlement of a forward with a security or other noncash asset. End-quarter positions
are to be reported in columns D (Assets) and E (Liabilities).
Part C—Swaps: Report in columns B and C the net amount of cash received or paid upon maturity or termination of a swap;
and any periodic net cash settlement payments required under the terms of the swap (net settlements refer to the netting ofindividual contract ﬂows and not to the netting of like instruments). End-quarter positions are to be reported in columns D(Assets) and E (Liabilities).
Part D—Notional Value of Foreign-Currency and Foreign Currency-Linked Contracts: Report positions in notional value,classiﬁed by foreign current payments and receipts, and by instrument (forwards and options).

Model Survey Forms

587

Speciﬁc Exclusions:
The following should not be reported: (1) spot foreign exchange contracts, (2) short sale of assets, (3) regular securities trades,(4) normal purchases and sales of an item other than a ﬁnancial instrument or derivative instrument that will be delivered inquantities expected to be used or sold by the reporting entity over a reasonable period in the normal course of business, (5) life
insurance, property and casualty contracts, and (6) ﬁnancial guarantees that do not meet the deﬁnition of a derivative. For
further information on ﬁnancial arrangements that are not ﬁnancial derivatives, see the sixth edition of the Balance of Payments
and International Investment Position Manual (paragraph 5.83).

588

Balance of Payments and International Investment Position Compilation Guide

Form 20—Holdings of and Transactions in Financial Derivatives Contracts with Nonresidents
Part A. Options(Report in thousands of Newland dollars)
Receipts/Payments of Cash upon
Exercise of Options That Are
Settled Only in CashTransactions

Outstanding Positions
at End-Quarter

EconomyPremium
Receipts

Premium
Payments

Receipts

Payments

AssetsLiabilities

A

B

C

D

E

F

G

Part B. Futures and Forwards(Report in thousands of Newland dollars)
Cumulative Receipts/Payments during the Period
as a Result of the Change in Value of Futures andForwards Contracts, and from Final Cash Settlements

Outstanding Positions
at End-Quarter

EconomyReceipts

Payments

AssetsLiabilities

A

B

C

D

E

Part C. Swaps(Report in thousands of Newland dollars)
Net amount of cash received/paid upon maturity or termination,
and any periodic net cash settlement payments

Outstanding Positions
at End-Quarter

EconomyReceipts

Payments

AssetsLiabilities

A

B

C

D

E

Model Survey Forms

589

Part D. Financial Derivative Positions with Nonresidents:
Notional Value of Foreign-Currency and Foreign Currency-Linked Contracts(Report in thousands of Newland dollars)
Instrument

Outstanding Positions at End-QuarterA

B

To receive foreign currency:
Forwards
Options
To pay foreign currency:
Forwards
Options

Part E. Revisions to Previously Reported Data
Please provide details of any revisions to data previously reported incorrectly.

Part F. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
[]

The name of the company shown on page 1 is correct. / I have corrected the name and address on page 1.

[]

Details about the contact person have been entered on page 1.

[]

The questions answered cover all the security activities of the company named on page 1. / The following activities havenot been included:[]

The information in parts A, B, C, and D of the form has been completed in accordance with instructions.

[]

There are no signiﬁcant revisions to data for previous periods. / Details of signiﬁcant revisions to data for previous
periods are indicated below.

[]

I have kept a copy of this form for my records.

Name of person completing this form:
Signature:590

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 21—Travel: Returning Residents
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information that will be used in compiling Newland’s balance of payments statistics
on the expenditure of resident travelers returning to Newland.
Instructions: Please respond to all the questions on form 21. When you have completed the form, please place it in the blue
bin that is labeled Newland Ministry of Statistics—Traveler Survey and located in the arrivals hall. A staff member from theministry will be standing beside this bin to answer any questions you may have.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: If you do not know the exact amounts requested for the form, please provide your best estimates.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and international investment position
statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

591

Form 21—Travel: Returning Residents
You have the option of reporting either in respect of yourself or in respect of a group of travelers.
Travelers who are accompanied by children (persons under the age of 18) should include the travel expenditure associated withthese children.
1.

2.

Are you completing this return in respect of yourself only or in respect of a group of travelers?
[]

Self only—please go to question 3.

[]

Group—please go to question 2.

a.

How many people are in your group?

b.

How many of these persons are under 18 years of age?

3.

In which economy did you spend the most time abroad?

4.

What was the purpose of your travel?
[

5.

6.

7.

]

Business[]

Personal

If the purpose of your travel was business, have you been employed abroad on:a.

border (commuting daily or weekly)b.

seasonal workc.

short-term contractd.

none of the above (paid by a resident employer)a.

How many nights did you stay abroad?

b.

How many of these nights did you spend in lodgings that were paidfor?

Please record, in Newland dollars, your travel expenditure while abroad. Include amounts paid on your behalf byother residents, such as your employer.
Amount(in Newland dollars)

Type of Expenditure(a) Expenditures incurred prior to the trip (including any amounts spent, prior to yourdeparture, on your trip abroad)(b) Accommodation(c) Food and beverages(d) Entertainment(e) Souvenirs and other goods that you have purchased abroad(f) Transportation inside foreign countries and between foreign countries(g) Gifts for persons residing abroad(g) Other expenditure, excluding international transportation, while abroad (please
specify)
Total expenditure while abroad
8.

Does the amount reported in question 7(a) include an airfare?
[

]

Yes

[

]

No

592

Balance of Payments and International Investment Position Compilation Guide

9.

Please record any earnings and other amounts you received during [period] from residents of countries you visitedwhile traveling abroad.
Source of Receipts(a) Earnings from employment by foreign companies(c) Gifts from foreign residents(d) Other (please specify)
Total amounts received while abroad

Amount(in Newland dollars)Model Survey Forms

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 22—Travel: Departing Nonresidents
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information that will be used in compiling Newland’s balance of payments statistics
on the expenditure of nonresident travelers in Newland.
Instructions: Please respond to all the questions on form 22. When you have completed the form, please place it in the blue
bin that is labeled Newland Ministry of Statistics—Traveler Survey and located in the departure hall. A staff member from theministry will be standing beside this bin to answer any questions you may have.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: If you do not know the exact amounts requested for the form, please provide your best estimates.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and international investment position
statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

593

594

Balance of Payments and International Investment Position Compilation Guide

Form 22—Travel: Departing Nonresidents
You have the option of reporting either in respect of yourself or in respect of a group of travelers.
Travelers who are accompanied by children (persons under the age of 18) should include the travel expenditure associated withthese children.
1.

2.

Are you completing this return in respect of yourself only or in respect of a group of travelers?
[]

Self only—please go to question 3.

[]

Group—please go to question 2.

a.

How many people are in your group?

b.

How many of these persons are under 18 years of age?

3.

In which economy do you ordinarily reside?

4.

What was the purpose of your visit to Newland?
[

5.

6.

7.

]

Business[]

Personal

If the purpose of your travel was business, have you been employed in Newland on:a.

border (commuting daily or weekly)b.

seasonal workc.

short-term contractd.

none of the above (paid by a nonresident employer)a.

How many nights did you stay in Newland?

b.

How many of these nights did you spend in lodgings that were paidfor?

Please record, in Newland dollars, your travel expenditure in Newland. Include amounts paid on your behalf byother nonresidents, such as your employer.
Amount(in Newland dollars)

Type of Expenditure(a) Expenditures incurred prior to the trip (including any amounts spent, prior to yourarrival, on your trip to Newland)(b) Accommodation(c) Food and beverages(d) Entertainment(e) Souvenirs and other goods that you are taking out of Newland(f) Transportation within Newland(g) Gifts for persons residing in Newland(g) Other expenditure, excluding international transportation, in Newland(please specify)
Total expenditure in Newland
8.

Does the amount reported in question 7(a) include an airfare?
[

]

Yes

[

]

No

Model Survey Forms

9.

Please record any earnings and other amounts you received during [period] from Newland residents while travelingin Newland.
Source of Receipts(a) Earnings from employment by Newland companies(c) Gifts from Newland residents(d) Other (please specify)
Total amounts received while in Newland

Amount(in Newland dollars)

595

596

Balance of Payments and International Investment Position Compilation Guide

LOGO

Pleasecorrect any
errors inthis label

Balance of Payments Survey
Form 23—International Transactions and Positions of Households
Balance of Payments Division
Newland Ministry of Statistics
Archadia___________|_|_|_|_|_|_|_|_|_|_|_|
Reference Number

Telephone (XXX) XXX-XXXX
Facsimile (XXX) XXX-XXXX
E-mail:bop@stat.com
OFFICE USE ONLY
Rec.
Edit
Check

QUARTER ENDED MM DD, YYYY
Please read this ﬁrst.
Collection authority: The Statistics Act of Newland requires that a representative of the company to which this form isaddressed complete and return this form to the Newland Ministry of Statistics.
Conﬁdentiality: The Statistics Act of Newland also guarantees the conﬁdentiality of the information provided via this form.
Purpose of collection: This form collects information that will be used in compiling Newland’s balance of payments statistics
on international transactions and positions of households. These statistics are published quarterly in Newland: Balance ofPayments and International Investment Position, which is available from the Newland Ministry of Statistics.
Due date: Please return the completed form by MM DD, YYYY.
How to ﬁle: Please submit the form by mail (address) or e-mail (bop@stat.com).
Estimates: Some of the data requested may not be readily available from your records. In these cases, careful estimates will
sufﬁce.
Assistance: For queries or assistance regarding this form, please call (XXX) XXX-XXXX or e-mail bop@stat.com.
Thank you: Your cooperation is greatly appreciated. Accurate balance of payments and international investment position
statistics depend upon it.

After you complete this form, please retain a copy for your records.
John Smith
Newland Statistician
Person who should be contacted if any queries arise regarding this form:
Name:

Telephone number: ()

Area code

Title:

Facsimile number:()

Area code

Model Survey Forms

597

Instructions for Completing Form 23—International Transactions and Positions of Households
Reporting Instructions
Form 23 should be completed for the household listed on page 1 of the form—unless different arrangements have been madewith the Newland Ministry of Statistics.

Residents and Nonresidents
A nonresident is any individual, company, or other organization ordinarily domiciled in an economy other than Newland.
Newland subsidiaries of nonresident companies are residents of Newland. Similarly, foreign subsidiaries of Newland companies
are nonresidents.

Conversion to Newland Dollars
All values should be reported in thousands of Newland dollars. Foreign currencies should be converted to Newland dollars at
the midpoint of the buy and sell rates applicable on the date of the transaction. Where amounts are less than ND500, leaveblank or indicate with a “—”.

Structure of Form 23
Form 23 collects quarterly information on selected international positions and transactions of this household.
Part A collects information on goods received and sent by parcel post and courier services. Do not include goods purchasedabroad and sent home during the personal trip.
Part B collects information on services received from nonresidents. Legal services include conveyancing on property purchases.
Education services include correspondence courses and education services purchased online. Entertainment services include
purchases of online content, fee-for-use Websites, and pay-per-view television. Do not include services purchased abroad
during the personal trip.
Part C collects information on foreign assets, including participation in time-share arrangements on foreign property andholdings of foreign-issued notes and coin. Equity and units in investment funds exclude positions held on your behalf byresident custodians and fund managers. Other changes include changes in the value of assets due to market price changes andexchange rate changes.
Part D collects information on foreign income received.
Part E collects information on foreign liabilities. Mortgages with foreign banks (e.g., on foreign properties) should be included
with loans.
Part F collects information on payments made to nonresidents.

EconomyEach question seeks information on the economy of transaction or position. Record the economy of residence of thenonresident transactor.

598

Balance of Payments and International Investment Position Compilation Guide

Form 23—International Transactions and Positions of Households
Part A. Imports and Exports of Goods(Report in thousands of Newland dollars)
Total
ATransactions by Economy (specify)
Economy 1

Economy 2

Economy 3

Economy 4

Economy 5

Imports of Goods
1. Value of goods received by parcel post(other than gifts)
2. Value of gifts received by parcel post
3. Value of goods received by courier (otherthan gifts)
4. Value of gifts received by courier
Exports of Goods
5. Value of goods dispatched by parcel post(other than gifts)
6. Value of gifts dispatched by parcel post
7. Value of goods dispatched by courier(other than gifts)
8. Value of gifts dispatched by courierPart B. Services Received from Nonresidents and Provided to Nonresidents(Report in thousands of Newland dollars)
Total
Value of services

A

Transactions by Economy (specify)
Economy 1

Economy 2

Services received from nonresidents
9. Legal services
10. Accounting services
11. Brokerage services
12. Education services
13. Entertainment services
14. Other (please specify:)
Services provided to nonresidents

15. Legal services
16. Accounting services
17. Brokerage services
18. Education services
19. Entertainment services
20. Other (please specify:)

Economy 3

Economy 4

Economy 5

Model Survey Forms

599

Part C. Foreign Assets(Report in thousands of Newland dollars)

EconomyCurrency

Position at
Beginning of
Quarter

A

B

C

Purchases andDeposits during
the Quarter

Sales and
Withdrawals
during theQuarter

Other Changes
in Position

Position at Endof the Quarter

D

E

F

G

21. Equity in Nonresident Companies

22. Units in Nonresident Investment Funds

23. Debt Securities Issued by Nonresidents

24. Stock Options Written by Nonresidents

25. Foreign Bank Accounts

26. Foreign Currency

27. Land

28. Other Foreign Investments

Please describe any participation in time-share arrangements, including the location of the accommodation and whether participation is by deeded ownership, on a membership basis, or on a right-to-use basis

600

Balance of Payments and International Investment Position Compilation Guide

Part D. Amounts Received from Nonresidents(Report in thousands of Newland dollars)
Transactions by Economy (specify)

Total
A

B

C

D

E

F

29. Dividends received on ownership of shares
30. Distributions from investment funds
31. Interest earned on debt securities
32. Education services
33. Interest on bank accounts
34. Rent received from leasing foreign land
35. Wages and salaries received from nonresident employers
36. Social security contributions paid on your behalf bynonresident employers
37. Remittances received from family/relatives/friends abroad
37a. Of which for purchase of real estate
38. Social security beneﬁts received from nonresident pension
funds
39. Claims received from nonresident insurers
40. Other (please specify:)

Part E. Foreign Liabilities(Report in thousands of Newland dollars)

EconomyCurrency

Position at
Beginning of
QuarterA

B

C

41. Loans

42. Other Foreign Liabilities

Borrowings
during theQuarter

Payments
during theQuarter

Other Changes
in Position

Position
at End of
the Quarter

D

E

F

G

Model Survey Forms

601

Part F. Payments to Nonresidents(Report in thousands of Newland dollars)
Transactions by Economy (specify)

Total
A

B

C

D

E

F

43. Remittances (e.g., to family abroad)
43a. Of which for purchase of real estate
44. Social security contributions paid to nonresident pension
funds
45. Insurance premiums paid to nonresident insurers
46. Taxes paid to foreign governments on foreign earnings
47. Loan repayments
Of which: interest accruing on loans
48. Fees on foreign bank accounts
49. Fees on foreign loans
50. Other (please specify:)

Part G. Final Questions
Please verify that the form has been correctly completed; mark the following boxes and strike out inappropriate phrases.
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The contact details for the household shown on page 1 are correct. / I have corrected the name and address on page 1.

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Details about the contact person have been entered on page 1.

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The information in parts A through F has been completed in accordance with the instructions.

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I have made a copy of this form for my records.

Name of person completing this form:
Signature: