Proposal for a COUNCIL REGULATION (EC) on the European System of National and Regional Accounts in the European Community
Date: 1994-12-16
Institutions: European Commission
Subjects: EU statistics, Economic and Monetary Union, European accounting system, Eurostat, confidentiality, data transmission

COMMISSION OF THE EUROPEAN  COMMUNITIES 

COM{94) 5 33 final 
Brussels,  16.12.199 4 

9 4/0314  -CVS) 

P r o p o s ai 

f or  a 

COUNCIL  REGULATION 

on the European  System of National and  Regional Account 
in the European  Community 

( p r e s e n t ed  by 

t he  C o m m i s s i on 

EXPLANATORY  MEMORANDUM 

The  European  System  of  Accounts  (ESA)  is  the  reference  framework  for  drawing  up  accounts  for 
Community  requirements,  since  its  methodology 
is  designed  to  produce  results  which  are 
comparable  between  Member  States. 

1.  The aim of the draft  Regulation  is to establish: 

a  methodology,  known  as the  European  System  of  Accounts  (ESA), comprising  common 
standards,  definitions,  classifications  and  accounting  rules  to  be  used  in  drawing  up 
accounts and tables on a comparable  basis for European  Community  requirements; 

a  schedule  for  transmitting  the  accounts  and  tables  drawn  up  on  the  basis  of  the  ESA  to 
the Commission on specific  dates. 

2.  Responsibility  for  the  project  is  shared  with  the  Member  States:  the  aim  is  Jo  harmonize  the 
concepts  and  nomenclatures  for  data  collection  and  to  present  the  information  needed  by  the 
main  users:  Community  institutions,  national,  regional  and  local  government,  international 
organizations, economic operators and research  institutes.  The methods used to collect the  data 
and the collection  itself are the province of the Member  States. 

3.  All  Member  States  have  an  interest  in  the  system.  They  already  collect  certain  data  for 
accounts  purposes.  The  new  system  will  mean  collecting  additional  information  (only  a 
limited  range for most Member  States), plus changes in the concepts and classifications  used. 

The  proposal  for  a  Regulation  observes  the  international  recommendations  on  the  subject.  It 
takes  account  of  the  need  for  statistical  definitions  to  be  adaptable  to  socio-economic  and 
technical  changes  affecting  the  production  system. 
It  sets  the  standard  for  the  quality  of 
observation  and analysis needed  to meet economic policy  requirements. 

4.  Only  a  Community  measure  of  this  nature  is  capable  of  establishing  the  reference  framework 
for  common  standards, definitions,  classifications  and  accounting  rules  and drawing  up the  list 
of  necessary  data.  Member  States'  own  accounts  are  then  drawn  up  by  the  Member  States 
themselves according to the system  fixed  at Community  level. 

5.  One  consequence  of  this  legislative  act  will  be  an  improvement  in  Community  statistics 
improved 
relevant  to  national  and  regional  accounts,  and  in  their  consistency. 
comparability  will  help  meet  the  challenge  of  managing  Economic  and  Monetary  Union  and 
enable  national  accounts  aggregates  to  be  used  for  Community  administrative,  particularly 
budget,  calculations.  Without  such  a  legislative  act,  Community  economic  and  monetary 
policy  would  have  to  be  formulated,  implemented,  monitored  and  evaluated  on  the  basis  of 
incomplete, non-harmonized  and outdated  statistics, with all the risks that would  imply. 

The 

6.  A  legislative  act  -  here  a  Council  Regulation  -  enables  the  reference  framework  (concepts, 
classifications,  list  of necessary  information)  to be  determined  without  having  to  concern  itself 
with the details of organizing  and the methods of drawing  up accounts. 

7.  A Council  Regulation  is needed  to establish the reference  framework,  but the  way  in which  the 
accounts are drawn up and  national  statistical  systems  adapted  will be  for  the Member  States to 
decide. 

-VK. 

Draft  proposal for a Council  Regulation 
on the European  System of National and  Regional  Accounts 
in the European  Community 

THE COUNCIL  OF THE  EUROPEAN  UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular  Article  213 
thereof, 

Having regard to the draft  Regulation  submitted by the  Commission, 

Having  regard  to the opinion of the European  Parliament, 

Having regard to the opinion of the European Monetary  Institute, 

Having regard to the opinion of the Economic and Social  Committee, 

Having regard to the opinion of the Committee of the Regions, 

the 

Whereas 
implementation  and  supervision  of  Economic  and  Monetary  Union  require 
comparable,  up-to-date  and  reliable  information  on  the  structure  of  and  developments  in  the 
economic  situation  of each country and/or region; 

Whereas  economic  accounts  are  a  basic  tool  for  analysing  the  economic  situation  of  a  country 
and/or region  on  condition  that  they  are drawn  up on the  basis  of  strict principles  that  are not  open 
to differing  interpretations; 

Whereas the  Protocol  on the excessive  deficit  procedure  annexed  to the  Treaty  on  European  Union 
refers  to  the  European  System  of  Integrated  Economic  Accounts  and  whereas  Regulation  (EC)  No 
3605/93  on  the  application  of  the  Protocol  on  the  excessive  deficit  procedure  states  in  Article  7 
that the revision of this system shall be decided by the Council of the European  Union; 

Whereas  Council  Directive  89/130/EEC,  Euratom  on  the  harmonization  of  the  compilation  of 
gross  national  product  at  market  prices  (GNPmp)  stipulates  that  GNPmp  can  be  comparable  in 
concept  only  if the definitions  and accounting rules of the European  System of Integrated  Economic 
Accounts  are  applied,  and  whereas  Regulation  (EEC,  Euratom)  No  1553/89  on  the  definitive 
uniform  arrangements  for  the  collection  of  own  resources  accruing  from  value  added  tax  provides 
that, in order to calculate  the weighted average rate of VAT, the breakdown of transactions  liable to 
tax  shall  be  effected  by  means  of  national  accounts,  prepared  in  accordance  with  the  European 
System of Integrated  Economic Accounts; 

Whereas  Council  Regulations  (EEC)  Nos  2052/884  and  2081/935  on  the  tasks  of  the  Structural 
Funds  stipulate  that  the  eligibility  of  regions  for  assistance  under  Objectives  1  and  5(b)  of  the 
Structural  Funds  shall  be  assessed  mainly  by  comparing  their  gross  domestic  product  (GDP)  per 
inhabitant with that of the Community  as a whole; 

Whereas  the  European  System  of  Integrated  Economic  Accounts  must  be  revised  to  meet  the 
requirements  of  Economic and  Monetary  Union and will  have to be used  for  compiling  the  national 
and regional  accounts provided  for by Community  legislation; 

2 
3 
4 
5 

OJ No L 332, 31.12.1993 
OJ No L 49, 21.2.1989 
OJ No L 155, 7.6.1989 
OJ No L  185,  15.7.1988 
OJNoL  193,31.7.1993 

vÎQv-

Whereas  the  revised  system,  entitled  "European  System  of  Accounts  (ESA)"  is  the  reference 
framework  of  common  standards,  definitions,  classifications  and  accounting  rules  for  drawing  up 
the accounts  of the Member  States  for  the requirements  of the European  Community,  so that  results 
that are comparable  between the Member  States can be  obtained; 

Whereas  the  results  of  the  accounts  and  tables  of  all  the  member  countries  drawn  up  according  to 
the  revised  ESA  (ESA  95)  must  be  made  available  by  the  Commission  to  users  on  precise  dates, 
particularly  with  regard  to monitoring  the convergence  of the Member  States' economic policies; 

Whereas  these dates  must  be laid  down  by broad  category  of accounts  and  tables, and  whereas  only 
the  information  essential  to  the  requirements  of  the  European  Community  must  be  processed  and 
communicated  to the Commission  on precise dates; 

Whereas  in  view  of  the  volume  and  size  of  the  accounts  concerned,  the  level  of  detail  and  the 
geographical  coverage,  as  well  as  the  situation  in  this  respect  in  the  Member  States,  certain  extra 
periods of time  for  forwarding  data shall be granted exceptionally  and temporarily  to Member  States 
which objectively  are unable to meet the deadlines  laid down  by the  Regulation; 

Whereas  solving  the  problem  of  breaking  down  indirectly  measured  financial 
intermediation 
services (IMFIS) would  make a substantial  qualitative  improvement  to the methodology  of the  ESA 
95, and whereas  the Member  States and the Commission undertake to find  a satisfactory  solution by 
31 December  1996 so that it can be implemented  for the first  transmission  of data in  1998; 

Whereas,  according  to the principle of subsidiarity,  the creation  of common  statistical  standards  is a 
task  that  can  only  be dealt  with  effectively  at  Community  level  and  whereas  such  standards  will  be 
implemented  in each  Member  State under the aegis of the organizations  and  institutions  responsible 
for compiling  official  statistics; 

Whereas the European  Community  cooperates with third countries to mutual  advantage,  particularly 
those  in the European  Economic Area (EEA); 

Whereas  the  United  Nations  Statistical  Commission  adopted  in  February  1993  the  new  System  of 
National  Accounts  (SNA) so that the results in all countries should be internationally  comparable; 

Whereas  the  ESA,  which  constitutes  a version  of the  SNA  adapted  to  the  structures  of the  Member 
States'  economies,  must  adhere  to  the  layout  of  the  SNA  so  that  the  Community's  data  are 
comparable  with those compiled  by its main international  partners; 

Whereas  it  is  necessary  to  set  up a procedure  to adapt  and  update  the  provisions  of  this  Regulation 
in  cooperation  with  the  Statistical  Programme  Committee,  established  by  Council  Decision 
89/382/EEC,  Euratom;6 

Whereas  the  Statistical  Programme  Committee  and  the  Committee  on  Monetary,  Financial  and 
Balance  of  Payments  Statistics  (CMFB),  establishe 
Balance  of  Payments  Statistics  (CMFB),  established  by  Council  Decision  91/115/EEC,  have 
declared  themselves  in favour  of the draft  Regulation, 

7 

^ 

OJ  No  L  181,28.6.1? 
OJ  N oL  59,6.3.1991 

-3-c^ 

HAS ADOPTED  THIS  REGULATION: 

Article  1 

Purpose 

1. 

The  purpose  of  this  Regulation  is  to  adapt  the  European  System  of  Integrated  Economic 
Accounts  by providing  for: 

(a) 

a  methodology  annexed  to  this  Regulation  on  common  standards,  definitions, 
classifications  and  accounting  rules,  hereinafter  referred  to  as  the  European  System 
of  Accounts  95  (ESA  95), intended  to  be used  for  compiling  accounts  and  tables  on 
comparable  bases for the purposes of the European  Community  and 

(b) 

a  programme,  which  appears  in  Article  3,  for  transmitting  for  Community  purposes 
on precise dates the accounts and tables compiled  according to the ESA 95. 

2. 

This  Regulation  does not oblige any Member  State to use the ESA  95  in compiling  accounts 
for  its own  purposes. 

Article 2 

Methodology 

The methodology  of the ESA 95 referred  to in Article  1(a) of this Regulation  is given  in Annex  A. 

Amendments  to  the  ESA  95  methodology  which  are  intended  to  clarify  and  improve  its  content 
shall  be  adopted  by  Commission  Decision  in accordance  with  the procedure  provided  for  in  Article 
5,  provided  that  they  do  not  change  its underlying  concepts,  do  not  require  additional  resources  for 
their implementation  and do not cause an increase in own resources  in the  Community. 

The  procedure  in  Article  5 shall  also  be applied  when  implementing  the  system  for  breaking  down 
the  indirectly  measured  financial  intermediation  services  (IMFIS)  described  in  Annex I  of  the 
methodology.  The Commission Decision shall take effect  not later than 31 December  1996. 

Article  3 

Transmission  to the  Commission  of the European  Communities 

1. 

The  Member  States  shall  transmit  to  the  Commission  (Eurostat)  the  accounts  and  tables  in 
Annex  B by the deadlines specified  for each table. 

The  extra  periods  of  time  granted  to  certain  Member  States  in  accordance  with  Annex  B 
shall  expire not later than  1 January 2005. 

The  Commission,  after  consulting  the  SPC,  shall  report  to  the  Council  of  the  European 
Union  not  later  than  1 July  2003  on  the  application  of  the  extra  periods  of  time  granted  in 
order to verify  whether they are still justified. 

-*K 

Not  later  than  1 January  2005, and  on  a proposal  from  the  Commission,  the  Council  of  the 
European  Union  shall  decide  again  on  the  extra  periods  of  time  granted  to  certain  Member 
States  for transmitting  data. 

2. 

The  Member  States shall transmit  the results of Annex  B,  including  the data  which  has  been 
declared  confidential  by  the  Member  States  in  accordance  with  national  legislation  or 
practice  concerning  statistical  confidentiality,  under  the  provisions  of  Council  Regulation 
(EEC,  Euratom  )  No  1588/90  of  11  June  1990  on  the  transmission  of  data  subject  to 
statistical  confidentiality  to the Statistical  Office  of the European  Communities. 

Within  the  limits  set  in  the  second  paragraph  of  Article  2,  any  changes  -  new  tables,  countries 
and/or  regions  concerned  -  in  the  data  requested  from  the  Member  States  may  be  the  subject  of 
Commission  Decisions  in accordance with the procedure provided  for  in Article 5. 

1. 

2. 

1. 

2. 

Article 4 

The Committee and its  tasks 

The  Commission  shall  be  assisted  by  the  Statistical  Programme  Committee,  hereinafter 
referred  to as  "the Committee". 

The  Committee  shall  examine  all  matters  relating  to  the  implementation  of  this  Regulation 
that  are  raised  by  its  Chairman,  either  on  his  own  initiative  or  at  the  request  of  a  Member 
State. 

Article 5 

Procedure 

The representative of the Commission  shall  submit to the  Committee  a draft  of the  measures 
to  be taken.  The  Committee  shall  deliver  its opinion  on  this  draft  within  a time  limit  which 
the  Chairman  may set in the light of the urgency  of the matter  in hand.  The opinion  shall  be 
delivered  by  the  majority  laid  down  in  Article  148 (2)  of  the  Treaty  establishing  the 
European  Community  for Decisions  which the Council  of the European  Union  is required  to 
adopt  on  a proposal  from  the  Commission.  When the  Committee  votes, the  weightings  laid 
down  in the  above-mentioned  Article  shall  be  applied  to  the  votes  of  the  representatives  of 
the Member  States. The Chairman shall not take part in the vote. 

The  Commission  shall adopt measures that  are immediately  applicable.  However,  if they do 
not  accord  with  the  opinion  delivered  by  the  Committee,  these  measures  shall  be 
immediately  communicated  by  the  Commission  to  the  Council,  in  which  case  the 
Commission  shall  postpone  the  application  of the  measures  it  has  adopted  by  three  months 
from  the date of such  communication. 

3. 

The  Council,  acting  by  a qualified  majority,  may  adopt  a different  Decision  within  the  time 
limit  laid down in paragraph 2. 

•c< <x 

Article 6 

Cooperation with other  committees 

1, 

2. 

On  all  matters  falling  within  the  competence  of  the  CMFB,  the  Commission  shall  request 
accordance  with  Article  2  of  Council 
the  opinion  of 
Decision  91/115/EEC. 

this  Committee 

in 

The  Commission  shall  communicate  to the Committee  on  Gross National  Product,  set up  by 
Council  Directive  89/130/EEC,  any  information  concerning  the  implementation  of  this 
Directive which is necessary  for the performance  of its duties. 

Article 7 

First transmission  of data 

Data  for  1995,  1996 and  1997 based  on the ESA  95  shall  be  sent  starting  on  1 January  1998  at  the 
latest,  in accordance with the deadlines laid down in Annex B. 

Until  the  first  transmission  based  on  the  ESA  95,  the  Member  States  shall  continue  to  send  the 
Commission  the accounts and tables according to the Directives  and  Regulations  in  force. 

Article 8 

Legal acts referring  to the  ESA 

All  references  to the ESA  in any existing  or future  legal  act  shall  be understood  to comply  with  the 
definitions  of the ESA 95. 

For  the  application  of  such  legal  acts, the  Member  States  shall  transmit  the  results  for  1995,  1996 
and  1997 in accordance with the ESA 95 for the first time starting not later than  1 January  1998 . 

Article 9 

This  Regulation  shall  enter  into  force  on the  twentieth  day  following  its  publication  in the  Official 
Journal  of the European  Communities. 

This Regulation  shall be binding in its entirety and directly  applicable  in all Member  States. 

OJ No L49,  21.2.1989 

-C Ov— 

Annex  I: 

Communication  to the  Commission 

Annex  la: 

Summary 

Annex II: 

Financial  statement 

Annex III: 

Impact assessment  form 

Annex  IV: 

Supplementary  form concerning  the EFTA  countries 

-i - o^ 

Annex  I 

Communication  to the  Commission 

Concerning:  Draft  proposal  for  a  Council  Regulation  on  the  European  System  of  National 

and  Regional  Accounts  in  the European  Union 

Grounds: 

1. 

The  statistical  services  of  the  Member  States,  coordinated  by  Eurostat,  have  an  important 
part to play  in meeting  Community  needs in the area of national  accounts. 

Over  the  past  two  years, Eurostat,  in close  cooperation  with  the  Member  States  and  various 
international  organizations,  has  carried  out  a thorough  revision  of  the  European  System  of 
Accounts  (ESA). The aim of this revision  was to bring the  system  up to date  with  economic 
changes, to clarify  it on a number of points, to harmonize  it with  other Community  statistical 
systems, and to iron out differences  between the old Community  system (ESA) and that used 
within the OECD and throughout  the world (SNA). 

2. 

The  draft  Regulation  has  two  annexes:  Annex  A  sets  out  the  methodology  of  the  European 
System  of Accounts  and Annex  B is a list of the tables  that the National  Statistical  Institutes 
will be obliged  to transmit to the  Commission. 

The  revised  methodology  is  fully  consistent  with  the  United  Nations'  System  of  National 
Accounts  (SNA),  but  more  specific  as  regards  the  institutions  and  conditions  in  the 
Community,  which will make it possible to achieve the higher  level of comparability  needed 
for  the  management  of  Economic  and  Monetary  Union  and  the  use  of  national  accounts 
aggregates  for  Community  administrative  and especially  budgetary  calculations. 

As  regards  the  production  of  national  accounts  data,  the  main  objectives  are  to  reduce  the 
time  taken  to  process  and  disseminate  the  data,  enhance  coverage  (not  least  geographical) 
and  step  up  the  harmonization  of  the  data.  This  cannot  fail  to  contribute  to  better 
management  and monitoring  of the implementation  of Economic  and Monetary  Union. 

Financial  implications 

3. 

The total  cost to the Community  budget  in the first  three years (1995-1997) of  implementing 
this  project  is  ECU  9  million,  90%  of  which  is  to  be  devoted  to  assisting  the  statistical 
services of the Member  States. The rest (10%) covers operating  expenditure  on research  and 
data  management. 

Impact on  small  and  medium-sized  enterprises  fSMEs) 

4. 

The  information  required  will  be  obtained  by  processing  official  statistics,  mostly  using 
existing  data  collection  systems.  Hence,  the  impact  of  the  project  on  enterprises  is 
considerably  reduced. 

Draft  Regulation 

5. 

The  Commission  is requested  to approve  this draft  Regulation  and  forward  it to the  Council 
for  adoption. 

-«*__ 

Annex la 

Summary 

Draft ESA Regulation 

The European System of Accounts (ESA) is a reference  framework  for drawing up accounts to meet 
the  Community's  needs,  using  a  methodology  designed  to  produce  results  that  are  comparable 
between the Member States. 

The aim of the draft  Regulation is to establish: 

a  methodology  comprising  common  standards,  definitions,  classifications  and  accounting 
rules, called the European System of Accounts (ESA), for drawing up accounts and tables on 
a comparable basis to meet the needs of the European Community; 

a  schedule  for  transmitting  the accounts  and  tables  drawn  up according  to  the  ESA  to  the 
Commission on precise dates. 

The implementation of this programme will cost ECU 9 million over the first three years, of which 
90%o will be devoted to the statistical services of the Member States. 

The  Commission  is  requested  to  approve  this  draft  Regulation  and  forward  it to  the  Council  for 
adoption. 

i-n. 

Annex  II 

1 TITLE  OF  OPERATION 

FINANCIAL  STATEMENT 

Draft  proposal  for  a  Council  Regulation  on  the  European  System  of  National 
and Regional  Accounts in the European  Union 

2 BUDGET  HEADING  INVOLVED 

Sub-section  B-5: Consumer  protection,  internal  market,  industry  and  trans-European 
networks. 

Chapter  B5-60:  Statistical  information  policy  connected  with  the  completion  of  the 
internal  market and in support of Community  policies. 

Article B5-600: Policy on statistical  information  concerned  with non-member  States. 

3  L E G AL  BASIS 

Article 213 of the Treaty establishing the European  Community 

The Treaty on European Union 

The Treaty  establishing the European Economic  Area 

Council  Decision  93/464/EEC of 22 July  1993 on the framework  programme 
for  priority  action  in  the  field  of  statistical  information  1993-1997,  in 
particular,  the  provisions  relating  to  the  policy  for  Economic  and  Monetary 
Union (OJ No L 219 of 28.08.1993). 

Council  Directive  89/130/EEC  of  13  February  1989  on  the  harmonization  of  the 
compilation  of gross national product at market prices (OJ No L 49 of 21.02.1998, p. 
26). 

Commission  Decision  93/570/EEC  of  4  October  1993  defining  the  distinction 
between  'other  taxes  linked  to  production'  and  'intermediate  consumption'  for  the 
purpose  of  the  implementation  of  Article  1  of  Council  Directive  89/130/EEC, 
Euratom  on the harmonization  of the compilation  of gross national  product  at market 
prices (OJ No L 276 of 09.11.1993, p.  13). 

Commission  Decision  94/168/EC  of  22  February  1994  on  measures  to  be  taken  for 
the  implementation  of  Council  Directive  89/130/EEC  on  the  harmonization  of  the 
compilation  of gross national product at market prices (OJ No L 77 of  19.03.1994, p. 
51). 

Council  Regulation  (EEC) No  2081/93  of 20 July  1993 amending  Regulation  (EEC) 
No  2052/88  on  the  tasks  of  the  Structural  Funds  and  their  effectiveness  and  on 
coordination  of  their  activities  between  themselves  and  with  the  operations  of  the 
European  Investment  Bank  and other  existing  financial  instruments  (OJ No  L  193 of 
31.07.1993, p. 5). 

^4& o~ 

Council  Regulation  (EC)  No  1164/94  of  16  May  1994  establishing  a cohesion  fund 
(OJ No  L  130 of 25.05.1994, p. 1). 

4  DESCRIPTION  OF OPERATION 

4.1 

General  objective 

The  objective  of  the  operation  is  to  provide  decision-makers  in  the  Institutions  and 
the  national  governments  with  harmonized  statistical  indicators  enabling  them  to 
monitor  the  attainment  of  objectives  in  connection  with  Economic  and  Monetary 
Union.  Such  statistics  are  required  by  the  Institutions  and  Member  States  for 
monitoring the application of the principles  set out in Article  3 A and  Article  130 A-E 
of  the  Treaty  on  European  Union  concerning  economic  policy  convergence  and 
economic  and social  cohesion. 

The  aim  of  the  programme  is  to  submit  proposals  to  the  statistical  institutes  of  the 
Member  States  for  carrying  out  statistical  surveys  and  for  the  processing  of  existing 
data  in the field  of national accounts using common  procedures. 

The programme will attempt to: 

implement  a  set  of  standards,  methods  and  organizational  structures  for 
producing  comparable,  reliable  and  relevant  statistics 
the 
Community; 

throughout 

provide the European  Institutions  and the  Governments  of the Member  States 
with  the  information  needed  to  implement,  monitor  and  promote 
the 
convergence of economic policy and regional  development  within the Union; 

disseminate  statistical  information  among  the  European  public,  enterprises 
and  other  social  and  economic  operators  to  assist  them  in  their  decision 
making; 

work towards improving the statistical  systems of the Member  States. 

4.2 

Period  covered  and arrangements  for renewal  or  extension 

Multiannual  operation, as there is an ongoing demand  for  statistical  information. 

5  CLASSIFICATION  OF  EXPENDITURE  OR  REVENUE 

5.1 

5.2 

5.3 

Non-compulsory  expenditure 

Differentiated  appropriations 

Type of revenue  involved 

Sale of statistics, partly covering the production  of  publications 

41-c^ 

6 T Y PE  OF  EXPENDITURE  OR  REVENUE 

£.J. 

- 

100% subsidy 

No 

The Community  budget contribution  accounts  for  only  a small  percentage  (in 
the  region  of  5%)  of  the  actual  cost  of  collecting  the  data,  since  the 
Community's  statistical  activities  are  largely  carried  out  by  the  Member 
States.  However, 
the 
standardization of data collection, processing and transmission  to  Eurostat. 

some  expenditure 

to  encourage 

is  essential 

C  Jl .,  - 

Subsidy  for  joint  financing  with  other  sources  in  the  public  and/or  private 
sector 

Yes 

Joint  financing  with  the  public  sector  (budgets  of  the  national  statistical 
services) and the private  sector (receipts  from  sales of statistical  products  and 
financing  of surveys by enterprises). 

<T- 3 .  - 

Interest  subsidies 

< £ .H 

No 

Other 

None 

Qxf 

- 

Should  the  initiative  prove  a  financial  success,  is  there  provision  for  all  or  part 

of the Community  contribution to be  reimbursed? 

Not  applicable 

C  é  . - 

Will the proposed operation cause any change in the level of  revenue? 
Yes.  The  results  of  the  statistical  work  on  indicators  of  own  resources  (GNP,  VAT, 
customs duties) may be used to re-assess the general  level of the budget. 

£.-\ 

Re-use 

This expenditure may generate income which may be re-used. 

7 FINANCIAL  IMPACT 

7.1 

Method  of calculating the total cost of the operation  for the 1995 financial  year 

The  financial  statement  provides  an  estimate  of  annual  requirements  by  type  of 
expenditure under the operating  budget. 

^ L ou 

The total cost of the operation  is broken down  into three items: 

Contribution to official  statistical  institutes 
of the Member  States: 

Services of research institutes and private  firms 
in the Member  States: 

Information  and publication: 

ECU  8.1  million 

ECU 0.8  million 

ECU 0.1  million 

7.2 

Breakdown  by budget year (ECU  thousand) 

BUDGET 

1995 

3 000 

1996 

3 000 

1997 

3 000 

7.3  Operating expenditure  on research, meetings  of experts, etc. included  in part B 

Administrative expenditure directly related to the achievement  of the objective  of the 
operation and forming  an integral part thereof, totals ECU 0.9  million. 

Research 

Meetings of experts 

Conferences and 
symposia 

Information and 
publication 

1995 

1996 

1997 

0.25 

0.05 

-

-

0.25 

0.05 

-

-

0.15 

0,05 

-

0.1 

7.4 

Schedule  to  be  completed  for  multiannual  operations  accompanied  by 
amount deemed  necessary 

8 

FRAUD  PREVENTION  MEASURES;  RESULTS OF MEASURES  TAKEN 

Statistical  information  is  considered  an  objective  means  of  assessing  Community  action 
programmes and thus helps to consolidate anti-fraud  measures. 

> ft  Ow 

ELEMENTS  OF COST-EFFECTIVENESS  ANALYSIS 

9.1  Specific  and  quantified  objectives;  target  population 

Specific  objectives: 

The  objective  mentioned  in  point  4.1  is  linked  to  the  Treaty  provisions 
concerning: 

Economic and Monetary  Union. 

The implementation  of the programme will involve the following  tasks: 

a) 

b) 

c) 

d) 

e) 

f) 

developing  common  classifications,  methodologies  and  definitions  directly 
applicable  in the Member  States with the backing of Community  legislation; 

carrying out common  statistical  surveys on the basis of harmonized  methods; 

producing,  analysing  and disseminating  statistical  results  for  the  Community, 
including  international  and  inter-regional  comparisons; 

incorporating  Community  practice  into  the  statistical  programmes  of  the 
Member  States; 

promoting  the  convergence  of  national  statistical  practices  by  means  of 
common training programmes; 

assisting  the  development  of the  statistical  systems  of  the  Member  States  by 
means of structural  initiatives  and the exchange  of technology  and  experience 
between  Member  States. 

Sectoral  programmes: 

Sectoral  programmes  for  Economic  and  Monetary  Union:  economic  and 
statistics; 
financial 
monetary policy coordination  and ecu indicators; external trade statistics. 

and  balance-of-payments 

accounts;  public-sector 

Target  population 

The beneficiaries  of this operation  are: the Community  Institutions, the  Governments 
of  the  Member  States,  enterprises,  economic  and  social  decision-makers  in  the 
Member  States, research  institutes, universities  and the  media. 

9.2  Grounds  for  the  operation 

Need  for  Community  financial  aid 

Mu-

This operation  aims to achieve  four  results: 

-  to  provide  the  Institutions  with  the  quantitative  data  they  need  to  develop, 
monitor  and  assess  programmes  of  action  in  accordance  with  Article  3, 
paragraph  2,  of  the  Financial  Regulation,  thereby  contributing  towards  a 
more  efficient  and  relevant  employment  of  the  Community  budget, 
combating  fraud,  and  providing  a  basis  for  better  decision-making  in  all 
areas covered  by the programme; 

-  to provide  national  Governments  with  comparable  statistics  at regional  and 
national  levels  on  all  the  Member  States  for  assessing  and  monitoring  the 
progress of Community  policy  programmes; 

-  to  provide  political,  economic  and  social  decision-makers 

the 
Community  with  statistics  for  taking  decisions  and  assessing  the  results  of 
decisions  taken  in their  own  area  of  activity;  it  is  therefore  a  vital  element 
in  the  European  information  market,  enhancing  the  European  economy's 
competitive position vis-à-vis  the rest of the  world; 

in 

-  to  provide  the  scientific  community  with  the  information  heeded  to  pursue 
research  into,  and  broaden  knowledge  of,  the  economic  and  social  life  of 
the  Community. 

Choice of ways and  means 

The financing  of this operation  falls  mainly  on the Member  States (heading  1, 
point  6.1) 
that  have  well-established  data  collection  and  processing 
structures. If the Commission  were to finance  the  whole programme, the  cost 
would  be extremely high for a less reliable  result; 

the  results  of  the  operation  contribute  towards  improving  the  statistical 
information  used  in work on the gross national  product  (GNP) of the  Member 
States, the distribution of the regional  and  cohesion  funds,  agricultural  levies, 
VAT calculations, and customs  levies and  receipts; 

the  collection  of  statistical  information  is  organized  in  a  highly  subsidiary 
manner,  whereby  the  national  statistical  systems  have  full  responsibility  in 
each  Member  State;  the  Community  statistical  programme  becomes  an 
integral  part  of  the  national  statistical  programmes,  thereby  contributing  to 
the creation of a European  statistical  area; 

pump-priming  effect  on  progress  towards  a  European  statistical  area,  and 
hence  towards  enhanced  Community-wide  integration  of  national  statistical 
systems; 

the  Community  statistical  programme  mobilizes  the  budgets  of  the  national 
statistical  systems, which make a large contribution  to achieving  it; 

effect  on  the  research  and  university  world,  which  will  have  unprecedented 
scientific  material  for  social and economic  studies and  research. 

- IV  G-

Main  factors  of uncertainty  which  could affect  the  results of the  operation 

The amount of the appropriations. 

9.3  Monitoring  and evaluation  of the  operation 

Performance  indicators 

The  performance  indictors  selected  for  assessing  the  progress  of  work  are  of  three 
kinds: 

budgetary:  in  order  to  compare  the  plan  with  the  out-turn  of  budget  at  the  end  of 
1998, the plan must be carried out in  full. 

planning:  to  compare  the  statistical  results  with  the  programme  established  in 
advance and the forecast  budget. 

cost-effectiveness:  comparative  studies  are  planned  to  measure  the  volume  of 
appropriations required for similar operations and to correct assessments. 

A. 

Implementation  of budget (ECU  million) 

Committed 

Disbursed 

1995 
end  1996 
end  1997 
end  1998 
Total 

3.0 
3.0 
3.0 

not forecast 

9.0 

2.1 
3.0 
3.0 
0.9 
9.0 

B. 

Implementation  of  programme 

Existing  programmes 

reduction of time taken to disseminate  data to users; 

volume of requests for access to  data. 

New  programmes 

carrying  out  surveys  and/or  statistical  processing  according  to  a 
schedule decided under the programme; 

carrying out surveys and/or  statistical  processing  within the  budgetary 
limits set for each programme; 

volume of new databases available to users. 

C. 

Use of human  and budgetary  resources 

study and assessment  of resources  needed  for  standard  operations; 

computerization  of  services  as  a  means  of  accomplishing  the  work 
with fewer  resources. 

At-*-

Details  and frequency  of planned  evaluations 

The  implementation  of  the  programme  submitted  to  the  Council  for  its  assent 
(Regulation)  will  be  monitored  by  a  Committee  composed  of  a  Chairman  and  a 
number  of Directors-General  of National  Statistical  Institutes: 

Statistical  ProgrammCommittee (Council  Decision  89/382/EEC  of  19 June  1989) 

The  Committee  examines  all  questions  pertaining  to  the  implementation  of  the 
Regulation  raised  by  its  Chairman,  either  on  his  own  initiative  or at the  request  of a 
Member  State. 

Is  the  operation  included  in  the  DG's  financial  programming  for  the  years  in 
question? 

The  planned  operation  is  part  of  the  statistical  programme,  but  no  provision  was 
made at the time for its  financing. 

To which  broader objective defined  in the DG's  financial  programming  does  the 
objective of the planned operation  correspond? 

10 

ADMINISTRATIVE  EXPENDITURE  (PART  A  OF THE  BUDGET) 

10.1  Will  the  proposed  operation  involve  an  increase  in  the  number  of  Commission 

staff? 

No. 

10.2  Indicate  the  amount  of  staff  and  administrative  expenditure  involved  in  the 

proposed  operation. 

W^c^-

Annex  III 

IMPACT ASSESSMENT  FORM 
THE  IMPACT OF THE PROPOSAL  ON  BUSINESS 

with  special  reference  to small and  medium-sized 
enterprises  (SMEs) 

Title  of proposal: 

Draft  Proposal  for  a  Council  Regulation  on  the  European  System  of 
National  and Regional Accounts  in the European  Union 

The  proposal: 

1. 

The  aim  of  the  proposal  is  to  establish  a  common  statistical  language  for  the  purpose  of 
producing  harmonized  statistical  indicators  for  monitoring  the  attainment  of  objectives  in 
connection  with  Economic  and  Monetary  Union.  The  programme  aims  to  submit  proposals 
to  the  statistical  institutes  of  the  Member  States  for  carrying  out  statistical  surveys  and 
processing  existing data in the field  of national accounts using common  procedures. 

Impact  on  enterprises: 

2. 

3. 

4. 

5. 

Enterprises  are not directly concerned by this proposal, regardless of sector, size or  region. 

The  Regulation  does  not  entail  any  particular  action  involving  enterprises,  but  at the  end  of 
the  day  they  will  benefit  from  the  availability  of comparable,  reliable  and  relevant  statistics 
for  the  Member  States  as  a  result  of  the  development  and  implementation  of  a  set  of 
standards, methods and organizational  structures. 

The  direct  economic  effects  are considerable,  and  one  may  hope  for  time  savings  and  better 
understanding  between  partners  through  the  uniform  application  of  a  more  systematic 
terminology. 

The  proposal  itself  defines  the  standards,  terminology,  concepts  and  priorities  among  the 
elements  to  be  implemented.  It  does  not  contain  specific  measures  affecting  any  given 
category  of enterprises. 

Consultation 

6. 

UNICE  and  the  main  European  Industrial  Branch  Federations  (FEBI)  have  been  informed 
indirectly  via other drafts  of this proposed  Regulation. 

M Q^ 

Annex  IV 

SUPPLEMENTARY  FORM CONCERNING  THE EFTA  COUNTRIES 

Title of the  proposal 

Draft  proposal  for  a  Council  Regulation  on  the  European  Systems  of  National  and  Regional 
Accounts  in the European  Union. 

Impact  on the EFTA  countries 

The  EFTA  countries  are  affected  by  the  draft  Regulation  and  were  involved  in  the  discussions 
concerning  it. 

They  attended  the  meetings  of  the  National  Accounts  Working  Party  at  which  the  proposal  was 
discussed. 

>f* Ow 

ANNEX A 

eurostat 

ESÂ 1995 

NOVEMBER  1994 

ESA 1995 

TABLE OF  C O N T E N TS 

Chapter  I.: 

General features 

IL: 

III.: 

IV.: 

V.: 

VI.: 

Units and groupings of units 

Transactions in products 

Distributive transactions 

Financial transactions 

Other 

flows 

VIL: 

Balance sheets 

VIII.: 

Sequence of accounts and balancing items 

IX.: 

X.: 

XI.: 

Input-output 

framework 

Price and volume measures 

Population and labour input 

XII.. 

Quarterly economic accounts 

XIII.: 

Regional accounts 

Annexes: 

1. 

2. 

3. 

4. 

Index 

Financial intermediation services indirectly measured (FISIM) 

Leasing and hire purchase of durable goods 

Insurance 

Classifications  and accounts 

v 

Page 

5 

31 

65 

107 

153 

187 

201 

231 

299 

327 

347 

359 

363 

373 

381 

387 

405 

CHAPTER I 

GENERAL FEATURES 

-4 S -

L 

INTRODUCTION 

1.01. 

internationally  compatible  accounting  framework 

The  European  System  of National  and  Regional  Accounts  (1995  ESA,  or  simply:  ESA)  is 
an 
for  a  systematic  and  detailed 
description  of  a  total  economy  (that  is,  a  region,  country  or  group  of  countries),  its 
components  and  its relations  with other total  economies. 

The  1995  ESA  replaces  the  European  System  of  Integrated  Economic  Accounts  published 
in  1970 (1970  ESA; a second,  slightly  modified,  edition appeared  in  1978). 

The  1995  ESA  is  fully  consistent  with  the  revised  worldwide  guidelines  on  national 
accounting,  the  System  of  National  Accounts  (1993  SNA,  or  simply:  SNA;  these 
guidelines  have  been  produced  under  the joint  responsability  of  the  United  Nations,  the 
IMF,  the  Commission  of  the  European  Communities,  the  OECD  and  the  World  Bank). 
However,  the  ESA  is  focused  more  on  the  circumstances  and  data  needs  in  the  European 
Union.  Like the  SNA, the ESA  is harmonized  with the concepts  and  classifications  used  in 
many  other,  social  and  economic  statistics.  Cases  in  point  are  statistics  on  employment, 
statistics  on  manufacturing  and  statistics  on external  trade. The  ESA  can therefore  serve  as 
the  central  framework  of  reference  for  the  social  and  economic  statistics  of  the  European 
Union  and  its Member  States. 

1.02. 

The ESA  framework  consists of two main sets of tables: 

- 

- 

the sector accounts (see chapter VIII); 

the  input-output  framework  (see  chapter  IX)  and  the  accounts  by  industry  (see  chapter 
VIII). 

The  sector  accounts  provide,  by  institutional  sector,  a  systematic  description  of  the 
different  stages  of the  economic  process: production,  generation  of  income,  distribution  of 
income,  redistribution  of 
income  and  financial  and  non-financial 
accumulation.  The  sector  accounts  also  include  balance  sheets  to  describe  the  stocks  of 
assets and  liabilities at the beginning and the end of the accounting  period. 

income,  use  of 

The  input-output  framework  and  the  accounts  by  industry  describe  in  more  detail  the 
production  process  (cost  structure,  income  generated  and  employment)  and  the  flows  of 
goods and  services  (output,  imports, exports, final  consumption,  intermediate  consumption 
and capital  formation  by product  group). 

The  ESA  encompasses  concepts  of  population  and  employment  (see  chapter  XI).  These 
concepts  are relevant  for both the sector accounts and the input-output  framework. 

The  ESA  is  not  restricted  to  annual  national  accounting,  but  applies  also  to  quarterly 
accounts (chapter  XII) and regional accounts (chapter XIII). 

II. 

THE  USES OF  THE  ESA 

1.03. 

The ESA  framework  can be used to analyse and  evaluate: 

- 

the structure of a total economy.  Cases in point are: 

*  value added and employment  by  industry; 

*  value added and employment by region; 

* 

income distributed by  sector; 

* 

imports and exports by product group; 

*  final  consumption expenditure by product  group; 

*  fixed  capital formation  and fixed capital  stock by  industry; 

*  the composition  of the stocks and  flows  of financial  assets by type of asset  and  by 

sector. 

-  specific  parts or aspects of a total economy. Cases in point are: 

*  banking and finance  in the national  economy; 

*  the role of  government; 

*  the economy of a specific  region (in comparison to that of the nation as a whole). 

- 

the development of a total economy over time. Cases in point are: 

*  the analysis of GDP growth rates; 

*  the analysis of  inflation; 

*  the  analysis  of  seasonal  patterns  in  household  expenditure  on  the  basis  of 

quarterly  accounts 

*  the  analysis  of  the  changing 

importance  of  particular 

types  of 

financial 

instruments over time, e.g. the increased importance of options; 

*  the  comparison  of the  industrial  structures  of  the  national  economy  over  the  long 

term, e.g. over a period of thirty years. 

-  a total economy  in relation to other total economies. Cases in point are: 

*  the comparison  of the roles of government  in two  Member  States of the  European 

Union; 

*  the  analysis  of  the  interdependencies  between  the  economies  of  the  European 

Union; 

*  the  analysis  of  the  composition  and  destination  of  the  exports  of  the  European 

Union; 

*  the  comparison  of  GDP  growth  rates  or  disposable  income  per  capita  in  the 

European  Union and in the United  States and  Japan. 

-7  -

1.04. 

For  the  EU  and  its  Member  States,  the  figures  from  this  framework  play  a  major  role  in 
formulating  and monitoring  their social and economic  policy. 

Furthermore, there are some very important  specific  uses (in  1995): 

- 

- 

- 

for  monitoring  and  guiding  European  monetary  policy:  the  criteria  of  convergence  for 
the  European  Monetary  Union  have  been  defined  in  terms  of  national  accounts  figures 
(government  deficit,  government  debt and GDP). 

for  granting  monetary  support  to  regions  in  the  EU:  the  expenditure  for  the  Structural 
Funds of the EU is partly based on regionalised  national  accounts  figures. 

for  determining  the  own  resources  of  the  EU.  The  latter  depend  on  national  accounts 
figures  in three ways: 

*  the  total  resources  for  the  EU  are  determined  as  a  percentage  of  the  Member 
States'  Gross  National  Incomes  (in  the  1970  ESA,  Gross  National  Income  was 
called  Gross national  Product (GNP)); 

*  the  third  own  resource  of the  EU  is the  VAT  own  resource.  The, contributions  by 
the  Member  States  for  this  resource  are  largely  affected  by  national  accounts 
figures,  because they are used to calculate the average VAT rate; 

*  the  relative  sizes  of  the  contributions  by  the  Member  States  for  the  fourth  own 

resource of the EU are based on their Gross National  Incomes. 

1.05. 

In order  to establish  a good  balance  between data needs and  data possibilities,  the  concepts 
in the ESA have eight important characteristics. They are: 

1.  internationally  compatible; 

2.  harmonized with those in other social and economic  statistics; 

3.  consistent; 

4.  operational; 

5.  different  from  most administrative  concepts; 

6.  well-established  and fixed  for a long period; 

7.  focused  on describing the economic process in monetary  and readily observable terms; 

8.  flexible  and  multi-purpose. 

1.06. 

The concepts are internationally  compatible because: 

-  For  EU  Member  States, the ESA is the standard  for  submitting  national  accounts  data to 
all  international  organizations.  Only  in  the  national  publications  is  strict  adherence  to 
the ESA not  obligatory. 

-  The  concepts  in  the  ESA  are  in  all  respects  consistent  with  those  in  the  worldwide 

guidelines on national accounting, i.e. the  SNA. 

International  compatibility  of  concepts  is  crucial  when  comparing  statistics  for  different 
countries. 

1.07. 

The concepts are harmonized  with those in other social  and economic  statistics  because: 

-  The  ESA  employs  many  concepts  and  classifications  (e.g.  NACE.Rev.  1) that  are  also 
used  for  the  other  social  and  economic  statistics  of  EU  Member  States, e.g.  in  statistics 
on  manufacturing,  statistics  on  external  trade  and  statistics  on  employment;  conceptual 
differences  have  been  kept  to  a  minimum.  Furthermore,  these  EU  concepts  and 
classifications  are also harmonized  with those of the United  Nations. 

-  Like  the  SNA,  the  concepts  in  the  ESA  are  also  harmonized  with  those  in  the  major 
international  guidelines  on  some  other  economic  statistics,  in  particular  the  IMF 
Balance  of  Payments  Manual  (BPM),  the  IMF  Government  Finance  Statistics  (GFS), 
the  OECD  Revenue  Statistics  and  the  ILO  resolutions  on  the  concepts  of  employment, 
hours worked and labour costs. 

This  harmonization  with  other,  social  and  economic  statistics  greatly  aids  the  linkage  to 
and  comparison  with  these  figures.  As a consequence,  better  national  accounts  figures  can 
be compiled.  Furthermore, the information  contained  in these  specific  statistics can now be 
better  related  to  the  general  statistics  on  the  national  economy,  i.e.  the  national  accounts 
figures  like GNP or value added per industry and  sector. 

1.08. 

The  identities  in  the  accounting  framework  enforce  the  consistency  of  the  concepts  used 
describ the different  parts of the economic  process  (production,  income  distribution,  use of 
income,  accumulation).  As  a  result  of  this  internal  consistency,  statistics  from  different 
parts  of  the  accounting  framework  can  be  usefully  related  to  each  other.  So,  for  example, 
the following  ratios can be calculated: 

-  productivity  figures,  such  as  value  added  per  hour  worked  (this  figure  requires 

consistency  between the concepts of value added  and hours worked) ; 

-  National  Disposable  Income  per  capita  (this  ratio  requires  consistency  between  the 

concepts National  Disposable Income and population); 

-  fixed  capital  formation  as  a  percentage  of  fixed  capital  stock  (this  ratio  requires 

consistency  between the definitions  of these flows  and stocks); 

-  government  deficit  and debt as percentages of Gross Domestic  Product (these  figures 

require  consistency  between  the  concepts  of  government  deficit,  government  debt  and 
Gross  Domestic Product). 

This  internal  consistency  of concepts  also allows  some estimates  to be derived  by  residual, 
e.g.  saving  can  be  estimated  as  the  difference  between  disposable  income  and  final 
consumption  expenditure (see also chapter IX). 

1.09. 

The  concepts  in  the  ESA  are  operational  concepts  since  they  are  designed  with  their 
measurement  in  mind.  The  operational  character  of  the  concepts  is  revealed  in  several 
ways: 

-  some  activities  or  items  have  only  to  be  described  when  significant  in  size.  This 
pertains,  for  example,  to  own-account  production  of  goods  by  households:  weaving 
cloth  and  the  production  of  pottery  are  not  to  be  recorded  as  production,  because  these 
types  of  production  are  deemed  to  be  insignificant  for  EU  countries.  Another  case  in 
point  is  that  small  inexpensive  tools  and  appliances  are  only  recorded  as  fixed  capital 
formation  when  the producer's  expenditure  on  such  durables  exceeds  ECU  500 (at  1995 
prices)  per  item  (or,  when  bought  in quantities,  for  the  total  amount  bought);  when  this 
expenditure  does  not  exceed  this  threshold,  these  items  are  recorded  as  intermediate 
consumption. 

-  some  concepts  are  accompanied  by  clear  indications  of  how  to  estimate  them.  For 
example,  in  defining  capital  consumption  reference  is  made  to  linear  depreciation  and 
for  estimating  fixed  capital  stock  the  Perpetual  Inventory  Method  is  recommended. 
Another  case in point is the valuation  of own-account  production:  in principle,  it  should 
be  at  basic  prices,  but  if  necessary  the  basic  prices  may  be  approximated  by  adding  up 
the various costs  involved. 

-  some  simplifying  conventions  have  been  adopted.  For  example,  by  convention,  the 
collective  services  provided  by  government  are  all  final  consumption  expenditures. 
None  of  these  services  (e.g. the  provision  of  education  and  infrastructure)  are  recorded 
as inputs in the domestic production process. 

- 

the  concepts  are harmonized  with those  in  social  and  economic  statistics  used  as  inputs 
for  compiling the national accounts. 

1.10. 

However,  at the  same time, the  concepts  are  not  always  easy  to  put  into  operation  as  they 
usually  diverge  in  some  respects  from  those  employed  in  administrative  data  sources. 
Cases  in point are business accounts, data on various types of taxes (VAT, personal  income 
tax,  import  levies, etc.), social  security  data  and  data  from  supervisory  boards  on  banking 
and  insurance.  These  administrative  data  often  serve  as  inputs  for  compiling  the  national 
accounts. In general, they will therefore  have to be transformed  in order to comply  with  the 
ESA. 

The  concepts  in  the  ESA  usually  differ  in  some  respects  from  their  administrative 
counterparts  because: 

-  administrative  concepts  differ  between  countries.  As  a  consequence,  international 

compatibility  cannot be attained through administrative  concepts; 

-  administrative  concepts  change  over  time.  As  a  consequence,  comparability  in  time 

cannot  be attained through administrative  concepts; 

- 

- 

the concepts.underlying administrative  data  sources  are  usually  not  consistent  with  each 
other.  However,  linking  and  comparing  data,  which  is  crucial  for  compiling  national 
accounts  figures,  is only possible with a consistent  set of concepts; 

the  administrative  concepts  are  generally  not  optimal  for  economic  analysis  and  the 
evaluation  of economic  policy. 

Nevertheless,  sometimes,  administrative  data  sources  meet  the  data  needs  of  national 
accounts  and  other statistics very well, because: 

-  concepts  and  classifications  originally  devised  for  statistical  purposes  may  also  be 
adopted  for  administrative  purposes,  e.g.  the  classification  of  government  expenditure 
by type; 

-  administrative  data  sources  may  explicitly  take  account  of  the  (separate)  data  needs  of 
statistics;  this  applies,  for  example,  to  the  Intrastat  system  for  providing  information 
about deliveries  of goods between  EU-Member  States. 

1.11. 

The main concepts  in the ESA are well-established  and  fixed  for  a long period,  because: 

- 

- 

they  have been approved  as the international  standard  for the next decades; 

in  the  successive  international  guidelines  on  national  accounting  most  of  the  basic 
concepts have hardly been  changed. 

This  conceptual  continuity  reduces  the  need  to  recalculate  time  series  and  to  learn  new 
concepts.  Furthermore,  it  limits  the  vulnerability  of  the  concepts  to  national  and 
international  political  pressure.  For  these  reasons,  the  national  accounts  figures  have  been 
able to serve as an objective  data base for economic policy  and analysis for  decades. 

1.12. 

The ESA concepts are focused  on describing the economic  process  in monetary  and  readily 
observable  terms.  For  the  most  part,  stocks  and  flows  that  are  not  readily  observable  in 
monetary  terms,  or  that  do  not  have  a  clear  monetary  counterpart  are  not  taken  into 
account. 

This  principle  has  not  been  applied  strictly,  because  account  should  also  be  taken  of  the 
requirement  of  consistency  and  the  various  data  needs.  For  example,  consistency  requires 
that the value of collective services produced by government  is recorded as output,  because 
the  payment  of  compensation  of  employees  and  the  purchase  of  all  kinds  of  goods  and 
services  by  government  are  readily  observable  in  monetary  terms.  Furthermore,  for  the 
purposes  of economic  analysis and policy, describing the collective  services of  government 
in relation  to the rest of the national  economy  increases  also  the  usefulness  of  the  national 
accounts  as a whole. 

1.13. 

The  scope  of  the  concepts  in  the  ESA  can  be  illustrated  by  considering  some  important 
borderline  issues. 

The following  fall  within the production boundary  of the ESA (see paras  3.07.-3.09.): 

-  production of individual and collective  services by  government; 

- 

the own-account  production of housing  services by  owner-occupiers; 

-  production  of goods for own final consumption,  e.g. of agricultural  products; 

-  own-account  construction,  including that by households; 

- 

the production  of services by paid  domestic  staff; 

-  breeding  of fish in fish farms; 

-  production  forbidden  by law, e.g. prostitution  and production  of drugs; 

-  production  from  which the revenues  are not declared  in full  to  the fiscal  authorities,  e.g. 

clandestine production of textiles. 

The  following  fall  outside the production  boundary: 

-  domestic and personal  services produced  and consumed  within  the  same household,  e.g. 

cleaning, the preparation of meals or the care of sick or elderly  people; 

-  volunteer  services  that  do  not  lead  to  the  production  of  goods,  e.g.  caretaking  and 

cleaning  without  payment; 

-  natural  breeding offish  in open seas. 

In  general,  the  ESA  records  all  outputs  that  result  from  production  within  the  production 
boundary. However, there are some specific exceptions to this rule: 

- 

the  outputs  of  ancillary  activities  are  not  to  be  recorded;  all  inputs  consumed  by  an 
ancillary  activity  -materials,  labour,  consumption  of  fixed  capital,  etc.-  are  treated  as 
inputs  into the principal or secondary  activity  which  it supports; 

-  outputs  produced  for  intermediate  consumption  in the  same  local  Kind  of  Activity  Unit 
(KAU,  see  also  para  1.29.)  are  not  to  be  recorded;  however,  all  outputs  produced  for 
other  local KAUs belonging to the same institutional  unit are to be recorded as  output. 

is  to  be  recorded, 

then  the  concomitant 

The  accounting  logic  of  the  ESA  implies  that  if  activities  are  regarded  as  production  and 
their  output 
income,  employment,  final 
consumption,  etc. are  also  to  be  recorded.  For  example,  as the  own-account  production  of 
housing  services  by  owner-occupiers  is recorded  as  production,  so  is the  income  and  final 
consumption  expenditure  it  generates  for  these  owner-occupiers.  The  reverse  holds  when 
activities  are not recorded  as production: domestic  services produced  and  consumed  within 
the  same  household  do  not  generate  income  and  final  consumption  expenditure  and 
according  to the ESA concepts, no employment  is  involved. 

The  ESA also contains many specific  conventions,  e.g.: 

- 

- 

- 

- 

the valuation  of government  output; 

the  valuation  of  the  output  of  insurance  services  and  financial  intermediation  services 
indirectly  measured; 

recording  all  the  collective  services  provided  by  government  as  final  consumption 
expenditure and none as intermediate  consumption; 

recording  the  use  of  financial 
intermediate consumption of a nominal sector or a nominal  industry. 

intermedation  services  indirectly  measured  as  the 

1.14. 

The concepts  in the ESA are multi-purpose: for a great range of uses the ESA concepts  will 
be  acceptable,  though  they  may  need  to  be  supplemented  for  some  uses  (see  also  para 
1.18.). 

1.15. 

1.16. 

1.17. 

The  detail  in the  conceptual  framework  of the  ESA  offers  the  opportunity  for  flexible  use: 
some  concepts  are  not  explicitly  present  in the  ESA  but  can  nevertheless  easily  be  derived 
from  it.  For  example,  value  added 'at  factor  cost  can  be  derived  by  subtracting  net  other 
taxes  on  production  from  value  added  at basic  prices. Another  case  in  point  is the  creation 
of new sectors  by rearranging  the sub-sectors defined  in the  ESA. 

Flexible  use  is  also  possible  by  introducing  additional  criteria  which  do  not  conflict  with 
the  logic  of  the  system.  For  example,  these  criteria  might  be  the  scale  of  employment  for 
enterprises  or  the  size  of  income  for  households.  For  employment,  subclassification  by 
level of education,  age and sex can be  introduced. 

This  flexible  use  may  be  incorporated  in a Social  Accounting  Matrix  (SAM).  The  SAM  is 
a  matrix  presentation  which  elaborates  the  linkages  between  supply  and  use  tables  and  the 
sector  accounts.  A  SAM  commonly  provides  additional  information  on  the  level  and 
composition  of  (un)employment,  via a subdivision  of  compensation  of  employees  by  type 
of  person  employed.  This  subdivision  applies  to  both  the  use  of  labour  by  industry,  as 
shown  in the  supply  and  use tables, and  the supply  of  labour  by  socio-economic  subgroup, 
as  shown  in  the  allocation  of  primary  income  account  for  households.  In  this  way,  the 
supply and  use of various categories  of labour is shown  systematically. 

1.18. 

For  some  specific  data  needs  the  best  solution  is  to  draw  up  separate  satellite  accounts. 
Cases in point  are the data needs  for  e.g.: 

- 

- 

- 

- 

- 

- 

- 

- 

the analysis of the role of tourism  in the national  economy; 

the analysis  of the costs and  financing  of health care; 

the  analysis  of  the  importance  of  research  &  development  and  human  capital  for  the 
national  economy; 

the  analysis  of the  income  and  expenditure  of households  on the  basis of  micro-oriented 
concepts  of income and  expenditure; 

the analysis of the interaction  between the environment  and the  economy; 

the analysis of production within  households; 

the analysis of changes  in  welfare; 

the analysis of the differences  between national accounts and business accounts  figures 
and their  influence  on stock and exchange markets; 

- 

the estimation  of tax revenues. 

1.19. 

Satellite  accounts  can serve such data needs by: 

-  showing  more detail  where necessary and leaving out superfluous  detail; 
-  enlarging  the  scope  of  the  accounting  framework  by  adding  non-monetary  information, 

e.g.  on pollution  and environmental  assets; 

-  changing  some  basic  concepts,  e.g.  by  enlarging  the  concept  of  capital  formation  by 
amount  of the expenditure  on research & development  or the expenditure  on  education. 

(2) 

1.20. 

An  important  feature  of  the  satellite  accounts  is  that  in  principle  all  basic  concepts  and 
classifications  of  the  standard  framework  are  retained.  Only  when  the  specific  purpose  of 
the  satellite  account  definitely  requires  a  modification,  are  changes  in  the  basic  concepts 
introduced.  In  such  instances, the  satellite  account  should  also  contain  a table  showing  the 
link  between  the  major  aggregates  in  the  satellite  account  and  those  in  the  standard 
framework.  In  this  way,  the  standard  framework  retains  its  role  as  a  framework  of 
reference  and  at the same time justice  is done to more  specific  needs. 

1.21. 

The  standard  framework  does  not  pay  much  attention  to  stocks  and  flows  which  are  not 
readily  observable  in  monetary  terms  (or  without  a  clear  monetary  counterpart).  By  their 
nature,  the  analysis  of  such  stocks  and  flows  is  usually  also  well  served  by  compiling 
statistics  in non-monetary  terms, e.g.: 

-  production  within  households  can  most  easily  be  described  in  terms  of  hours  allocated 

to the alternative  uses; 

-  education  can  be  described  in  terms  of  type  of  education,  the  number  of  pupils,  the 

average  number  of years of education  before  obtaining a diploma, etc. 

- 

the  effects  of  pollution  are  best  described  in  terms  of  changes  in  the  number  of  living 
species,  the  health  of  the  trees  in  the  forest,  the  volume  of  refuse,  the  amounts  of 
carbon-monoxide  and radiation, etc. 

The  satellite  accounts  offer  a possibility  to link  such  statistics  in non-monetary  units  to  the 
standard  national  accounts  framework.  The  linkage  is  possible  by  using  for  these  non 
monetary  statistics,  as  far  as  possible,  the  classifications  employed  in  the  standard 
framework,  e.g.  the classification  by type of household  or the classification  by  industry.  In 
this way, a consistent  extended  framework  is drawn up. This framework  can then  serve  as a 
data  base  for  the  analysis  and  evaluation  of  all  kinds  of  interactions  between  the  variables 
in the standard  framework  and those in the extended  part. 

1.22. 

The  standard  framework  and  its  major  aggregates  do  not  describe  changes  in  welfare. 
Extended  accounts  can  be  drawn  up  which  include  also  the  imputed  monetary  values  of, 
e.g.: 

-  domestic and personal  services produced  and consumed  within the same  household; 

-  changes  in leisure time; 

-  amenities  and dis-amenities of urban  life; 

- 

inequalities  in the distribution of income over persons. 

They  can  also  reclassify  the  final  expenditure  on  regrettable  necessities  (e.g.  defence)  as 
intermediate  consumption,  i.e. as not contributing  to welfare.  Similarly,  the  damage  due  to 
floods  and  other  natural  disasters  could  be classified  as  intermediate  consumption,  i.e.  as a 
reduction  in (absolute)  welfare. 

14  -

In this way, one could try to construct a very rough and very  imperfect  indicator of  changes 
in  welfare.  However,  welfare  has  many  dimensions,  most  of  which  are  best  not  expressed 
in  monetary  terms.  A  better  solution  for  measuring  welfare  is  therefore  to  use,  for  each 
dimension,  separate  indicators  and  units  of  measurement.  The  indicators  could  be,  for 
example,  infant  mortality,  life  expectancy,  adult  literacy  and  national  income  per  capita. 
These  indicators could  be incorporated  in a satellite  account. 

1.23. 

In  order  to  attain  a  consistent,  internationally  compatible  framework,  administrative 
concepts  are  not  employed  in  the  ESA.  However,  for  all  kinds  of  national  purposes, 
obtaining  figures  based  on  administrative  concepts  can  be  very  useful.  For  example,  for 
estimating  tax  revenues  statistics  of  taxable  income  are  required.  These  statistics  can  be 
provided  by  making  some  modifications  to  the  national  accounts  statistics.  A  similar 
approach could  be taken for some concepts used in national  economic policy, e.g.  for: 

- 

- 

- 

the  concept  of  inflation  used  for  increasing  pensions,  unemployment  benefits  or 
compensation  of employees for civil servants; 

the  concepts  of taxes, social contributions,  government  and  the collective  sector  used  in 
discussing  the optimal  size of the collective  sector; 

the  concept  of  'strategic'  sectors/industries  used  in  national  economic  policy  or  the 
economic policy  of the EU; 

- 

the concept  of'business  investments' used in national  economic  policy. 

Satellite  accounts  or  simple  supplementary  tables  could  do  justice  to  such,  usually 
specifically  national, data needs. 

1.24. 

The  ESA  (the  1995 ESA)  is fully  consistent  with the revised  System  of National  Accounts 
(1993  SNA), which provides guidelines on national  accounting  for  all countries  throughout 
the  world.  Nevertheless, there are  several  differences  between  the  1995 ESA  and  the  1993 
SNA: 

-  differences  in presentation,  e.g.: 

*  In  the  ESA  there  are  separate  chapters  on  transactions  in  products,  distributive 
transactions  and  financial  transactions.  In  contrast,  in  the  SNA  these  transactions 
are  explained  in  seven  chapters  arranged  by  account,  e.g.  chapters  on  the 
production  account,  the  primary  distribution  of  income  account,  the  capital 
account and the Rest of the World  account. 

*  The  ESA  describes  a  concept  by  providing  a  definition  and  a  listing  of  what  is 
included  and  what  is  excluded.  The  SNA  describes  concepts  usually  in  more 
general  terms and  endeavours  also to explain  the  rationale  behind  the  conventions 
adopted. 

The ESA also contains chapters on regional  accounts and  quarterly  accounts. 

The  SNA also contains a chapter on satellite  accounts. 

- 

the  ESA  concepts  are  in  several  instances  more  specific  and  precise  than  those  of  the 
SNA,  e.g.: 

*  The  SNA  defines  market  output  in terms  of'economically  significant  prices'.  The 
ESA  adds  that  for  EU  countries  economically  significant  prices  should  cover  at 
least  50% of the production  costs of the product. 

*  The  ESA  specifies  concrete  recording  thresholds,  e.g.  for  recording  small  tools 

and appliances devices as intermediate  consumption; 

*  The  ESA  assumes  that  several  types  of  household  production  of  goods,  such  as 
the  weaving  of  cloth  and  the  making  of  furniture,  are  not  significant  in  EU 
Member  States and therefore  need not be  recorded; 

*  The ESA makes explicit reference  to specific  institutional  arrangements  in the EU, 
such  as  the  Intrastat  system  for  recording  intra-EU  flows  of  goods  and  the 
contributions  by the Member  States to the EU. 

*  The  ESA  contains  EU-specific  classifications,  e.g.:  CPA  for  products  and 
NACE.Rev.l  for  industries  (specific  but  harmonized  with  the  corresponding  UN 
classifications). 

*  The  ESA  contains  an  additional  classification  for  all  external  transactions:  they 
should  be divided  into those between  residents  of the  EU  and  those  with  residents 
from  outside the EU. 

The  ESA  can  be  more  specific  than  the  SNA,  because  the  ESA  only  applies  to  the  EU 
Member  States. For the data needs of the EU, the ESA should  also be more  specific. 

1.25. 

The  1995  ESA  differs  in  scope  as  well  as  in  concepts  from  the  1970  ESA.  Most  of  these 
differences  correspond  to  differences  between  the  1968  SNA  and  1993  SNA.  Some  of 
these major  differences  in scope are: 

- 

- 

- 

- 

- 

the  inclusion of balance sheets; 

the  inclusion  of  other  changes  in  assets  accounts,  i.e.  the  introduction  of  the  concepts 
other changes in volume, nominal holding gains and real holding  gains; 

the  introduction of a subsectoring  of households; 

the  introduction  of a new concept of final consumption:  Actual  Final  Consumption; 

the  introduction  of  a  new  price-adjusted  income  concept:  Real  National  Disposable 
Income; 

- 

the inclusion  of the concept of purchasing power parities. 

Some  of the major  differences  in concepts are: 

- 

- 

literary-artistic  work  (writing  books, composing  music)  is  now  regarded  as  production; 
payments  for  literary-artistic  work  are therefore  payments  for  services  and  not  property 
income; 

the  valuation  of  the  output  of  insurance  services  has  changed  in  some  respects,  e.g. 
technical  reserves  are  now  also  taken  into  account  in  valuing  the  output  of  non-life 
insurance; 

-  more detailed  treatment  of trade and transport  margins; 

- 

- 

the introduction of chain  linking for calculating constant prices; 

the  concept  of  financial  leasing  has  been  introduced  (the  1968  SNA  and  1970  ESA 
contained  only the concept of operational  leasing); 

-  expenditure  on mineral  exploration and on computer  software  is now recorded  as capital 

formation  (instead  of as intermediate  consumption); 

-  capital  consumption  should  also  be  recorded  for  infrastructural  works  of  government 

(roads, dikes, etc.); 

- 

identification  of  new  financial 
derivative financial  instruments  such as options. 

instruments,  such  as  repurchase  agreements,  and 

There are also differences  that do not result from  changes  in the SNA,  e.g.: 

- 

- 

the introduction  of supply and use tables (this was already  included  in the  1968 SNA); 

introduction  of  some  registration 

the 
institutional  arrangements  in the EU (see para  1.24.); 

thresholds  and 

the  reference 

to  specific 

-  a clear  choice  in favour  of valuing  output  at basic prices  (the  1970 ESA,  the  1968  SNA 

and the  1993 SNA also accept valuation at producer's prices); 

- 

the  introduction  of  the  concepts  of  economically  active  population  and  unemployment 
(these concepts are absent in the  1968 and  1993 SNA). 

III. 

THE ESA AS A  SYSTEM 

1.26. 

The main features  of the system are: 

-  statistical units and their  groupings 

-  flows  and  stocks 

- 

- 

the system of accounts and the aggregates 

the input-output  framework. 

A) 

STATISTICAL  UNITS AND THEIR GROUPINGS  0) 

1.27. 

A  characteristic  feature  of  the  system  is  the  use  of  two  types  of  unit  and  two  ways  of 
subdividing  the economy which are quite different  and serve separate analytical  purposes. 

In  order  to  describe  income,  expenditure  and  financial  flows,  and  balance  sheets,  the 
system  groups  institutional  units  into  sectors  on  the  basis  of  their  principal  functions, 
behaviour  and  objectives. 

See chapter  II, "Units and groupings of units". 

17 

In  order  to  describe  processes  of  production  and  for  input-output  analysis,  the  system 
groups  local kind-of-activity  units (local KAUs) into industries on the basis of their  type of 
activity.  An  activity  is characterised  by  an  input  of  products,  a production  process  and  an 
output  of products. 

1 ) 

Institutional  units and  sectors 

1.28. 

Institutional  units  are  economic  entities  that  are  capable  of  owning  goods  and  assets,  of 
incurring  liabilities and of engaging in economic activities and transactions with other  units 
in  their  own  right.  For  the  purposes  of  the  system,  the  institutional  units  are  grouped 
together  into  five  mutually  exclusive  institutional  sectors  composed  of the  following  types 
of units : 

-  non-financial  corporations; 

- 

financial  corporations; 

-  general  government; 

-  households; 

-  non-profit  institutions serving households. 

The  five  sectors  together make up the total  economy.  Each  sector  is also divided  into  sub-
sectors.  The  system  makes  provision  for  a  complete  set  of  flow  accounts  and  balance 
sheets  to  be  compiled  for  each  sector,  and  sub-sector  if  desired,  as  well  as  for  the  total 
economy. 

2) 

Local kind  of activity units and  industries 

1.29.  Most  institutional  units  in their  capacity  as producers  carry  out  more  than  one  activity;  to 
emphasize  relationships  of  a  technico-economic  kind,  they  have  to  be  partitioned  with 
regard to the type of activity. 

Local  Kind  of  Activity  Units  are  intended  to  meet  this  requirement  as  an  operational 
approach.  A  local  KAU  groups  all  the  parts  of  an  institutional  unit  in  its  capacity  as 
producer  which  are located  in a single or closely  located  sites, and  which  contribute to  the 
performance  of an activity at the class level (4 digits) of the NACE  Rev.  1. 

In principle,  as  many  local  kind  of activity  units  must  be  registered  as there  are  secondary 
activities;  however,  if the  accounting  documents  that  would  be  necessary  to  describe  such 
activities  are  not  available,  a  local  kind  of  activity  unit  may  include  one  or  several 
secondary  activities. 

The  group  of  all  local  KAUs  engaged  on  the  same,  or  similar,  kind  of  activity  constitutes 
an  industry. 

There  is  a  hierarchical  relationship  between  institutional  units  and  local  KAUs.  An 
institutional  unit contains one or more entire  local  KAUs; a local  KAU  belongs to  one  and 
only one  institutional  unit. 

For  more  refined  analysis  of  the  production  process,  use  is  made  of  an  analytical  unit  of 
production.  This  unit,  which  is  not  observable  (except  in  the  case  of  a  local  KAU  only 
producing  one  type  of  product),  is  the  unit  of  homogeneous  production,  defined  as 
covering  no  secondary  activities.  Groupings  of  these  units  constitute  homogeneous 
branches. 

3) 

Resident  and non-resident  units; total economy  and  rest of the  world 

1.30. 

The  total  economy  is defined  in terms of resident  units.  A  unit  is  said  to  be  a resident  unit 
of  a  country  when  it  has  a  centre  of  economic  interest  on  the  economic  territory  of  that 
country  - that  is, when  it  engages  for  an  extended  period  (one  year  or  more)  in  economic 
activities  on this territory. The  institutional  sectors  referred  to above  are groups  of  resident 
institutional  units. 

Resident  units  engage  in  transactions  with  non-resident  units  (that  is,  units  which  are 
residents  in  other  economies).  These  transactions  are  the  external  transactions  of  the 
economy  and  are  grouped  in the  rest-of-the-world  account.  So,  in  the  system's  accounting 
structure,  the  rest  of  the  world  plays  a  role  similar  to  that  of  an  institutional  sector, 
although  non-resident  units  are  included  only  in  so  far  as  they  are  engaged  in  transactions 
with  resident  institutional  units.  Consequently,  as  far  as  coding  of  classifications  is 
concerned,  a  specific  item  for  the  rest  of  the  world  is  included  at  the  end  of  the 
classification  of sectors. 

Notional  resident units, treated  in the system  as institutional  units, are defined  as : 

- 

those  parts  of  non-resident  units  which  have  a  centre  of  economic  interest  (that  is  in 
most cases which engage in economic transactions  for  a year or more or which carry  out 
a  construction  activity  for  a  period  of  less  than  a  year  if  the  output  constitutes  gross 
fixed  capital  formation)  on the economic territory  of the  country; 

-  non-resident  units  in  their  capacity  as  owners  of  land  or  buildings  on  the  economic 
territory  of  the  country,  but  only  in  respect  of  transactions  affecting  such  land  or 
buildings. 

B) 

FLOWS AND  STOCKS 

1.31. 

The  system  records  two  basic  kinds  of  information:  flows  and  stocks.  Flows  refer  to 
actions  and  effects  of  events  that  take  place  within  a  given  period  of  time,  while  stocks 
refer  to positions at a point of time. 

1 ) 

Flows 

1.32. 

Flows  reflect  the  creation,  transformation,  exchange,  transfer  or  extinction  of  economic 
value.  They  involve  changes  in  the  value  of  an  institutional  unit's  assets  or  liabilities. 
Economic  flows  are  of  two  kinds:  i)  transactions,  and  ii)  other  changes  in  assets. 
Transactions  appear  in  all  accounts  and  tables  where  flows  appear,  except  the  other 
changes  in  the  volume  of  assets  account  and  the  revaluation  account.  Other  changes  in 
assets appear only  in these two accounts. 

Elementary  transactions  and  other  flows  are  innumerable.  The  system  groups  them  into  a 
relatively  small  number  of types according to their  nature. 

19-

a) 

Transactions 

1.33. 

A  transaction  is  an  economic  flow  that  is  an  interaction  between  institutional  units  by 
mutual  agreement  or  an  action  within  an  institutional  unit  that  it  is  useful  to  treat  as  a 
transaction,  often  because the unit  is operating  in two  different  capacities.  It  is  convenient 
to divide transactions  into four  main groups: 

1 -  Transactions  in products 

which  describe the origin (domestic output or imports) and  use (intermediate  consumption, 
final  consumption,  capital formation  or exports) of products/1) 

2 -  Distributive  transactions 

which  describe  how  value  added  generated  by  production  is  distributed  to  labour,  capital 
and  government,  and the redistribution  of income  and  wealth  (taxes  on  income  and  wealth 
and other  transfers)/2) 

3 - 

Financial  transactions 

which  describe the net  acquisition  of  financial  assets  or  the  net  incurrence  of  liabilities  for 
each  type  of  financial  instrument.  Such  transactions  often  occur  as  counterparts  of  non-
financial  transactions,  but  they  may  also  occur  as  transactions  involving  only  financial 
instruments/3) 

4 - 

Transactions not included in the three groups above : 

consumption  of fixed capital and acquisitions  less disposals  of non-produced  non  financial 
assets/4) 

b) 

Properties  of transactions 

b. 1 ) 

Interactions  versus intra-unit transactions. 

1.34.  Most  transactions  are  interactions  between  two  or  more  institutional  units.  However,  the 
system  records  some  actions  within  institutional  units  as  transactions.  The  purpose  of 
recording  these  intra-unit  transactions  is  to  give  a  more  analytically  useful  picture  of 
output,  final  uses and costs. 

Consumption  of  fixed  capital,  which  is  recorded  as  a  cost  by  the  system,  is  an  important 
intra-unit  transaction.  All  other  intra-unit  transactions  are  transactions  in  products, 
typically  recorded when institutional  units operating  as both producers  and  final  consumers 
choose  to  consume  some  of  the  output  they  have  produced  themselves.  This  is  often  the 
case for households and general  government. 

0) 
(2) 
(3) 
(4> 

See chapter III, "Transactions in products". 
See chapter  IV, "Distributive  transactions". 
See chapter  V, "Financial  transactions". 
See chapter  VI, "Other  flows". 

20 

1.35. 

All  own-produced  output  used  for  final  uses  within  the  same  institutional  unit  is  recorded. 
Own-produced  output  used  for  intermediate  consumption  within  the  same  institutional  unit 
is  recorded  only  when  production  and  intermediate  consumption  take  place  in  different 
local  kind  of  activity  units within  the  same  institutional  unit.  Output  produced  and  used  as 
intermediate  consumption  within the same  local kind  of activity  unit  is not  recorded. 

b.2) 

Monetary  versus  non-monetary  transactions 

1.36.  Most  transactions  recorded  by  the  system  are  monetary  transactions,  where  the  units 
involved  make  or  receive  payments,  or  incur  liabilities  or  receive  assets  denominated  in 
units of  currency. 

Transactions  that  do  not  involve  the  exchange  of  cash,  or  assets  or  liabilities  denominated 
in  units  of  currency,  are  non-monetary  transactions.  Intra-unit  transactions  are  normally 
non-monetary 
than  one 
institutional  unit  occur  among  transactions  in  products  (barter  of  products),  distributive 
transactions  (remuneration  in kind,  transfers  in kind,  etc.)  and  other  transactions  (barter  of 
non-produced  non-financial  assets). 

transactions.  Non-monetary 

involving  more 

transactions 

The  system  records  all  transactions  in monetary  terms.  The  values  to  be  recorded  for  non 
monetary  transactions  must therefore  be measured  indirectly  or otherwise  estimated. 

b.3) 

Transactions  with and without  counterparts 

1.37. 

Transactions  involving  more  than  one  unit  are  either  "something  for  something"  or 
"something  for  nothing"  transactions.  The  former  are  exchanges  between  institutional 
units,  i.e. provision  of goods, services or assets  in return  for  a counterpart,  e.g.  money.  The 
latter  typically  are  payments  in  cash  or  in  kind  from  one  institutional  unit  to  another 
without  counterpart.  "Something  for  something"  transactions  occur  in  all  four  transaction 
groups,  while  "something  for  nothing"  transactions  occur  mainly  among  distributive 
transactions,  in the form  of,  for example, taxes, social assistance  benefits  or  gifts. 

b.4) 

Rearranged  transactions 

1.38. 

The  system's  treatment  of most  transactions  is straightforward;  that  is, the  transactions  are 
recorded  in the same way as they appear to the  institutional  units  involved. However,  some 
transactions  are  rearranged  in  order  to  bring  out  the  underlying  economic  relationships 
more  clearly.  Transactions  can  be  rearranged  in  three  ways:  rerouting,  partitioning  and 
recognizing  the principal party to a transaction. 

Rerouting 

1.39. 

A  transaction  that  appears  to  the  units  involved  as  taking  place  directly  between  units  A 
and  C  may  be  recorded  as  taking  place  indirectly  through  a third  unit  B. Thus,  the  single 
transaction  between  A  and  C  is  recorded  as  two  transactions:  one  between  A  and  B,  and 
one between  B and C. In this case the transaction  is  rerouted. 

21 

to  social 

insurance  funds.  The  system  records 

A  well-known  example  of  a  rerouting  is  employers'  social  contributions  paid  directly  by 
these  payments  as  two 
employers 
transactions:  i)  employers  pay  employer's  social  contributions  to  their  employees,  and  ii) 
employees  pay  the same contributions  to social  insurance  funds.  As with  all  reroutings,  the 
rerouting  employers'  social  contributions  is  to  bring  out  the  economic 
purpose  of 
substance  behind  the  transaction. 
In  this  case  this  means  to  show  employer's  social 
contributions  as contributions paid  for the benefit  of employees. 

Another  type  of  rerouting  is  that  of  transactions  recorded  as  taking  place  between  two  or 
more  institutional  units,  although  according  to  the  parties  involved  no  transaction  takes 
place  at  all.  An  example  is the  treatment  of  property  income  earned  on  certain  insurance 
funds,  which  is retained  by  insurance  enterprises.  The  system  records  this  property  income 
as  being  paid  by  insurance  enterprises  to  policy  holders,  who  then  pay  the  same  amount 
back to the insurance enterprises as premium  supplements. 

Partitioning 

1.40.  When  a transaction  appearing  to the parties  involved  as  a  single  transaction  is  recorded  as 
two  or  more  differently  classified  transactions,  the  transaction  is  partitioned.  Partitioning 
does usually  not imply  involving additional  units in the transactions. 

The  payment  of  non-life  insurance  premiums  is a typical  partitioned  transaction.  Although 
policy  holders  and  insurers  regard  these  payments  as  one  transaction,  the  system  divides 
them  into  two  quite  different  transactions:  i)  payments  in  return  for  non-life  insurance 
services  provided,  and  ii) net non-life  insurance  premiums.  The  recording  of  trade  margins 
is another  important  case of partitioning. 

Recognizing  the principal  party to a transaction 

1.41.  When  a  unit  carries  out  a transaction  on  behalf  of  another  unit,  the  transaction  is  recorded 
exclusively  in  the  accounts  of  the  principal.  As  a  rule,  one  should  not  go  beyond  this 
principle  and  try,  for  instance,  to allocate  taxes  or  subsidies  to  ultimate  payers  or  ultimate 
beneficiaries  under the adoption of assumptions. 

b.5) 

Borderline  cases 

1.42. 

The  definition  of  a  transaction  stipulates  that  an  interaction  between  institutional  units  be 
by  mutual  agreement.  When  a  transaction  is  undertaken  by  mutual  agreement,  the  prior 
knowledge  and  consent  of  the  institutional  units  is  implied.  However,  this  does  not  mean 
that  all  units  necessarily  enter  a  transaction  voluntarily,  because  some  transactions  are 
imposed  by  law.  This  applies  mainly  to certain  distributive  transactions,  such  as  payments 
of taxes,  fines  and  penalties.  However,  uncompensated  seizure  of  assets  is  not  regarded  as 
a transaction,  even when imposed by law. 

Illegal  economic  actions  are  transactions  only  when  all  units  involved  enter  the  actions 
voluntarily.  Thus,  purchases,  sales  or  barters  of  illegal  drugs  or  stolen  property  are 
transactions, while theft  is not. 

- 2 2-

c) 

Other changes  in assets 

1.43. 

Other  changes  in  assets  record  changes  that  are  not  the  result  of  transactions/1)  They  are 
either  1)  other  changes  in  the  volume  of  assets  and  liabilities,  or  2)  holding  gains  and 
losses. 

c.l) 

Other changes  in the volume of assets and  liabilities 

1.44. 

These changes can be roughly  divided  into three main  categories: 

i) 
ii) 
iii) 

normal  appearance and disappearance  of assets other than by  transactions 
changes in assets and liabilities due to exceptional,  unanticipated  events 
changes  in classification  and structure. 

1.45. 

Examples  of  changes  within  category  i)  are  discovery  or  depletion  of  subsoil  assets,  and 
natural  growth  of  non-cultivated  biological  resources.  Category  ii)  comprises  changes 
(normally  losses) in assets due to natural disasters, war or severe acts of crime/2)  Unilateral 
cancellation  of  debt  and  uncompensated  seizure  of  assets  also  belong  to  category  ii). 
Category  iii) consists  of  changes  as a consequence  of  reclassification  and  restructuring  of 
institutional  units or of assets and  liabilities. 

c.2) 

Holding gains and  losses 

1.46.  Holding  gains  and  losses  result  from  changes  in  the  prices  of  assets.  They  occur  on  all 
kinds  of  financial  and  non-financial  assets,  and  on  liabilities.  Holding  gains  and  losses 
accrue  to  the  owners  of  assets  and  liabilities  purely  as  a  result  of  holding  the  assets  or 
liabilities  over time, without transforming  them in any way. 

Holding  gains and  losses measured  on the basis of current market prices are called  nominal 
holding  gains  and  losses. These  may  be decomposed  into  neutral  holding  gains  and  losses, 
reflecting  changes  in  the  general  price  level,  and  real  holding  gains  and  losses,  reflecting 
changes  in the relative prices of assets. 

2) 

Stocks 

1.47. 

Stocks  are  holdings  of  assets  and  liabilities  at  a point  in  time.  Stocks  are  recorded  at  the 
beginning  and  end  of  each  accounting  period.  The  accounts  that  show  stocks  are  called 
balance  sheets^3). 

Stocks  are  also  recorded  for  population  and  labour  inputs.  However,  these  stocks  are 
recorded  as mean values over the accounting  period. 

( 1) 
(2^ 

O) 

See  chapter  VI,  "Other  flows". 
The  consequences  of  minor  crimes,  such  as  shoplifting,  may  be  recorded  as  part  of  change  in  inventories  and 
thus  as  a  transaction. 
See  chapter  VII,  "Balance  sheets". 

23 

Stocks are recorded  for all assets within the system's boundaries; that  is, for  financial  assets 
and  liabilities  and  for  non-financial  assets, both  produced  and  non-produced.  However,  the 
coverage  is  limited  to those assets that are used  in economic  activity  and that are subject  to 
ownership  rights.  Thus,  stocks  are  not  recorded  for  assets  such  as  human  capital  and 
natural  resources that are not owned. 

Within  its  boundaries,  the  system  is  exhaustive  in  respect  of  both  flows  and  stocks.  This 
implies that all changes  in stocks can be fully  explained  by recorded  flows. 

C) 

THE SYSTEM OF ACCOUNTS AND THE AGGREGATES*1) 

1) 

Rules of  accounting 

1.48. 

An  account  is  a  means  of  recording,  for  a  given  aspect  of  economic  life,  the  uses  and 
resources  or  the  changes  in  assets  and  the  changes  in  liabilities  during  the  accounting 
period,  or  the  stock  of  assets  and  liabilities  existing  at  the  beginning  or  at  the  end  of  this 
period. 

a) 

Terminology  for the two sides of the accounts 

1.49. 

The  system  employs  the  term  "resources"  for  the  right  side  of  the  current  accounts  where 
transactions  appear  which  add  to the  amount  of  economic  value  of  a  unit  or  a  sector.  The 
left  side  of  the accounts, which relates  to transactions  that  reduce  the amount  of  economic 
value of a unit or sector, is termed  "uses". 

The  right  side  of the  accumulation  accounts  is called  "changes  in  liabilities  and  net  worth" 
and their left  side is called  "changes in assets". 

Balance  sheets  are presented  with  "liabilities  and net worth"  (the difference  between  assets 
and  liabilities)  on  the  right  side  and  "assets"  on  the  left.  Comparison  of  two  successive 
balance  sheets  shows changes in liabilities and net worth and changes  in assets. 

b) 

Double entry/quadruple  entry 

1.50. 

For  a  unit  or  sector,  national  accounting  is  based  on  the  principle  of  double  entry.  Each 
transaction must  be recorded  twice, once as a resource  (or  a change  in  liabilities)  and  once 
as  a use  (or  a change  in assets). The total  of transactions  recorded  as  resources  or  changes 
in  liabilities  and  the  total  of  transactions  recorded  as  uses  or  changes  in  assets  must  be 
equal, thus permitting  a check on the consistency  of the accounts. 

In  practice  through,  national  accounts  -with  all  units  and  all  sectors-  are  based  on  a 
principle  of  quadriple  entry,  since  most  transactions  involve  two  institutional  units.  Each 
transaction  of  this  type  must  be  recorded  twice  by  the  two  transactors  involved.  For 
example,  a  social  benefit  in  cash  paid  by  a government  unit  to  a  household  is  recorded  in 
the  accounts  of  government  as  a  use  under  transfers  and  a  negative  acquisition  of  assets 
under  currency  and  deposits  ;  in  the  accounts  of  the  household  sector  it  is  recorded  as  a 
resource  under transfers  and an acquisition  of assets under  currency  and  deposits. 

On  the  other  hand,  transactions  within  a single  unit  (such  as  the  consumption  of  output  by 
the  same unit that produced  it) require only two entries, whose values have to be  estimated. 

0) 

See  chapter  VII,  "Balance  sheets", and  chapter  VIII,  "Sequence of accounts  and  balancing  items". 

24  -

c) 

Valuation 

1.51.  With the exception  of some  variables  concerning  population  and labour, the system  shows 
all  flows  and  stocks  in  monetary  terms.  The system  does  not  attempt  to  determine  the 
utility  of  flows  and  stocks.  Instead,  flows  and  stocks  are  measured  according  to  their 
exchange  value, i.e. the value at which  flows  and stocks are in fact, or could  be, exchanged 
for  cash. Market prices are thus ESA's basic reference  for valuation. 

1.52. 

In the case  of monetary  transactions  and cash  holdings  and liabilities,  the values  required 
are directly  available. In most other cases, the preferred  method  of valuation is by reference 
to market  prices for analogous  goods, services or assets. This  method  is used  for e.g.  barter 
and  the  services  of  owner-occupied  dwellings.  When  no  market  prices  for  analogous 
products  are  available,  for  instance  in  the  case  of  non-market  services  produced  by 
government,  valuation  should  be made  according  to  production  costs.  If  neither  of  these 
two  methods  are feasible,  flows  and stocks may be valued  at the discounted  present  value 
of  expected  future  returns.  However,  due  to  the  great  uncertainty  involved,  this  last 
method  is only recommended  as a last resort. 

1.53. 

Stocks  should be valued at current prices at the time to which the balance  sheet relates, not 
at  the time  of production  or acquisition  of the  goods  or assets  that  form  the stocks.  It is 
sometimes  necessary  to  value  stocks  at  their  estimated  written-down  current  acquisition 
values or production costs. 

c. 1 ) 

Special  valuations  concerning  products^]) 

1.54. 

1.55. 

Because  of 
transport  costs,  trade  margins  and  taxes  less  subsidies  on  products,  the 
producer  and the user  of a given  product  usually  perceive  its value  differently.  In order to 
keep  as  close  as possible  to the views  of  the transactors,  the system  records  all uses  at 
purchaser's  prices, which  include  transport  costs, trade  margins  and taxes  less  subsidies on 
products, while output is recorded at basic prices, which  exclude  these elements. 

Imports  and exports  of products  are recorded  at border  values.  Total  imports  and exports 
are  valued  at the exporter's  customs  frontier,  or  free  on board  (f.o.b.).  As it may not be 
possible  to  obtain  f.o.b.  values  for  detailed  product  breakdowns,  the  tables  containing 
details  on  foreign  trade  show  imports  valued  at  the  importer's  customs  frontier  (c.i.f. 
value),  supplemented  with  global  adjustments  to f.o.b.  C.i.f.  values  include  insurance and 
freight  charges  incurred between the exporter's  frontier  and  that of  the importer. 

(!) 

See  chapter  III,  "Transactions  in products". 

c.2) 

Valuation  at constant prices(1) 

1.56. 

Valuation  at constant  prices means valuing  the  flows  and  stocks  in an accounting  period  at 
the prices of a previous period. The purpose of valuation  at constant  prices  is to  decompose 
changes  over  time  in  the  values  of  flows  and  stocks  into  changes  in  price  and  changes  in 
volume.  Flows  and  stocks at constant prices are said  to be in volume  terms. 

Many  flows  and  stocks,  e.g.  income,  do  not  have  price  and  quantity  dimensions  of  their 
own.  However,  the  purchasing  power  of  these  variables  can  be  obtained  by  deflating  the 
current  values  with  a  suitable  price  index,  e.g.  the  price  index  for  final  national  uses, 
excluding  changes  in inventories. Deflated  flows  and  stocks  are said  to be in real terms. An 
example  is real disposable  income. 

d) 

Time  of  recording 

1.57. 

The  system  records  flows  on  an  accrual  basis;  that  is,  when  economic  value  is  created, 
transformed  or  extinguished,  or  when  claims  and  obligations  arise,  are  transformed  or  are 
cancelled. 

Thus,  output  is recorded  when produced,  not when  paid  for  by  a purchaser,  and  the  sale of 
an  asset  is recorded  when the asset changes hands, not  when  the  corresponding  payment  is 
made.  Interest  is recorded  in the  accounting  period  when  it  accrues,  regardless  of  whether 
or  not  it  is  actually  paid  in  that  period. Recording  on  an  accrual  basis  applies  to  all  flows, 
monetary  as well  as non-monetary  and intra-unit as well  as between  units. 

However,  in  some  cases  it  is  necessary  to  show  flexibility  as  regards  time  of  recording. 
This  applies  in  particular  to  taxes  and  other  flows  concerning  general  government,  which 
are often  recorded  on a cash basis in government  accounts. It is sometimes  difficult  to carry 
out an exact transformation  of these flows from  cash basis to accrual  basis. In these cases it 
might therefore  be necessary to use approximations. 

Any  flow  should  be  recorded  at the  same  point  of  time  for  all  institutional  units  involved 
and  in  all  accounts  in question.  This  principle  may  seem  simple,  but  its  implementation  is 
not.  Institutional  units do not always  apply the  same  accounting  rules. Even  when  they  do, 
differences 
in  actual  recording  may  occur  for  practical  reasons  such  as  delays  in 
communication.  Consequently,  transactions  may  be  recorded  at  different  times  by  the 
transactors  involved. These discrepancies  must be eliminated  by  adjustments. 

e) 

Consolidation  and  netting 

e.l) 

Consolidation 

1.58. 

Consolidation  refers  to  the  elimination,  from  both  uses  and  resources,  of  transactions 
which  occur between  units when the latter are grouped,  and  to the elimination  of  reciprocal 
financial  assets and liabilities. 

For  sub-sectors  or  sectors,  flows  and  stocks  between  constituent  units  are  not  consolidated 
between  constituent  units as a matter of principle. 

However,  consolidated  accounts  may  be  built  up  for  complementary  presentations  and 
analyses.  For  certain  kinds  of  analysis,  information  on  the  transactions  of  these  (sub) 
sectors  with  other  sectors  and  the  corresponding  "external"  financial  position  is  more 
significant  than  overall  gross  figures. 

0) 

See  chapter  X,  "Price  and  volume  measures". 

-26 -

Moreover,  the  accounts  and  tables  showing  the  creditor/debtor  relationship  provide  a 
for 
detailed  picture  of  financing  of  the  economy  and  are  considered  very  useful 
understanding  the channels through  which  the  financing  surpluses  move  from  final  lenders 
to  final  borrowers. 

e.2) 

Netting 

1.59. 

Individual  units  or  sectors  may  have  the  same  kind  of  transaction  both  as  a  use  and  as  a 
resource  (e.g. they  both  pay and  receive  interest) and  the  same  kind  of  financial  instrument 
both as an asset and as a liability. 

The  system  recommends  gross  recording,  apart  from  the  degree  of  netting  which  is 
inherent  in the classifications  themselves. 

In  fact,  netting  is  implicit  in various  transaction  categories,  the  most  outstanding  example 
being  "changes  in  inventories",  which  underlines  the  analytically  significant  aspect  of 
overall  capital  formation  rather than tracking  daily additions and  withdrawals. 

Similarly,  with  few  exceptions,  the  financial  account  and  other  changes  in  assets  accounts 
record  increases  in  assets  and  in  liabilities  on  a  net  basis,  bringing  out  the  final 
consequences  of these types of flows at the end of the accounting  period. 

f) 

Accounts, balancing  items and  aggregates 

1.60. 

For  units  (institutional  units;  local  kind  of  activity  units)  or  groups  of  units  (institutional 
sectors  and,  by  extension,  the  rest  of  the  world;  industries),  different  sub-accounts  record 
the  transactions  or  other  flows  which  are  connected  to  some  specific  aspect  of  economic 
life  (for  instance, production).  Such a set of transactions  usually  does not balance; the  total 
amounts  recorded  as  receivable  and  payable  usually  differ.  Therefore,  a  balancing  item 
must  be introduced.  Usually, a balancing  item  must also  be introduced  between the total  of 
assets  and  the  total  of  liabilities  of  an  institutional  unit  or  sector.  Balancing  items  are 
meaningful  measures  of  economic  performance  in  themselves.  When  summed  for  the 
whole economy, they constitute significant  aggregates. 

2) 

The sequence of accounts 

1.61. 

The system  is built around  a sequence of inter-connected  accounts. 

The  full  sequence  of accounts  for  the  institutional  units  and  sectors  is composed  of  current 
accounts, accumulation  accounts and balance sheets. 

Current  accounts  deal  with  the  production,  generation,  distribution  and  redistribution  of 
income  and  the  use  of  this  income  in  the  form  of  final  consumption.  Accumulation 
accounts  cover  changes  in assets and  liabilities  and changes  in net worth (the difference  for 
any  institutional  unit  or  group  of  units  between  its  assets  and  liabilities).  Balance  sheets 
present  stocks of assets and liabilities and net worth. 

1.62. 

It  is  not  possible  to  envisage  a  complete  set  of  accounts,  including  balance  sheets,  being 
compiled  for  a local KAU, because generally  such an entity  is not capable of owning  goods 
or  assets  in  its  own  right  or  capable  of  receiving  or  disbursing  income.  The  sequence  of 
accounts  for  local  kind  of  activity  units  and  industries  is  shortened  to  the  first  current 
accounts  :  production  account  and  generation  of  income  account,  the  balancing  item  of 
which  is the operating  surplus. 

3) 

The goods and services  account 

1.63. 

The  goods  and  services  account  shows,  for  the  economy  as  a  whole  or  for  groups  of 
products,  the  total  resources  (output  and  imports)  and  uses  of  goods  and  services., 
(intermediate  consumption,  final  consumption,  changes  in  inventories,  gross  fixed  capital 
formation,  acquisitions  less disposals of valuables, and exports). 

4) 

The rest-of-the-world  account 

1.64. 

The  rest  of  the  world  account  covers  transactions  between  resident  and  non-resident 
institutional  units and the related stocks of assets and liabilities when  relevant. 

As  the  rest  of  the  world  plays  a  role  in  the  accounting  structure  similar  to  that  of  an 
institutional  sector,  the  rest  of  the  world  account  is  established  from  the  point  of  view  of 
the rest of the world. A resource for the rest of the world  is a use for  the total  economy  and 
vice versa.  If a balancing  item  is positive,  it means  a surplus  of the  rest  of the  world  and  a 
deficit  of the total economy, and vice versa if the balancing  item is negative. 

5) 

Balancing  items 

1.65. 

A  balancing  item  is an  accounting  construct  obtained  by  subtracting  the  total  value  of  the 
entries  on  one  side  of  an  account  from  the  total  value  on  the  other  side.  It  cannot  be 
measured  independently  of the other entries; as a derived  entry, it reflects  the application  of 
the general  accounting rules to the specific  entries on the two sides of the  account. 

Balancing  items  are  not  only  devices  introduced  to  ensure  that  accounts  balance.  They 
encapsulate  a  great  deal  of  information  and  include  some  of  the  most  important  entries  in 
the accounts, as can be seen from  the following  examples  of balancing  items: value  added, 
operating  surplus, disposable income, saving, net lending/net borrowing, net  worth. 

6) 

Aggregates 

1.66. 

The  aggregates  are  composite  values  which  measure  the  result  of  the  activity  of  the  total 
economy  considered  from  a  particular  point  of  view;  for  example,  output,  value  added, 
disposable  income,  final  consumption,  saving,  capital  formation,  etc.  Although  the 
calculation  of  the  aggregates  is  neither  its  sole  nor  its  main  purpose,  the  system  does 
recognise  their  importance  as  summary  indicators  and  key  magnitudes  for  purposes  of 
macro-economic  analysis and comparisons over  time and  space. 

Two types of aggregates  can be distinguished  : 

-  aggregates  which refer  directly  to transactions  in the system,  such as the output of  goods 
and  services,  actual  final  consumption,  gross  fixed  capital  formation,  compensation  of 
employees, etc. 

-  aggregates  which  represent  balancing  items  in  the  accounts,  such  as  gross  domestic 
product  at  market  prices  (GDP),  operating  surplus  of  the  total  economy,  national 
income,  national  disposable  income,  saving,  current  external  balance,  net  worth  of  the 
total  economy. 

1.67. 

A  dimension  is  added  to  the  usefulness  of  a  number  of  national  accounts  figures  by 
calculating  these  figures  per head. For broad  aggregates  such as GDP or national  income  or 
household  final  consumption,  the  denominator  commonly  used  is  the  total  (resident) 
population.  When  sub-sectoring  the  accounts  or  part  of  the  accounts  of  the  household 
sector, data on the number of households and the number  of persons belonging  to each sub-
sector are also necessary*1). 

D) 

THE  INPUT-OUTPUT  FRAMEWORK*2) 

1.68. 

1.69. 

The  input-output  framework  consists  of  supply  and  use  tables  by  industry,  tables  linking 
the  supply  and  use  tables  to  the  sector  accounts  and  input-output  tables  by  homogeneous 
branch  (product). 

Supply  and  use tables are matrices  (rows of products, columns  of  industries)  showing  how 
supplies  of products  originate from  domestic  industries and  imports and how these  supplies 
are  allocated  between  various  intermediate  or  final  uses,  including  exports.  They  also 
incorporate  the  structure  of production  costs  and  the  income  generated  in that  production, 
as they  include, for  each industry, the flows recorded  in the goods and  services account  and 
in the current  accounts calculable by  industry. 

The  supply  and  use  tables  are  the  coordinating  framework  for  all  tables  by  industry  and 
(or)  by  product,  which  include  data  on  labour  inputs,  gross  fixed  capital  formation,  stocks 
of  fixed  assets,  detailed  price  indices  -  and  thus  describe  in  detail  cost  structure,  income 
generated,  employment,  labour productivity, capital  intensity. 

1.70. 

It  is  possible  to  link  the  supply  and  use  tables  to  the  sector  accounts  by  cross-classifying 
output,  intermediate  consumption  and  the  components  of  value  added  by  sector  and  by 
industry. 

1.71. 

Product-by-product  input-output  tables  are  conceptually  different  from  supply  and  use 
tables  by  industry, as they employ a product classification  for  both rows and  columns. 

( i) 

(2) 

See chapter  XI,  "Population  and  labour  inputs". 
See chapter  IX,  "The  input-output  framework". 

- 2l> 

(3) 

CHAPTER II 

UNITS AND GROUPINGS OF UNITS 

2>3  -31 

2.01.  The  economy  of  a  country  is  the  outcome  of  the  activity  of  a  very  large  number  of  units 
which  carry  out  numerous  transactions  of various  kinds  for  purposes  of production,  finance, 
insurance, redistribution  and  consumption. 

2.02.  The units  and  groupings of units used  in national  accounts  must  be defined  with reference  to 
the  kind  of  economic  analysis  for  which  they  are  intended,  and  not  in  terms  of  the  types  of 
unit  usually  employed  in  statistical  inquiries.  These  latter  units  (enteiprises,  holding 
companies,  kind-of-activity  units, 
local  units,  government  departments,  non-profit 
institutions,  households,  etc.)  may  not  always  be  satisfactory  for  the  purposes  of  national 
accounts,  since  they  are  generally  based  on  traditional  criteria  of  a  legal,  administrative  or 
accounting  nature. 

Statisticians  should  take  into account the definitions  of units  of analysis  used  in the  ESA, in 
order  to  ensure  that  in  the  surveys  in  which  actual  data  are  collected  all  the  elements  of 
information  needed  to  compile  data  based  on  the  units  of  analysis  used  in  the  ESA  are 
gradually  introduced. 

2.03.  A  feature  of the  system  is the use  of three types  of  unit  corresponding  to two  very  different 
ways  of  subdividing  the  economy.  To  analyse  the  process  of  production,  it  is  essential  to 
select  units  which  bring  out  relationships  of  a  technico-economic  nature;  to  analyse  flows 
affecting  income,  capital  and  financial  transactions  and  balance  sheets,  it  is  essential  to 
select  units  which  make  it  possible  to  study  behavioural  relationships  among  economic 
agents. 

Given  these  two  objectives,  institutional  units  appropriate  for  the  analysis  of  economic 
behaviour,  local  kind-of-activity  units and  units  of homogeneous  production  appropriate  for 
the  analysis  of technico-economic  relationships  are  defined  later  in this  chapter.  In  practice, 
these three types of unit are formed  by combining or subdividing  the basic units of  statistical 
inquiries  or  sometimes  received  directly  from  statistical  inquiries.  Before  giving  precise 
definitions  of these  three types of unit used  in the ESA, it is necessary  to define  the limits of 
the national  economy. 

THE  LIMITS  OF THE NATIONAL  ECONOMY 

2.04.  The  units, whether  institutional,  local kind-of-activity  or of homogeneous  production,  which 
constitute  the  economy  of  a  country  and  whose  transactions  are  recorded  in  the  ESA,  are 
those  which  have  a  centre  of  economic  interest  on  the  economic  territory  of  that  country. 
These  units,  known  as  resident  units, may  or  may  not  have  the  nationality  of  that  country, 
may or may  not be legal entities, and may or may not be present  on the economic territory  of 
the  country  at  the  time  they  carry  out  a  transaction.  Having  thus  defined  the  limits  of  the 
national  economy  in  terms  of  resident  units,  it  is  necessary  to  define  the  meaning  of  the 
terms economic territory and centre of economic  interest. 

T?  -

2.05.  The term economic territory  means: 

a) 

the  geographic  territory  administered  by  a  government  within  which  persons,  goods, 
services and capital move  freely 

b)  any  free  zones, including bonded warehouses and factories  under customs  control 

c) 

d) 

the  national  air-space,  territorial  waters  and  the  continental  shelf  lying  in  international 
waters, over which the country  enjoys  exclusive  rightsO) 

territorial  enclaves  (i.e. geographic  territories  situated  in the  rest  of the  world  and  used, 
under  international  treaties  or  agreements  between  States,  by  general  government 
agencies  of the country (embassies, consulates, military  bases, scientific  bases, etc.)) 

e)  deposits  of  oil,  natural  gas,  etc.  in  international  waters  outside  the  continental  shelf  of 
the  country,  worked  by  units  resident  in  the  territory  as  defined  in  the  preceding  sub 
paragraphs. 

2.06.  The  economic  territory  does  not  include  extraterritorial  enclaves  (i.e.  the  parts  of  the 
country's  own  geographic  territory  used  by  general  government  agencies  of  other  countries, 
by  the  Institutions  of  the  European  Union  or  by  international  organisations  under 
international  treaties or agreements between  States (2)). 

2.07.  The  term  centre  of economic  interest  indicates  the  fact  there  exists  some  location  within  the 
economic  territory  on,  or from,  which  a unit  engages,  and  intends  to  continue  to  engage,  in 
economic  activities  and transactions  on a significant  scale, either  indefinitely  or over a  finite 
but  long  period  of  time  (a  year  or  more).  It  follows  that  a  unit  which  carries  out  such 
transactions  on  the  economic  territory  of  several  countries  is  deemed  to  have  a  centre  of 
economic  interest in each of them. The ownership of land and  buildings  within the  economic 
territory  is  deemed  to  be  sufficient  in  itself  for  the  owner  to  have  a  centre  of  economic 
interest  there. 

2.08.  On  the  basis  of  these  definitions,  units  deemed  to  be  residents  of  a  country  can  be  sub 

divided  into: 

a)  units  which  are  principally  engaged  in  production,  finance,  insurance  or  redistribution, 
in  respect  of  all  their  transactions  except  those  relating  to  ownership  of  land  and 
buildings 

b)  units  which  are  principally  engaged 

in  consumptions), 

in  respect  of  all  their 

transactions  except those relating to ownership of land and  buildings 

c) 

all  units  in their  capacity  as owners  of  land  and  buildings  with  the  exception  of  owners 
of extraterritorial  enclaves which  are part  of the economic  territory  of other  countries  or 
are States sui generis (see 2.06.). 

*  ' 

'  ' 

(3) 

Fishing  boats, other ships, floating platforms  and aircraft  are treated  in the ESA just  like any other mobile equipment,  whether owned 
and/or operated  by units resident  in the country, or owned by non-residents  and operated  by resident  units. Transactions  involving the 
ownership  (gross fixed capital  formation)  and  use (renting,  insurance, etc) of this type of equipment  are attributed  to the economy of 
the  country  of  which  the  owner  and/or  operator  respectively  are  resident.In  cases  of  financial  leasing  a  change  of  ownership  is 
assumed. 

The territories  used by the Institutions of the European  Union and international  organisations thus constitute the territories of States sui 
generis. The feature of such States is that the only residents are the institutions themselves (see 2.10.e). 

Consumption  is  not  the  only  possible  activity  of  households.  Households  may  as  entrepreneurs  engage  in  any  kind  of  economic 
activity. 

2.09. 

In  the  case  of  units  which  are  principally  engaged  in  production,  finance,  insurance  or 
redistribution,  in  respect  of  all  their  transactions  except  those  relating  to  ownership  of  land 
and buildings, the following  two cases may be  distinguished: 

a)  activity  conducted  exclusively  on  the  economic  territory  of  the  country:  units  which 

carry  out such activity are resident units of the country 

b)  activity  conducted  for  a  year  or  more  on  the  economic  territories  of  several  countries: 
only  that  part  of  the  unit  which  has  a  centre  of  economic  interest  on  the  economic 
territory  of the country  is deemed to be a resident unit.  It may  be: 

-  either  an  institutional  resident  unit  (see  2.12.),  whose  activities  conducted  for  a  year 

or more  in the rest of the world are excluded  and treated  separatelyO) 

-  or  a.notional  resident  unit  (see  2.15.),  in  respect  of  the  activity  conducted  in  the 

country  for a year or more by a unit which is resident  in another  countryO). 

2.10. 

In the case of units which are principally  engaged  in consumption,  except  in their capacity  as 
owners  of  land  and  buildings,  households  which  have  a  centre  of  economic  interest  in  the 
country  are deemed  to be resident  units, even  if they  go abroad  for  short  periods  (less than a 
year). They  include, in particular, the  following: 

a)  border  workers,  i.e.  people  who  cross  the  frontier  daily  to  work  in  a  neighbouring 

country 

b) 

seasonal  workers,  i.e. people  who  leave  the  country  for  several  months,  but  less  than  a 
year,  to  work  in  another  country  in  sectors  in  which  additional  manpower  is  needed 
periodically 

c) 

tourists, patients, students(2), visiting officials,  businessmen,  salesmen, artists  and  crew 
members who travel abroad 

d) 

locally recruited  staff working  in the extraterritorial  enclaves  of foreign  governments 

e) 

f) 

the  staff  of  the  Institutions  of  the  European  Union  and  of  civilian  or  military 
international  organisations which have their headquarters  in extra-territorial  enclaves 

the  official,  civilian  or  military  representatives  of  the  government  of  the  country 
(including their households) established  in territorial  enclaves. 

2.11.  All  units  in  their  capacity  as  owners  of  land  and/or  buildings  which  form  part  of  the 
economic  territory  are  deemed  to  be  resident  units  or  notional  resident  units  (see  2.15.)  of 
the country  in which the land or buildings in question are  located. 

'  ' 

It  is  only  where  such  activity  is  carried  on  for  less  than  a year  that  it  should  not  be  separated  from  the  activities  of  the  producer 
institutional  unit.  This  may  also  be  done  where  the  activity,  though  conducted  for  a  year  or  more,  is  insignificant,  and  in  all 
circumstances  for  the  installation  of  equipment  abroad.  But  a unit  which  is  resident  in  another  country  and  which  is  carrying  out a 
construction  activity  in the country  for a duration of less than a year is deemed  to have a centre of economic  interest  on the economic 
territory  of the country  if the output of the construction  activity constitutes  gross fixed capital  formation.  Such  a unit should  therefore 
be treated  as a notional  resident unit. 

'  ' 

Students are always treated as residents, however long they study abroad. 

- 3 4-

THE  INSTITUTIONAL  UNITS 

2.12.  Definition:  The  institutional  unit  is  an  elementary  economic  decision-making  centre 
characterised  by uniformity  of behaviour  and  decision-making  autonomy  in the 
exercise  of  its principal  function.  A resident  unit  is  regarded  as  constituting  an 
institutional  unit  if  it has  decision-making  autonomy  in  respect  of  its  principal 
function  and either keeps a complete set of accounts  or  it would  be possible and 
meaningful,  from  both an economic and  legal  viewpoint,  to compile a  complete 
set of accounts  if they were required. 

In  order  to  be  said  to  have  autonomy  of  decision  in  respect  of  its  principal  function,  a 
unit must : 

* 

* 

* 

be  entitled  to  own  goods  or  assets  in  its  own  right  ;  it  will  therefore  be  able  to 
exchange  the  ownership  of  goods  or  assets  in  transactions  with  other  institutional 
units, 

be  able to take economic decisions and engage  in economic activities  for  which  it is 
itself held to be directly responsable and accountable  at  law, 

be  able  to  incur  liabilities  on  its own  behalf,  to  take  on  other  obligations  or  further 
commitments  and to enter into contracts. 

In  order  to  be  said  to  keep  a  complete  set  of  accounts,  a  unit  must  keep  accounting 
records  covering  all  its  economic  and  financial  transactions  carried  out  during  the 
accounting  period, as well as a balance sheet of assets and  liabilities. 

2.13.  The  following  principles  apply  whenever  entities  do  not  clearly  possess  both 

the 

characteristics  of an institutional  unit: 

a)  households  always enjoy  autonomy of decision  in respect  of their principal  function  and 
must  therefore  be  institutional  units,  even  though  they  do  not  keep  a  complete  set  of 
accounts 

b)  entities  which  do  not  keep  a  complete  set  of  accounts,  and  for  which  it  would  not  be 
possible  or meaningful  to complete a complete  set of accounts  if required, are  combined 
with the institutional  units into whose accounts their partial  accounts are  integrated 

c)  entities  which,  while keeping a complete  set of accounts, have  no autonomy  of  decision 
in  the  exercise  of  their  principal  function  are  combined  with  the  units  which  control 
them 

d)  entities  which  satisfy  the  definition  of  an  institutional  unit  are  treated  as  such  even  if 

they  do not publish their  accounts 

e)  entities  forming  part of a group of enterprisesO ) and  keeping  a complete  set of  accounts 
are  deemed  to  be  institutional  units  even  if  they  have  partially  surrendered  their 
autonomy  of  decision  to  the  central  body  (the  holding  corporation)  responsible  for  the 
general  direction  of  the  group;  the  holding  corporation  itself  is  deemed  to  be  an 
institutional  unit distinct from  the units which  it controls, unless b) is applicable. 

'  ' 

The enterprise  does not constitute a separate statistical  unit in the ESA  1995. In accordance  with the SNA the term "enterprise"  is used 
for  institutional  units engaged  in production. 

- 3 5-

f) 

quasi-corporations  keep  a  complete  set  of  accounts  and  have  no  independent  legal 
status.  However,  they  have  an  economic  and  financial  behaviour  that  is  different  from 
that  of  their  owners  and  similar  to  that  of  corporations.  Therefore  they  are  deemed  to 
have autonomy  of decision and are considered  as distinct  institutional  units. 

2.14.  Holding  corporations  are  institutional  units  whose  main  function  is  to  control  and  direct  a 

groupr of  subsidiaries. 

2.15.  Notional  resident  units are defined  as: 

those  parts  of  non-resident  units  which  have  a  centre  of  economic  interest  (that  is  in 
most  cases which engage in economic transactions  for  a year  or more or which carry  out 
a  construction  activity  for  a  period  of  less  than  a  year  if  the  output  constitutes  gross 
fixed  capital  formation)  on the economic territory of the  country; 

non-resident  units  in  their  capacity  as  owners  of  land  or  buildings  on  the  economic 
territory  of  the  country,  but  only  in  respect  of  transactions  affecting  such  land  or 
buildings. 

Notional  resident  units,  even  if  they  keep  only  partial  accounts  and  may  hot  always  enjoy 
autonomy  of decision, are treated as institutional  units. 

2.16. 

In conclusion, the following  are deemed to be institutional  units: 

units which have a complete set of accounts  and autonomy  of decision: 

a)  private and public  corporations 

b)  co-operatives  or partnerships recognized  as independent  legal  entities 

c)  public  enterprises  which  by  virtue  of  special  legislation  are  recognized  as  independent 

legal  entities 

d)  non-profit  institutions recognized as independent  legal  entities 

e)  agencies  of general  government. 

units which  have a complete  set of accounts and which  are deemed  to have  autonomy  of 
decision: 

f) 

quasi-corporations  (see 2.13. f) 

units which do not necessarily  keep a complete set of accounts, but which by  convention 
are deemed to have autonomy of decision : 

g)  households 

h)  notional  resident units (see 2.15.). 

36 

THE INSTITUTIONAL  SECTORS 

2.17.  The need  for  aggregation  means that it is impossible to consider  individual  institutional  units 
separately;  they  must  be combined  into groups  called  institutional  sectors or  simply  sectors, 
some of which are divided  into sub-sectors. 

The  following  sectors and sub-sectors are distinguished  in the ESA : 

Sectors and  sub-sectors 

Public 

private 

controlled 

National 

Foreign 

Non-financial  corporations 

S.ll 

S.1100T 

S. 11002 

S.11003 

Financial  corporations 

S.12 

Central  Bank 
Other monetary  financial  institutions 
Other financial  intermediaries,except 
insurance corporations  and pension funds  S. 123 
Financial  auxiliaries 
S. 124 
Insurance corporations  and pension funds  S. 125 

S.121 
S.122 

S.12201  S12202 

S. 12203 

S.12301 
S.12401 
S.12501 

S.12302 
S. 12402 
S.12502 

S.12303 
S. 12403 
S.12503 

General  government 

S.13 

Central  government 
State  government 
Local  government 
Social security  funds 

S.1311 
S.1312 
S.1313 
S.1314 

Households 

Employers  (including  own-
account  workers) 
Employees 
Recipients of property  incomes 
Recipients of  pensions 
Recipients of other transfer  incomes 
Others 

S.14 

S.141 +  S.142 

S.143 
S.1441 
S.1442 
S.1443 
S.145 

Non-profit  institutions  serving 
households 

Rest of the  world 

S.15 

S.2 

The European  Union 

The member  countries of the EU 
The institutions of the EU 

Third countries  and  international 
organizations 

S.21 

S.211 
S.212 

S.22 

37 

2.18.  Each  of  the  sectors  and  sub-sectors  groups  together  the  institutional  units  which  have  a 

similar type of economic  behaviour. 

The institutional  units are grouped  into sectors on the basis of their principal  function,  which 
is  considered  to  be  indicative  of  their  economic  behaviour;  if  the  principal  function  of  the 
unit  is not  apparent,  it  may  be  deduced  from  the principal  resources  of the  unit.  A  sector  is 
divided  into  sub-sectors  according  to  the  criteria  relevant  to  that  sector;  this  permits  a  more 
precise,description of the economic  behaviour of the units. 

The  accounts  for  sectors  and  sub-sectors  record  all  the  activities,  whether  primary  or 
secondary, of the institutional  units covered. 

Each institutional  unit belongs to only one sector or  sub-sector. 

2.19.  When  the principal  function  of the  unit  is to produce  goods  and  services, it is necessary  - in 
deciding  the  sector  to  which  it  should  be  allocated  -  to  distinguish  first  of  all  whether  the 
output of goods and services is : 

market output  (P. 11 ) (see 3.17.), 
output produced  for own final use (P. 12) (see 3.22.)  or 
other non-market output (P. 13) (see 3.25.). 

Institutional  units most of whose output is market outputO) are classified  in the sectors Non-
financial  corporations  (S.l 1), Financial  corporations (S.12) or Households  (S.14). 

Output  produced  for  own  final  use  and  retained  for  own  final  consumption  can  only  be 
produced  by  households  (see  3.23.).  Institutional  units  most  of  whose  output  is  output 
produced  for  own  final  use  and  retained  for  own  final  consumption^)  are  classified  in  the 
Households  sector (S.14). 

Institutional  units  most  of  whose  output  is  other  non-market  outputw)  are  classified  in  the 
sectors General  Government  (S.l3) or Non-profit  institutions serving households  (S.l5). 

'  ' 

' 

' 

(  ' 

Market output is output of producers whose sales (excluding taxes on products) cover generally the major part of their production costs 
(see 3.27.). 

Main  examples  of  such  output  are  housing  services  produced  by  owner-occupiers,  agricultural  products  retained  by  farmers  or 
household services produced by employing paid staff (see 3.23). 

Other  non-market  output  covers output  that  is provided  free,  or at economically  not significant  prices  to other  institutional  units (see 
3.25). 

- 3 8-

2.20.  The  following  table  shows  the  principal  functions  and  the  nature  of  the  principal  resources 

which  are characteristic  of each sector : 

Sector 

Type of economic  behaviour 

Principal  function 

Principal  resources 

Non-financial  corporations 
(see 2.21.) 

(S. 11) 

Production  of market goods and  Receipts  from  disposal  of market 
non-financial  services 

output 

corporations  Financial 

intermediation  Funds  derived  from 

including insurance 
Auxiliary  financial  activities 

liabilities 
incurred;  interest,  commissions; 
fees; contractual  premiums; 

government  Production  and  supply  of  non-  Compulsory  levies  on  units  in 
market  output  for  collective  and  other sectors, received  directly  or 
and 
individual 
carrying 
transactions 
intended  to  redistribute  national 
income and wealth 

consumption 
out 

indirectly. 

Financial 
(5.12) 

(see  2.32.) 

General 
(5.13) 

(see  2.68.) 

Households 
(5.14) 

' 

- as  consumers 

- as entrepreneurs 

(see 2.75.) 

Consumption 

of 

employees, 
Compensation 
property  income,  transfers  from 
other  sectors 

Production  of  market  output; 
production  of  goods  and  non-  Receipts  from  disposal  of  market 
financial  services  for  own  final  output 
consumption 

Imputed  receipts  from  products 
for own  final  consumption 

Non-profit  institutions  serving  Production and supply of non- 
households 

market output  for collective and 
individual consumption 

Voluntary  contributions  made by 
households  as consumers; 
income from  property 

(see 2.87.) 

(S.15) 

59-

The  rest  of the  world  (S.2)  is a grouping  of  institutional  units  (see  2.89.)  which  is not  characterised 
by  any  principal  function  or  principal  resources;  it  groups  together  non-resident  institutional  units 
insofar  as they carry  out transactions with resident institutional  units. 

Non-financial  corporations  (S.ll) 

2.21.  Definition:  The  sector  non-financial  corporations  (S.ll)  consists  of 

institutional  units 
whose  distributive  and  financial  transactions  are  distinct  from  those  of  their 
owners  and  which  are  principally  engaged  in  the  production  of  market  goods 
and  non-financial  services.  Most  of  the  output  of  these  units  is  market  output 
(see 2.19.)  0 ). 

2.22.  The sector non-financial  corporations  also includes non-financial  quasi-corporations. 

2.23.  The  term  "non-financial  corporations  "  denotes  all  bodies  recognized  as  independent  legal 
entities,  whose  main  activity  is  the  production  of  goods  and  non-financial  services  for  sale 
on the  market. 

The institutional  units covered  are the  following: 

a)  private  and  public  corporations  which  are  principally  engaged  in  the  production  of 

market  goods and non-financial  services 

b)  co-operatives  and  partnerships  recognized  as  independent  legal  entities  which  are 

principally  engaged in the production of market goods and nonrfinancial  services 

c)  public  enterprises  which  by  virtue  of  special  legislation  are  recognized  as  independent 
legal  entities  and  which  are principally  engaged  in  the  production  of  market  goods  and 
non-financial  services 

d)  non-profit  institutions  or  associations  serving  non-financial  corporations,  which  are 
recognized  as  independent  legal  entities  and  which  are  principally  engaged  in  the 
production of market goods and non-financial  services (2) 

e)  holding  corporations  controlling  (see 2.26.) a group  of corporations,  if the  preponderant 
type  of activity  of the group of corporations  as a whole  - measured  on the basis  of  value 
added  - is the production of market goods and non-financial  services 

f) 

private and public quasi-corporations  which are principally  engaged  in the production  of 
market  goods and non-financial  services. 

2.24.  The  term  "non-financial  quasi-corporations"  denotes  all  bodies  without  independent  legal 
status  which  are  principally  engaged  in  the  production  of  market  goods  and  non-financial 
services and meet the conditions qualifying  them as quasi-corporations  (see 2.13.  f). 

Quasi-corporations  must  keep  a  complete  set  of  accounts  and  are  operated  as  if  they  were 
corporations.  The  de  facto  relationship  to  their  owner  is  that  of  a  corporation  to  their 
shareholders. 

^  ' 

(2) 

fly convention, market regulatory agencies whose sole or principal activity  is to buy, hold and sell agricultural  and other food  products 
are classified  under S.ll  (see 2.69.a note  1 ). 

Including  institutions  financed  by  voluntary  contributions  of  a  quasi-fiscal  nature,  levied  on  enterprises  by  units  whose  principal 
activity  is to provide services  in exchange. These contributions are considered  as purchases of market services. 

- 4 0-

Thus  non-financial  quasi-corporations  owned  by households, government  units or  non-profit 
institutions  are  grouped  with  non-financial  corporations  in  the  non-financial  corporations 
sector. 

The  existence  of  a  complete  set  of  accounts,  including  balance  sheets,  is  not  a  sufficient 
condition  for  enterprises  to  be  treated  as  quasi-corporations.  Therefore,  partnerships  and 
public  enterprises  other  than  those  included  under  2.23.  a),  b),  c)  and  f)  and  sole 
proprietorships  -  even  if  they  keep  a  complete  set  of  accounts  -  are  in  general  not  distinct 
institutional  units  because  they do not enjoy  autonomy  of  decision,  their  management  being 
under the control  of the households, non-profit  institutions or governments  which own them. 

2.25.  The  sector  non-financial  corporations  also  includes  all  notional  resident  units  (see  2.15.) 

which, by convention, are treated  as if they were  quasi-corporations. 

2.26.  Control  over  a corporation  is defined  as the  ability  to determine  general  corporate  policy  by 

choosing appropriate directors, if necessary. 

A  single  institutional  unit,  another  corporation,  or a household  or  a government  unit  secures 
control  over  a  corporation  by  owning  more  than  half  the  voting  shares  or  otherwise 
controlling  more  than  half  the  shareholders'  voting  power.  In  addition,  government  secures 
control  over  a  corporation  as  a  result  of  special  legislation  decree  or  regulation  which 
enpowers  the government to determine corporate policy or to appoint  the directors. 

In  order  to  control  more than half the shareholders'  voting  power,  an  institutional  unit  needs 
not  own  any  of  the  voting  shares  itself.  A  corporation  C  could  be  a  subsidiary  of  another 
corporation  B in which a third corporation  A owns a majority  of the voting  shares. 

Corporation  C is said to be subsidiary  of corporation  B when  : either  corporation  B  controls 
more  than  half  of  the  shareholders'  voting  power  in  corporation  C  or  corporation  B  is  a 
shareholder  in C with the right to appoint  or remove a majority  of the directors of C. 

2.27.  The sector non-financial  corporations  is divided  into three  sub-sectors: 

public non-financial  corporations  (S. 11001 ) 
national private non-financial  corporations  (S.ll002) 
foreign  controlled non-financial  corporations  (S. 11003). 

Sub-sector  : Public  non-financial  corporations  (S.l 1001) 

2.28.  Definition:  The  sub-sector  public  non-financial  corporations  consists  of  all  non-financial 
corporations  and  quasi-corporations  that  are  subject  to  control  (see  2.26.)  by 
government units. 

2.29.  Public quasi-corporations  are quasi-corporations  owned directly  by government  units. 

Sub-sector:  National  private non-financial  corporations  (S.l 1002) 

2.30.  Definition:  The  sub-sector  national  private  non-financial  corporations  consists  of  all  non-
that  are  not  controlled  by 
financial  corporations  and  quasi-corporations 
government  or  by  non-resident  institutional  units.  This  sub-sector  includes  all 
the  non-profit  institutions  which  are  included  in  the  non-financial  corporate 
sector  (see 2.23.d). 

This  sub-sector  includes  corporate  and  quasi-corporate  direct  foreign  investment  enterprises 
(see  4.65.)  not  classified  in  the  sub-sector  foreign  controlled  non-financial  corporations 
(S.l 1003). 

Sub-sector:  Foreign  controlled  non-financial  corporations  (S.l 1003) 

2.31.  Definition:  The  sub-sector  foreign  controlled  non-financial  corporations  consists  of  all 
non-financial  corporations  and quasi-corporations  that are controlled  (see  2.26.) 
by  non-resident  institutional  units. 

This sub-sector  includes : 

all  subsidiaries  of non-resident  corporations; 

all  corporations  controlled  by  a  non-resident  institutional  unit  that  is  not  itself  a 
corporation  : for  example, a corporation  which  is controlled  by  a foreign  government;  it 
includes corporations  controlled  by a group of non-resident  units acting  in  concert; 

all  branches  or  other  unincorporated  agencies  of  non-resident  corporate  or 
unincorporated  enterprises  which  are  notional  resident  units  to  be'  treated  as  non-
financial  quasi-corporations  (see 2.25.). 

Financial  corporations  (S.12) 

2.32.  Definition:  The  sector  financial  corporations  (S.12)  consists  of  all  corporations  and  quasi-
corporations  which  are principally  engaged  in  financial  intermediation  (financial 
intermediaries)  and/or in auxiliary  financial  activities  (financial  auxiliaries).0) 

Financial  intermediation  is  the  activity  in  which  an  institutional  unit  acquires 
financial  assets  and  at  the  same  time  incurs  liabilities  (see  2.34.)  on  its  own 
account  (see  2.33.)  by  engaging  in  financial  transactions  on  the  market  (see 
2.37.-  2.38.).  The  assets  and  liabilities  of  the  financial  intermediaries  have 
different  characteristics,  involving  that  the  funds  are  transformed  or  repackaged 
with  respect  to  maturity,  scale,  risk  and  the  like  in  the  financial  intermediation 
process. 

financial 
Auxiliary 
intermediation  but which are not financial  intermediation  themselves  (see 2.39.). 

financial  activities  are  activities  closely 

related 

to 

2.33.  Through  the  financial  intermediation  process,  funds  are  channelled  between  third  parties 
with  a  surplus  on  one  side  and  those  with  a  lack  of  funds  on  the  other.  A  financial 
intermediary  does  not  simply  act  as  an  agent  for  these  other  institutional  units  but  places 
itself at risk by acquiring  financial  assets and  incurring  liabilities on  its own  account. 

(i) 

My convention,  sector  S.12  includes  holding  corporations  which  only  control  and  direct  a  group  of  subsidiaries  principally  engaged  in 
financial  intermediation  and/or  in  auxiliary  financial  activities  (see  2.43.)  and  non-profit  institutions  recognized  as  independent  legal 
entities  serving  financial  corporations  (sec  2.44.). 

42 

2.34. 

In the  financial  intermediation  process,  all  categories  of  liabilities  may  be  involved  with  the 
exception  of the category  other accounts  payable (AF.7). 

the  category  other  accounts  receivable  (factoring). 

The  financial  assets  involved  in the financial  intermediation  process may  be classified  in any 
category  with  the  exception  of  the  category  insurance  technical  reserves  (AF.6)  but 
financial 
including 
intermediaries  may  invest  their  funds  in non-financial  assets  including  real  estate.  However, 
in order  to be considered  as a  financial  intermediary,  a corporation  should,  in addition,  incur 
liabilities  on  the  market  and  transform  funds.  Therefore,  real  estate  corporations  (NACE 
division  70) are  excluded. 

In  addition, 

2.35.  The  primary  function  of insurance  corporations  and  pension  funds  consists  of the pooling  of 
risks.  The  main  liabilities  of  these  institutions  are  insurance  technical  reserves  (AF.6).  The 
counterparts  of  the  reserves  are  investments  by  the  insurance  corporations  and  pension 
funds,  which, therefore,  act as financial  intermediaries. 

2.36.  Mutual  funds  primarily  incur  liabilities  through  the  issue  of  shares  (AF.52).  They  transform 
these  funds  by  acquiring  financial  assets  and/or  real  estate.  Therefore,  mutual  funds  are 
classified  as financial  intermediaries.  As  with other  corporations,  any  change  in the  value  of 
their  assets  and  liabilities  other  than  their  own  shares  is  reflected  in  their  own  funds  (see 
7.05.).  Because  the  amount  of  own  funds  normally  equals  the  value  of  the  mutual  fund's 
shares,  any  change  in  the  value  of  the  fund's  assets  and  liabilities  will  be  reflected  in  the 
market  value of these shares. 

Mutual  funds  investing  solely  in real estate are also regarded  as financial  intermediaries. 

2.37.  Financial  intermediation,  generally,  is  limited  to  financial  transactions  on  the  market.  In 
other  words,  acquiring  assets  and  incurring  liabilities  should  be  with  the  general  public  or 
specified  and  relatively  large  sub-groups  thereof.  Where  the  activity  is  limited  to  small 
groups  of  persons  or  families,  generally,  no  financial 
intermediation  takes  place.  In 
particular,  financial  intermediation  does  not  include  institutional  units  providing  treasury 
services  to  a company  group. These  institutional  units  are  allocated  to  a sector  according  to 
the  predominant  function  of the  company  group  within  the  economic  territory.  However,  in 
cases  where  the  institutional  unit  providing  the  treasury  services  is  subject  to  financial 
supervision,  it is classified  in the financial  corporations  sector by  convention. 

2.38.  Exceptions  to  the  general  limitation  of  financial  intermediation  to  financial  transactions  on 
the  market  may  exist.  Examples  are municipal  credit  and  savings-banks,  which  rely  heavily 
on the municipality  involved,  or financial  lease corporations  depending  on a parent  group  of 
companies  in  acquiring  funds  or  in  investing  funds.  However,  their  lending  or  their 
acceptance  of  savings  should  be  independent  of  the  municipality  involved  or  the  parent 
group, respectively,  in classifying  them as financial  intermediaries. 

2.39.  Auxiliary  financial  activities  comprise  auxiliary  activities  for  realizing  transactions  in 
financial  assets  and  liabilities  or  the  transformation  or  repackaging  of  funds.  Financial 
auxiliaries  do  not  set  themselves  at  risk  by  acquiring  financial  assets  or  incurring  liabilities. 
They  only  facilitate  financial  intermediation. 

43  -

2.40.  The  institutional  units  included  in the sector  financial  corporations  (S.12) are the  following: 

a)  private  or public  corporations  which  are principally  engaged  in  financial  intermediation 

and/or in auxiliary  financial  activities; 

b)  co-operatives  and  partnerships  recognized  as  independent  legal  entities  which  are 
principally  engaged  in financial  intermediation  and/or  in auxiliary  financial  activities; 

c)  public  enterprises,  which  by  virtue  of  special  legislation  are  recognised  as  independent 
legal  entities,  which  are  principally  engaged  in  financial  intermediation  and/or  in 
auxiliary  financial  activities; 

d)  non-profit  institutions  recognised  as  independent  legal  entities  which  are  principally 
engaged  in  financial  intermediation  and/or  in  auxiliary  financial  activities,  or  which  are 
serving  financial  corporations; 

e)  holding  corporations  (see  2.14.)  if  the  group  of  subsidiaries  within  the  economic 
territory  as a whole is principally  engaged  in financial  intermediation  and/or  in  auxiliary 
financial  activities; 

f) 

unincorporated  mutual  funds  comprising  investment  portfolios  owned  by  the  group  of 
participants,  and  whose  management  is  undertaken,  in  general,  by  other  finanical 
corporations.  These  funds  are  institutional  units  by  convention,  separate  from  the 
managing  financial  corporation; 

g) 

financial  quasi-corporations: 

-  unincorporated  units  principally  engaged  in  financial  intermediation  and  subject  to 
regulation  and  supervision  (in  most  cases  classified  in  the  other  monetary  financial 
institutions  sub-sector  or  the  insurance  corporations  and  pension  funds  sub-sector) 
are  deemed  to  enjoy  autonomy  of  decision  and  to  have  autonomous  management 
independent  of  their  owners.  Their  economic  and  financial  behaviour  is  similar  to 
that  of  financial  corporations.  Therefore,  they  are  treated  as  separate  institutional 
units. Examples are branches of non-resident  financial  corporations; 

-  other  unincorporated  units  principally  engaged  in  financial  intermediation  but  not 
subject  to  regulation  and  supervision  are  only  considered  as  financial  quasi-
corporations  if  they  meet  the  conditions  qualifying  them  as  quasi-corporations  (see 
2.13.f); 

-  unincorporated  units  principally  engaged  in  auxiliary  financial  activities  are  only 
considered  as  financial  quasi-corporations  if  they  meet  the  conditions  qualifying 
them as quasi-corporations  (see  2.13.f). 

2.41.  The financial  corporations  sector  is subdivided  into five sub-sectors: 

- 

The central bank (S.121); 

Other monetary  financial  institutions  (S.l22); 

Other  financial  intermediaries, except  insurance  corporations  and pension  funds  (S.l23); 

Financial  auxiliaries  (S.l24); 

Insurance  corporations and pension  funds  (S. 125). 

-44 

The  other  monetary  financial  institutions  sub-sector  is  regarded  as  equivalent  to  the  other 
depository  corporations  sub-sector  as  defined  in  the  1993  SNA  4.88-4.94.  While  the 
definition  of  the  other  monetary  financial  institutions  sub-sector  (see  2.48.)  is  intended  to 
cover  those  financial  intermediaries  through  which  the  effects  of  the  monetary  policy  of the 
central  bank  are  transmitted  to  the  other  entities  of  the  economy,  the  other  depository 
corporations  sub-sector  is  defined  in  the  1993  SNA  with  reference  to  measures  of  broad 
money.  The  combined  sub-sectors  S.121  and  S.l22  coincide  with  the  monetary  financial 
institutions  for  statistical  purposes as defined  by the EMI  (see 2.49.). 

2.42.  With  the exception  of sub-sector  S.121, each sub-sector  may  be further  subdivided  into: 

Public  financial  corporations; 

National  private  financial  corporations; 

Foreign controlled  financial  corporations. 

The  criteria  for  this  subdivision  are  the  same  as  for  non-financial  corporations  (see  2.26.-
2.31.). 

2.43.  Holding  corporations  which  only  control  and  direct  a  group  of  subsidiaries  principally 
engaged  in  financial  intermediation  and/or  in  auxiliary  financial  activities  are  classified  in 
the  sub-sector  other  financial  intermediaries  except  insurance  corporations  and  pension 
funds 
financial  corporations 
themselves  are  to  be  allocated  to  the  sub-sectors  according  to  the  main  type  of  financial 
activity. 

(S.123).0)  However,  holding  corporations  which  are 

2.44.  Non-profit 

institutions 

financial 
corporations, but not engaged  in financial  intermediation  or  auxiliary  financial  activities, are 
classified  in the sub-sector  financial  auxiliaries (S.124). 

recognized  as 

legal  entities 

independent 

serving 

Sub-sector:  The  central  bank  (S.121) 

2.45.  Definition:  The  sub-sector  the  central  bank  (S.121)  consists  of  all  financial  corporations 
and  quasi-corporations  whose  principal  function 
is  to  issue  currency,  to 
maintain  the  internal  and  external  value  of  the  currency  and  to  hold  all  or  part 
of the international  reserves of the country. 

2.46.  The  following  financial  intermediaries are classified  in sub-sector  S.121: 

a) 

the  national  central  bank,  also  in  the  case  where  it  is  part  of  a  European  System  of 
Central  Banks; 

b)  central  monetary  agencies  of  essentially  public  origin  (e.g.  agencies  managing  foreign 
exchange  or  issuing  currency)  which  keep  a  complete  set  of  accounts  and  enjoy 
autonomy  of  decision  in  relation  to  central  government.  Mostly  these  activities  are 
performed  either within  central  government  or within  the central  bank.  In these cases no 
separate  institutional  units  exist. 

( i) 

The  classification  of  holding  corporations  within  the  financial  corporations  sector  deviates  from  the  1993  SNA  4.100  in  order  to 
maintain  consistency  with the monetary  financial  institutions  for statistical  purposes  as defined  by the  EMI  and  with official  statistics 
on  insurance corporations. 

-45  -

2.47.  Sub-sector  S.121  does  not  include  agencies  and  bodies,  other  than  the  central  bank,  which 
regulate  or  supervise  financial  corporations  or  financial  markets. They  are  classified  in  sub-
sector  S. 124 (see  2.58.g).(1) 

Sub-sector:  Other  monetary  financial  institutions  (S.122) 

2.48.  Definition:  The  sub-sector  other  monetary  financial  institutions  (S.122)  consists  of  all 
financial  corporations  and  quasi-corporations,  except  those  classified  in  the 
central  bank 
financial 
sub-sector,  which  are  principally  engaged 
is  to  receive  deposits  and/or  close 
intermediation  and  whose  business 
substitutes  for  deposits  from  institutional  units  other  than  monetary  financial 
institutions,  and,  for  their  own  account,  to  grant  loans  and/or  to  make 
investments  in securities. 

in 

2.49.  The  monetary  financial  institutions  (MFIs)  comprise  the  sub-sector  the  central  bank  (S.121) 
and  the  sub-sector  other  monetary  financial  institutions  (S.122),  and  coincide  with  the 
monetary  financial  institutions  for statistical purposes as defined  by the EMI (see 2.41.). 

2.50.  MFIs  cannot  be  described  simply  as  "banks",  because  they  may  possibly  include  some 
financial  corporations  which  may  not  call  themselves  banks,  and  some  which  may  not  be 
permitted  to  do  so  in  some  countries,  while  some  other  financial  corporations  describing 
themselves  as  banks  may  not  in  fact  be  MFIs.  In  general,  the  following 
financial 
intermediaries  are classified  in sub-sector  S.122: 

a) 

b) 

c) 

d) 

e) 

f) 

commercial  banks, "universal" banks, "all-purpose"  banks; 

savings  banks  (including  trustee  savings  banks  and  savings  banks  and 
associations); 

loan 

post  office  giro institutions, postbanks, girobanks; 

rural  credit  banks, agricultural  credit banks; 

co-operative  credit banks, credit unions; 

specialized  banks (e.g. merchant banks, issuing houses, private banks). 

2.51.  The  following  financial  intermediaries  may also be classified  in sub-sector  S.122  where  it is 
their  business  to  receive  repayable  funds  from  the public  whether  in the  form  of  deposits  or 
in  other  forms  such  as  the  continuing  issue  of  bonds  and  other  comparable  securities. 
Otherwise,  they  should  be classified  in sub-sector  S.123: 

a) 

b) 

c) 

corporations  engaged  in  granting  mortgages  (including  building  societies,  mortgage 
banks  and  mortgage credit institutions); 

mutual  funds,  investment trusts and other collective  investment  schemes; 

municipal  credit  institutions. 

This  is  a  deviation  from  the  1993  SNA  4.86  and  4.101.  in  order  to  maintain  consistency  with  the  monetary  financial  institutions  for 
statistical  purposes  as  defined  by  the  EMI. 

- 4 6-

(4) 

2.52.  Sub-sector  S.122  does not include: 

holding  corporations  which only  control  and  direct  a group  consisting  predominantly 
of  other  monetary  financial  institutions,  but  which  are  not  other  monetary  financial 
institutions  themselves. They are classified  in sub-sector  S.123  (see 2.43.); 

institutions  recognized  as 

legal  entities  serving  other 
non-profit 
monetary  financial  institutions, but  not engaged  in  financial  intermediation.  They  are 
classified  in sub-sector  S.124  (see 2.44.). 

independent 

Sub-sector: 

Other  financial  intermediaries,  except  insurance  corporations  and  pension 
funds  (S.123) 

2.53.  Definition:  The  sub-sector  other financial  intermediaries  except  insurance  corporations  and 
pension  funds  (S.123)  consists  of  all  financial  corporations  and  quasi-
corporations  which  are  principally  engaged  in  financial 
intermediation  by 
incurring 
liabilities  in  forms  other  than  currency,  deposits  and/or  close 
substitutes  for  deposits  from  institutional  units  other  than  monetary  financial 
institutions, or insurance technical  reserves. 

2.54.  Sub-sector  S.123  includes  various  types  of  financial  intermediaries  especially  those  which 
are  predominantly  engaged  in  long-term  financing.  In  most  cases  this  predominant  maturity 
forms  the  basis  of  a  distinction  from  the  other  monetary  financial  institutions  sub-sector. 
Based  on  the  non-existence  of  liabilities  in  the  form  of  insurance  technical  reserves,  the 
borderline  with the insurance corporations  and pension  funds  sub-sector  can be  determined. 

2.55. 

In  particular,  the  following  financial  corporations  and  quasi-corporations  are  classified  in 
sub-sector  S. 123 unless they are MFIs: 

a) 

corporations  engaged  in financial  leasing; 

b)  corporations  engaged  in  hire  purchase  and  the  provision  of  personal  or  commercial 

finance; 

c)  corporations  engaged  in  factoring; 

d) 

security  and derivative  dealers (on own account); 

e) 

f) 

g) 

specialized  financial  corporations  such  as  venture  and  development  capital  companies, 
export/import  financing  companies; 

financial  vehicle corporations, created to be holders of securitized  assets; 

financial  intermediaries  which  receive  deposits  and/or  close  substitutes  for  deposits 
from  MFIs  only; 

h)  holding  corporations  which  only  control  and  direct  a  group  of  subsidiaries  principally 
engaged  in  financial  intermediation  and/or in auxiliary  financial  activities, but which  are 
not  financial  corporations  themselves (see 2.43.). 

2.56.  Sub-sector  S.123  does  not  include  non-profit  institutions  recognized  as  independent  legal 
entities  serving  other  financial  intermediaries  except  insurance  corporations  and  pension 
funds,  but  not  engaged  in  financial  intermediation.  They  are  classified  in  sub-sector  S.124 
(see 2.44.). 

47 

Sub-sector:  Financial  auxiliaries  (S.124) 

2.57.  Definition:  The  sub-sector 

financial  auxiliaries 

financial 
corporations  and  quasi-corporations  which  are  principally  engaged  in  auxiliary 
financial  activities,  that  is  to  say  activities  closely  related 
to  financial 
intermediation  but  which  are  not  financial  intermediation  themselves  (see 
2.39.). 

(S.124)  consists  of  all 

2.58. 

In  particular,  the  following  financial  corporations  and  quasi-corporations  are  classified  in 
sub-sector  S.124: 

a) 

insurance  brokers,  salvage  and  average  administrators, 
consultants, etc.; 

insurance  and  pension 

b) 

loan brokers, securities brokers, investment advisers, etc.; 

c)  flotation  corporations  that manage the issue of securities; 

d)  corporations  whose  principal  function  is to guarantee, by  endorsement,  bills  and  similar 

instruments; 

e)  corporations  which  arrange  derivative  and  hedging  instruments,  such  as  swaps,  options 

and futures  (without issuing them); 

f) 

corporations  providing  infrastructure  for financial  markets; 

g)  central  supervisory  authorities  of  financial  intermediaries  and  financial  markets  when 

they  are separate institutional  units; 

h)  managers  of pension  funds,  mutual  funds, etc.; 

i) 

corporations providing  stock exchange and insurance  exchange; 

j) 

institutions  recognized  as  independent 

financial 
non-profit 
corporations,  but not engaged  in financial  intermediation  or  auxiliary  financial  activities 
(see 2.44.). 

legal  entities  serving 

2.59.  Sub-sector  S.124  does  not  include  holding  corporations  which  only  control  and  direct  a 
group  of  subsidiaries  principally  engaged  in auxiliary  financial  activities,  but  which  are  not 
financial  auxiliaries themselves. They are classified  in sub-sector  S.123  (see 2.43.). 

Sub-sector:  Insurance corporations  and pension funds  (S.125) 

2.60.  Definition:  The sub-sector  insurance corporations and pension  funds  (S. 125) consists of all 
financial  corporations  and  quasi-corporations  which  are  principally  engaged  in 
financial  intermediation as the consequence of the pooling of risks (see 2.35.). 

2.61.  The  insurance  contracts  administered  might  relate  to  individuals  and/or  groups,  whether  or 
not  participation  results  from  a  general  obligation  imposed  by  government.  Furthermore, 
social  insurance  contracts  (see  4.83.  -  4.91.)  are  sometimes  a  considerable  part  of  the 
contracts  administered. 

2.62.  Sub-sector  S.125  includes both captive  insurance corporations  and  reinsurance  corporations. 

-48 

2.63.  Sub-sector  S.125  does not include: 

institutional  units  which  fulfil  each  of  the  three  criteria  listed  in  2.74.  They  are 
classified  in sub-sector  S.l314; 

insurance  corporations  and  pension  funds,  but  which  are  not 

holding  corporations  which  only control  and  direct  a group consisting  predominantly 
insurance 
of 
corporations  and  pension  funds  themselves.  They  are  classified  in  sub-sector  S.123 
(see 2.43.); 

non-profit  institutions  recognized  as  independent  legal  entities  serving  insurance 
corporations  and  pension  funds,  but  not  engaged  in  financial  intermediation.  They 
are classified  in sub-sector  S.124  (see 2.44.). 

2.64.  The  sub-sector  insurance corporations  and pension funds  may be subdivided  into: 

insurance  corporations; 

(autonomous)  pension  funds. 

Autonomous  pension  funds  are pension  funds  which  have  autonomy  of  decision  and  keep a 
complete  set  of  accounts.  They  are  therefore  institutional  units.  Non-autonomous  pension 
funds  are not institutional  units and remain part of the institutional  unit that sets them up. 

2.65.  Risks  concerning  individuals  or  groups  could  both  be  included  in  the  activities  of  life  and 
non-life  insurance  corporations.  Some  insurance  corporations  might  limit  their  activities  to 
group contracts only. These corporations are allowed to insure every  group. 

2.66.  Pension  funds  can  be  described  as  institutions  which  insure  group  risks  relating  to  social 
risks  and  needs  (see 4.84.)  of the insured persons. The typical  groups  of participants  in  such 
policies  include  employees  of  a  single  enterprise  or  a  group  of  enterprises,  employees  of  a 
branch  or  industry,  and  persons  having  the  same  profession.  The  benefits  included  in  the 
insurance  contract  might  encompass  benefits  which  are paid  after  death  of the  insured  to the 
widow(er)  and  children  (mainly  death  in  service),  benefits  which  are  paid  after  retirement 
and benefits  which are paid after  the insured became  disabled. 

2.67. 

In  some  countries  all  these  types  of  risks  could  be  insured  equally  well  by  life  insurance 
corporations  as by pension  funds.  In other countries  some of these classes of risks have to be 
insured  through  life  insurance  corporations.  In  contrast  to  life  insurance  corporations, 
pension funds  are restricted  (by law) to specified  groups of employees  and  self-employed. 

General  government  (S.13) 

2.68.  Definition:  The  sector  general  government  (S.13)  includes  all  institutional  units  which  are 
principally  engaged  in the production  of (other) non-market  goods  and  services 
(see  3.25.),  and  intended  for  individual  and  collective  consumption  and/or  in 
the  redistribution  of  national  income  and  wealth.  The  principal  resources  of 
these  units  are  derived  directly  or  indirectly  from  compulsory  payments  made 
by units belonging to other sectors. 

49 

2.69.  The institutional  units included  in sector S.l3 are the  following: 

a)  general  government  entities  (excluding  public  enterprises  established  as  public 
corporations  or, by virtue of special  legislation, recognized  as independent  legal  entities, 
or  quasi-corporations,  when  any  of these  are  classified  in  the  non-financial  or  financial 
sectors)  which  administer  and  finance  a  group  of  activities,  principally  providing  non-
market  goods and services, intended  for the benefit  of the community  0 ). 

b)  non-profit  institutions  recognized  as  independent  legal  entities  which  are  principally 
engaged  in  the  production  of  non-market  goods  and  services,  which  are  controlled  by 
general  government  and  whose  principal  resources  other  than  the  proceeds  of  sales  are 
derived  from  payments made by the government  departments  specified  in a) above. 

c)  autonomous pension  funds  if the three requirements  of paragraph  2.74. are met. 

2.70.  The general  government  sector is divided  into  four  sub-sectors: 

central  government  (S. 1311 ) 
state government (S. 1312) 
local government (S. 1313 ) 
social  security  funds  (S. 1314). 

Sub-sector:  Central  government  (S.1311) 

2.71.  Definition:  The  sub-sector  central  government  includes  all  administrative  departments  of 
the  State and other central  agencies  whose  competence  extends  over  the  whole 
economic territory, except for the administration  of social security  funds. 

Included  in  sub-sector  S.1311  are  those  non-profit  institutions  which  are  controlled  by 
central  government  and whose competence extends over the whole economic  territory. 

Sub-sector:  State government  (S.1312) 

2.72.  Definition:  The  state  government  sub-sector  consists  of  state  governments  which  are 
separate  institutional  units exercising  some  of the  functions  of  government  at a 
level  below  that  of  central  government  and  above  that  of  the  governmental 
institutional  units existing  at  local  level, except  for  the  administration  of  social 
security  funds. 

Included  in  sub-sector  S.1312 are those  non-profit  institutions  which  are controlled  by  state 
governments  and whose competence is restricted  to the economic territories of the states. 

Sub-sector:  Local government  (S.1313) 

2.73.  Definition:  The  sub-sector  local  government  includes  those  types  of  public  administration 
whose  competence  extends to  only  a local  part  of  the  economic  territory,  apart 
from  local agencies of social security  funds. 

Included  in  sub-sector  S.1313 are those non-profit  institutions  which  are controlled  by  local 
governments  and  whose  competence  is  restricted  to  the  economic  territories  of  the  local 
governments. 

'  ' 

By  convention,  market  regulatory  organisations  which  are  either  exclusively  or  principally  simple  distributors  of  subsidies  are 
classified  in S.l3,  sub-sector  central  government  S.1311.  However,  those  organisations  which  arc exclusively  or principally  engaged 
in buying, holding and selling agricultural  or food  products are classified  in S.l  l(see 2.21., note (1)). 

-50 

Sub-sector  : Social  security  funds  (S.1314) 

2.74.  Definition:  The  sub-sector  social  security  funds  includes  all  central,  state  and  local 
institutional  units  whose  principal  activity  is  to  provide  social  benefits  and 
which  fulfil  each of the following  three criteria : 

-  by  law  or  by  regulation  -  with  the  exclusion  of  regulations  concerning 
government  employees  -  certain  groups  of  the  population  are  obliged  to 
participate  in the scheme or to pay  contributions; 

-  general  government  is  responsible  for  the  management  of  the  institution  in 
respect  of  the  settlement  or  approval  of  the  contributions  and  benefits 
independently  from  its role as supervisory body or  employer; 

-  general government  guarantees the payment of the  benefits. 

Households  (S.14) 

2.75.  Definition:  The  households  sector  (S.14)  covers  individuals  or  groups  of  individuals  as 
consumers and possibly also as entrepreneurs producing  market goods and  non-
financial  and  financial  services  provided 
the 
corresponding  activities  are  not  those  of  separate  entities  treated  as  quasi-
corporations.  It also includes  individuals  or  groups  of  individuals  as  producers 
of goods and non-financial  services  for  exclusively  own  final  consumption  (see 
3.22.-3.23.). 

the  latter  case, 

that, 

in 

Households as consumers may be defined  as small groups of persons who  share 
the  same  living  accommodation,  who  pool  some,  or  all,  of  their  income  and 
wealth  and  who  consume  certain  types  of  goods  and  services  collectively, 
mainly  housing  and  food.  The  criteria  of  the  existence  of  family  or  emotional 
ties may be added. 

The  principal  resources  of  these  units  are  derived  from  the  compensation  of 
employees,  property  income,  transfers  from  other  sectors  or  the  receipts  from 
disposal  of market products or the imputed  receipts  from  output  of products  for 
own  final  consumption. 

2.76.  The households  sector includes: 

individuals or groups of individuals whose principal  function  is  consumption; 

persons  living  permanently  in  institutions  who  have  little  or  no  autonomy  of  action  or 
decision  in  economic  matters  (e.g.  members  of  religious  orders  living  in  monasteries, 
long-term  patients  in  hospitals,  prisoners  serving  long  sentences,  old  persons  living 
permanently  in  retirement  homes).  Such  people  are  treated  as  comprising,  together,  a 
single institutional  unit, that is, a single  household; 

individuals  or  groups  of  individuals  whose  principal  function  is  consumption  and  that 
produce  goods  and  non-financial  services  for  exclusively  own  final  consumption;  only 
two  categories  of  services  produced  for  own  final  consumption  are  included  within  the 
system:  services  of  owner-occupied  dwellings  and  domestic  services  produced  by  paid 
employees; 

sole  proprietorships  and partnerships  without  independent  legal  status  - other  than  those 
treated  as  quasi-corporations  -  whose  principal  function  is  the  production  of  market 
goods and  services ; 

51  -

non-profit  institutions  serving  households,  which  do  not  have  independent  legal  status 
or those  which  do  but are of only  minor  importance  (see  2.88.).  The principal  resources 
of  these  institutions  are  derived  from  voluntary  contributions  by  households  in  their 
capacity  as consumers  and  from  property  income. 

2.77.  The households  sector  is subdivided  into six sub-sectors : 

employers (including own-account workers) (S.141  +S.142) 
employees  (S.l43) 
recipients  of property  incomes  (S. 1441 ) 
recipients  of pensions  (S. 1442) 
recipients of other transfer  incomes  (S. 1443) 
others (S. 145). 

- 

2.78.  Households  are allocated to sub-sectors according to the largest  income category  (employers' 
income, compensation  of employees, etc.) of the household  as a whole. When  more than  one 
income  of a given category  is received  within the same household, the classification  must  be 
based  on the total household  income within each category. 

Sub-sector  : Employers  (including own-account workers)  (S.141 + S.  142) 

2.79.  Definition:  The  sub-sector  employers  (including  own-account  workers)  consists  of  the 
group  of  households  for  which  the  (mixed)  incomes  (B3)  accruing  to  the 
owners  of  household  unincorporated  enterprises 
their  activity  as 
producers of market  goods and services with or without  paid employees  are the 
largest  source  of  income  for  the  household  as  a  whole,  even  if  it  does  not 
always account  for more than a half of total household  income. 

from 

Sub-sector  : Employees  (S.l43) 

2.80.  Definition:  The  sub-sector  employees  consists  of  the  group  of  households  for  which  the 
income  accruing  from  compensation  of employees  (Dl)  is the  largest  source  of 
income for the household  as a whole. 

Sub-sector  : Recipients  of property incomes  (S.1441) 

2.81.  Definition:  The  sub-sector  recipients  of  property  incomes  consists  of  the  group  of 
households  for  which property  income  (D4)  is the  largest  source  of  income  for 
the household  as a whole. 

Sub-sector  : Recipients  of pensions  (S.1442) 

2.82.  Definition  :  The  sub-sector  recipients  of  pensions  consists  of  the  group  of  households  for 
which  the  income  accruing  from  pensions  is  the  largest  source  of  income  for 
the household  as a whole. 

Pension  households  are  households  whose  largest  income  consists  of  retirement  or  other 
pensions, including  pensions from  previous employers. 

52 

Sub-sector  : Recipients  of other transfer  incomes  (S.1443) 

2.83.  Definition  :  The  sub-sector  recipients  of  other  transfer  incomes  consists  of  the  group  of 
households  for  which  the  income  accruing  from  other  current  transfers  is  the 
largest  source of income for the household  as a whole. 

Other  current  transfers  are  all  current  transfers  other  than  property  income,  pensions  and 
income  of persons  living permanently  in institutions. 

Sub-sector  : Others  (S. 145) 

2.84.  Definition:  The sub-sector  others consists of persons  living permanently  in  institutions. 

Persons  living  permanently  in  institutions  are  classified  separately  because  the  criterion  of 
the  largest  source  of  income  does  not  allow  a meaningful  classification  of  these  persons  in 
one of the  foregoing  sub-sectors. 

2.85. 

If  the  main  income  source  of  the  household  as  a  whole  is  not  available  for  sectoring 
purposes,  the  income  of the  reference  person  constitutes  the  second-best  characteristic  to  be 
used  for  classifying  purposes.  The  reference  person  of  a  household  is  normally  the  person 
with  the  largest  income.  If  the  latter  information  is  not  available,  the  income  of  the  person 
who states that he/she is the reference  person may be used  for  sub-sectoring  households. 

2.86.  However,  other  criteria  may  be  appropriate  and  needed  for  different  kinds  of  analysis  or  as 
the  basis  for  policy-making,  e.g.  breakdown  of  households  as  entrepreneurs  by  activity  : 
agricultural  households;  non-agricultural  households  (industry,  services  for  sale,  services 
provided  free). 

Non-profit  institutions  serving households  (S.15) 

institutions  which  are  separate 

2.87.  Definition:  The  sector  non-profit  institutions  serving  households  (NPISHs)  (S.15)  consists 
of  non-profit 
legal  entities,  which  serve 
households  and  which  are principally  engaged  in the  production  of  non-market 
goods  and  services  intended  for  particular  groups  of  households.  Their 
principal  resources, apart from  those derived  from  occasional  sales, are  derived 
directly  or  indirectly  from  voluntary  contributions  in  cash  or  in  kind  from 
households  in  their  capacity  as  consumers,  from  payments  made  by  general 
governmentsC1) and from property  income. 

2.88.  Where  these  institutions  are  not  very  important,  they  are  not  included  in  this  sector,  their 

transactions  being mixed up with those of households  (S.14). 

The  NPISHs  sector  includes  the  following  main  kinds  of  NPISHs  that  provide  non-market 
goods and  services to households : 

Trade  unions,  professional  or  learned  societies,  consumers'  associations,  political 
parties, churches or religious societies (including those financed  but not controlled  by 
governments), and social, cultural, recreational  and  sports clubs; 

Charities,  relief  and  aid  organizations  financed  by  voluntary  transfers  in  cash  or  in 
kind  from  other  institutional units. 

*• ' 

NPIs financed  and controlled  by general government are classified  in the general government sector (see 2.69.b). 

- 5 3-

Sector  S.15  includes  charities,  relief  or aid  agencies  serving  non-resident  units  and  excludes 
entities  where membership  gives right to a predetermined  set of goods and  services. 

Rest  of the world  (S.2) 

2.89.  Definition:  The  rest  of  the  world  (S.2)  is  a  grouping  of  units  without  any  characteristic 
functions  and  resources;  it  consists  of  non-resident  unitsO)  insofar  as  they  are 
engaged 
institutional  units,  or  have  other 
economic  links  with  resident  units. Its  accounts  provide  an  overall  view  of  the 
economic  relationships  linking the national economy  with the rest of the  world. 

in  transactions  with  resident 

2.90.  The  rest  of  the  world  is  not  a  sector  for  which  complete  sets  of  accounts  have  to  be  kept, 
although  it  is often  convenient  to describe the rest of the world  as  if  it were a sector.  Sectors 
are  obtained  by  disaggregating  the  total  economy  to  obtain  more  homogeneous  groups  of 
resident  institutional  units,  which  are  similar  in  respect  to  their  economic  behaviour,  their 
objectives  and  functions.  This  is  not  the  case  for  the  sector  rest  of  the  world:  there  are 
recorded  the  transactions  and  other  flows  of  non-financial  and  financial  corporations,  non 
profit  institutions,  households  and  general  government  with  non-resident  institutional  units 
and  other  economic  relationships  between  residents  and  non-residents,  e.g.  claims  by 
residents on  non-residents. 

2.91. 

It  should  be  noted  that  the  rule  whereby  the  accounts  for  the  rest  of  the  world  include  only 
transactions  carried  out  between  resident  institutional  units  and  non-resident  units  is  subject 
to the following  exceptions: 

a) 

b) 

c) 

the services of transport  (up to the border of the exporting  country) provided  by  resident 
units  in  respect  of imported  goods  are  shown  in the  rest  of the  world  accounts  with  fob 
imports, even though they are produced by resident units (see 3.114.); 

transactions  in foreign  assets between residents belonging  to different  sectors  are  shown 
in  the  detailed  financial  accounts  for  the  rest  of  the  world;  although  they  do  not  affect 
the  country's  financial  position  vis-à-vis  the  rest  of  the  world,  they  affect  the  financial 
relationships  of individual  sectors with the rest of the world; 

transactions  in  the  country's  liabilities  between  non-residents  belonging  to  different 
geographical  zones  are  shown  in  the  geographical  breakdown  of  the  rest  of  the  world 
accounts.  Although  these transactions  do  not  affect  the  country's  overall  liability  to  the 
rest of the world, they affect  its liabilities to different  parts of the  world. 

2.92.  The sector rest of the world (S.2) is subdivided  into: 

the European Union (S.21 ) 
- 
- 
third  countries and international  organizations  (S.22) 

the member  countries of the EU (S.211) 
the Institutions of the EU (S .212) 

Sector  classification  of standard  legal  types of producer  units 

2.93.  The  following  paragraphs  summarise the principles underlying  the classification  of  producer 
units  into  sectors,  using  the  standard  terminology  for  describing  the  main  types  of 
institutions. 

'  ' 

Included  are the Institutions of the EU and international  organizations (see also 2.06.) 

- 54 -

SECTOR CLASSIFICATION OF PRODUCER UNITS FOR 

" \ ^^ 

^ ~ ^ - ^^ 

PRINCIPAL FUNCTION 
(otherwise, principal resources) 

STANDARD 
LEGAL DESCRIPTION  ^ " ^ - ^^ 

^ ^ \ ^^ 

PRODUCTION OF 
MARKET 
GOODS AND NON-
FINANCIAL 
SERVICES 

FINANCIAL 
INTERMEDIATION 

Private and public  corporations 

S.ll  non-financial 
corporations 
(see 2.23.a) 

S.12  financial 
corporations 
(see 2.40.a and  2.40.f) 

Co-operatives  and partnerships recognized  as 
independent 
legal  entities 

S.ll  non-financial 
corporations 
(see  2.23.b) 

Public enterprises  which by virtue of special 
legislation  are recognized  as independent  legal 
entities 

S.ll  non-financial 
corporations 
(see  2.23.c) 

Public  enterprises 
not recognized  as 
independent  legal 
entities 

those with the 
characteristics of 
quasi-corporations 

S.ll  non-financial 
corporations 
(see2.23.f) 

the rest 

Non-profit  institutions recognized  as 
independent  legal  entities 

S.13 general 
government 
(see  2.69.a) 

S.ll  non-financial 
corporations 
(see 2.23.d) 

Partnerships  not 
recognized  as 
independent  legal 
entities 

those with the 
characteristics 
of  quasi-corporations 

S.ll  non-financial 
corporations 
(see 2.23 .f) 

S.12  financial 
corporations 
(see  2.40.b) 

S.12  financial 
corporations 
(see  2.40.c) 

S.12  financial 
corporations 
(see  2.40.g) 

S.12  financial 
corporations 
(see  2.40.d) 

S.12  financial 
corporations 
(see  2.40.g) 

Sole  proprietorships 

the rest 

Holding  corporations 

S.14  households 
(see  2.75.) 

S.14  households 
(see 2.75.) 
The sectoral  classification  of these units is not 
based directly  on their principal  function,  but on 
the preponderant  type of activity of the group of 
corporations controlled  by them  : they  should be 
allocated, as appropriate, to S.l  1 non-financial 
corporations  (see 2.23.e)  or S.12  financial 
corporations  (see 2.40.e). 

.0  * - 56 

MAIN STANDARD  LEGAL  FORMS  OF  OWNERSHIP 

PRODUCTION OF NON-MARKET GOODS AND SERVICES 

COMPULSORY  PAYMENTS MADE BY OTHER UNITS  I 

VOLUNTARY CONTRIBUTIONS MADE BY 
HOUSEHOLDS, IN THEIR CAPACITY AS 
CONSUMERS, PAYMENTS MADE BY GENERAL 
GOVERNMENT AND FROM PROPERTY INCOME 

S.13  general  government 
(see 2.69.b) 

S.15  non-profit  institutions  serving households (1) 
(see  2.87.) 

( 1 )  With  the exception  of non-profit  institutions of minor  importance  (see  2.88.) 

-  57 

2.94.  Private and  public corporations are classified  as  follows: 

a) 

b) 

those  principally  engaged  in the production  of market  goods  and  non-financial  services: 
in sector  S.l  1, non-financial  corporations  (see 2.23.a) 

those  principally  engaged  in  financial  intermediation  and  auxiliary  financial  activities: 
in sector  S.12, financial  corporations  (see 2.40.a and 2.40.1). 

2.95.  Co-operatives  and  partnerships  recognized  as  independent  legal  entities  are  classified  as 

follows: 

a) 

b) 

those principally  engaged  in the production  of market  goods  and  non-financial  services: 
in sector  S.l  1, non-financial  corporations  (see  2.23.b) 

those  principally  engaged  in  financial  intermediation  and  auxiliary  financial  activities: 
in sector  S.12, financial  corporations (see 2.40.b). 

2.96.  Public  enterprises  which  by virtue  of special  legislation  are  recognized  as independent  legal 

entities are classified  as  follows: 

a) 

b) 

those  principally  engaged  in the production  of market  goods  and  non-financial  services: 
in sector  S.l  1, non-financial  corporations  (see  2.23.c) 

those  principally  engaged  in  financial  intermediation  and  auxiliary  financial  activities: 
in sector  S.12, financial  corporations  (see 2.40.c). 

2.97.  Public enterprises  not recognized as independent  legal entities are classified  as  follows: 

if they are quasi-corporate  (see 2.13 .f): 

a)  those  principally  engaged  in  the  production  of  market  goods  and  non-financial 

services: in sector S.ll, non-financial  corporations  (see  2.23.f) 

b)  those  principally  engaged 

in  financial 

intermediation  and  financial  auxiliary 

activities: in sector S.12, financial corporations  (see 2.40.g) 

if  they  are  not  quasi-corporate:  in  sector  S.13,  general  government,  as  they  remain  an 
integral part of the units which control them (see 2.69.a). 

2.98.  Non-profit  institutions  (associations,  foundations)  recognized  as  independent  legal  entities 

are classified  as  follows: 

a) 

b) 

those principally  engaged  in the production  of market  goods  and  non-financial  services: 
in sector  S.l  1, non-financial  corporations  (see 2.23.d) 

those  principally  engaged  in  financial  intermediation  and  auxiliary  financial  activities: 
in sector  S.12, financial  corporations  (see 2.40.d) 

- 58 

c) 

those principally  engaged  in the production of non-market  services  : 

- 

- 

in  sector  S.13,  general  government,  if  their  resources  come  mainly  from  the 
departments  of general government (see  2.69.b) 

in  sector  S.15,  non-profit  institutions  serving  households,  if  their  resources,  other 
than  those  derived  from  occasional  sales, come  mainly  from  voluntary  contributions 
made  by  households  in their  capacity  as consumers,  from  payments  made  by  general 
governments or from  property  income (see 2.87.). 

2.99.  Sole  proprietorships  and  partnerships  not  recognized  as  independent  legal  entities  are 

classified  as  follows:. 

if they are quasi-corporate  (see  2.13.f): 

a)  those  principally  engaged  in  the  production  of  market  goods  and  non-financial 

services: in sector S.l  1, non-financial  corporations  (see  2.23.f) 

b)  those principally engaged  in financial  intermediation  and  financial  auxiliary  activities 

in sector  S.12 financial corporations  (see  2.40.g) 

if they are not quasi-corporate, they are classified  in sector  S. 14, households  (see 2.75.). 

2.100.  Holding  corporations  (i.e. corporations  which  direct  a group  of  companies)  are  classified  as 

follows: 

a) 

in  sector  S.ll,  non-financial  corporations,  if  the  preponderant  type  of  activity  of  the 
group  of  corporations  as  a  whole  is  the  production  of  market  goods  and  non-financial 
services (see 2.23.e) 

b) 

in sector  S.12, financial  corporations, if the preponderant  type of activity of the group of 
corporations  as a whole is financial  intermediation  (see 2.40.e). 

2.101.  The  table  on  pages  56-57  illustrates  in  schematic  form  the  various  cases  which  are 

enumerated  above. 

5()  -

LOCAL  KIND-OF-ACTIVITY  UNITS AND  INDUSTRIES 

2.102.  In  practice,  most  institutional  units  producing  goods  and  services  are  engaged  in  a 
combination  of  activities  at  the  same  time.  They  may  be  engaged  in  a  principal  activity, 
some  secondary  activities and some ancillary  activities (see 3.10. - 3.13.). 

2.103.  An  activity  can  be  said  to  take  place  when  resources  such  as  equipment, 

labour, 
manufacturing  techniques,  information  networks  or  products  are  combined,  leading  to  the 
creation  of  specific  goods  or  services.  An  activity  is  characterised  by  an  input  of  products 
(goods and  services), a production process and an output of products. 

Activities can be determined  by reference  to a specific  level of NACE Rev.  1. 

2.104.  If a unit carries out more than one activity, all the activities which  are not ancillary  activities 
are ranked  according  to the  gross value  added.  On the  basis  of the  preponderant  gross  value 
added  generated,  a  distinction  can  then  be  made  between  principal  activity  and  secondary 
activities.  Ancillary  activities  are not  isolated  to  form  distinct  entities  or  separated  from  the 
principal  or secondary  activities of entities they  serve. 

2.105.  In order  to analyse  flows  occurring  in the process  of production  and  in the use  of goods and 
services,  it  is  necessary  to  choose  units  which  emphasize  relationships  of  a  technico-
economic  kind. This requirement  means that as a rule  institutional  units must be  partitioned 
into  smaller  and  more homogeneous  units with regard to the kind  of production.  Local  kind-
of-activity  units  are  intended  to  meet  this  requirement  as  a  first  but  practice-oriented 
operational  approach. 

The local kind-of-activity  unit 

2.106.  Definition:  The  local  kind-of-activity  unit  (local  KAU)  is  the  part  of  a  KAU  which 
corresponds to a local unit 0 ).  The KAU  groups  ail the parts of an  institutional 
unit  in its capacity  as producer contributing  to the performance  of an activity at 
class  level  (4  digits)  of  the  NACE  Rev.  1  and  corresponds  to  one  or  more 
operational  subdivisions  of  the  institutional  unit.  The  institutional  unit's 
information  system  must  be  capable  of  indicating  or  calculating  at  least  the 
value  of  production,  intermediate  consumption,  compensation  of  employees, 
the operating surplus and employment and gross  fixed  capital  formation. 

The  local  unit  is an  institutional  unit producing  goods  and  services  or a part  thereof  situated 
in a geographically  identified  place. 

A  local  KAU  may  correspond  to  an  institutional  unit  as  producer  or  a  part  thereof;  on  the 
other hand,  it can never belong to two different  institutional  units. 

2.107.  If  an  institutional  unit  producing  goods  and  services  contains  a  principal  activity  and  also 
one  or  several  secondary  activities,  it  should  be  subdivided  into  the  same  number  of  KAUs, 
and  the  secondary  activities  should  be classified  under  different  headings  from  the  principal 
activity.  On  the  other  hand,  the  ancillary  activities  are  not  separated  from  the  principal  or 
secondary  activities.  But  KAUs  falling  within  a  particular  heading  of  the  classification 
system  can  produce  products  outside  the  homogeneous  group  on  account  of  secondary 
activities  connected  with  them  which  cannot  be  separately 
identified  from  available 
accounting  documents. Thus a KAU may carry out one or more secondary  activities. 

The local  KAU is called establishment  in the SNA and  ISIC Rev.3 

-60  -

The  industry 

2.108.  Definition:  An  industry  consists of a group of local  KAUs  engaged  in the  same, or  similar, 
kind  of activity. At the most detailed  level of classification,  an industry  consists 
of  all  the  local  KAUs  falling  within  a  single  class  (4  digits)  of  NACE  Rev.  1 
and  which  are  therefore  engaged  in the  same  activity  as  defined  in  the  NACE 
Rev.l. 

Industries  comprise  both  local  KAUs  producing  market  goods  and  services  and  local  KAUs 
producing  non-market  goods  and  services.  An  industry  by  definition  consists  of  a  group  of 
local  KAUs  engaged  in  the  same  type  of productive  activity,  irrespective  of  whether  or  not 
the institutional  units to which they belong produce market  or non-market  output. 

2.109.  Industries  may  be classified  in three categories : 

a) 

b) 

c) 

industries  producing  market  goods  and  services  (market  industries)  and  goods  and 
services  for  own final use ( ' ) 

industries  producing  non-market  goods  and  services  of  general  government  :  non-
market  industries of general  government 

industries  producing  non-market  goods  and  services  of  non-profit  institutions  serving 
households  : non-market  industries of non-profit  institutions. 

CLASSIFICATION  OF  INDUSTRIES 

2.110.  The classification  used  for grouping  local KAUs into industries  is the NACE  Rev.  1. 

UNITS  OF HOMOGENEOUS  PRODUCTION  AND HOMOGENEOUS  BRANCHES 

2.111.  The  local  KAU  meets  the  requirements  of  production  process  analysis  only  approximately 
(see  2.105.  and  2.107.).  The unit  which  is optimal  for  this  kind  of analysis,  i.e.  input-output 
analysis, is the unit of homogeneous  production. 

*  ' 

Services tor own  final  use concern only  housing services produced  by owner-occupiers  and domestic services produced  by employing 
paid  stair (see 3.23.). 

-61  -

The unit of homogeneous  production 

2.112.  Definition:  The  distinguishing  feature  of  a  unit  of  homogeneous  production  is  a  unique 
activity  which  is identified  by  its inputs, a particular  process  of production  and 
its  outputs.  The  products  which  constitute 
inputs  and  outputs  are 
themselves  distinguished  not  only  by  their  physical  characteristics  and  the 
extent  to  which  they  are  processed  but  also  by  the  technique  of  production 
used:  they  can  be  identified  by  reference  to  a  classification  of  products  (see 
2.118.). 

the 

2.113.  If  a  goods  and  services  producing  institutional  unit  carries  out  a  principal  activity  and  also 
one  or  more  secondary  activities,  it  will  be  partitioned  into  the  same  number  of  units  of 
homogeneous  production.  Ancillary  activities  are  not  separated  from  the  principal  or 
secondary  activities.  Just  like  the  local  KAU,  the  unit  of  homogeneous  production  may 
correspond  to an institutional  unit or a part thereof; on the  other  hand,  it can  never  belong  to 
two different  institutional  units. 

The homogeneous  branch 

2.114.  Definition:  The  homogeneous  branch  consists  of  a  grouping  of  units  of  homogeneous 
production.  The set of activities covered  by a homogeneous  branch  is  identified 
by  reference  to  a  product  classification.  The  homogeneous  branch  produces 
those goods or services specified  in the classification  and only those products. 

2.115.  Homogeneous  branches  are  units  designed  for  economic  analysis  which  cannot  usually  be 
observed  directly;  data  collected  from  the  units  used  in  statistical  enquiries  have  to  be  re 
arranged  to form  homogeneous  branches. 

2.116.  Homogeneous  branches may be classified  in three categories: 

a)  homogeneous  branches  producing  market  goods  and  services  (market  branches)  and 

goods and  services for own final use  0) 

b)  homogeneous  branches  producing  non-market  goods  and  services  of  general 

government: non-market  branches of general  government 

c)  homogeneous  branches  producing  non-market  goods  and  services  of  non-profit 
institutions  serving  households:  non-market  branches  of  non-profit  institutions  serving 
households. 

2.117.  The homogeneous  branches producing market goods and  services  and  goods and  services  for 
own  final  use consist of all units of homogeneous production  of whatever  institutional  sector 
which  are  exclusively  engaged  in  the  production  of  market  goods  and  services  or  of  goods 
and  services  for  own  final  use.  The  production  of  market  goods  and  services  within  the 
general  government  or  non-profit 
for 
themselves)  are treated  as units  of homogeneous  production  and  classified  in  an  appropriate 
market  branch. 

institutions  sectors  (including 

intended 

those 

The non-market  homogeneous  branches of general  government  producing  non-market  goods 
and  services  consist  of  all  units  of  homogeneous  production  in  the  general  government 
sector which produce non-market  goods and  services. 

*• ' 

Services  for own final use concern  only  housing services produced  by owner-occupiers  and domestic services  produced  by employiiui 
paid staff  (see  3.23). 

- 6 2-

The  non-market  homogeneous  branches of non-profit  institutions  serving  households  consist 
of  all  units  of  homogeneous  production  in  the  non-profit  institutions  serving  households 
sector which produce non-market goods and services. 

THE CLASSIFICATION  OF HOMOGENEOUS  BRANCHES 

2.118.  The  classification  of  homogeneous  branches  used  in  the  input-output  tables  is  based  on  the 
Classification  of  Products  by  Activity  (CPA).  The  CPA  is  a  product  classification  whose 
elements  are  structured  according  to  the  industrial  origin  criterion,  industrial  origin  being 
defined  by NACE  Rev. 1. 

6 3-

(5) 

CHAPTER III 

TRANSACTIONS IN PRODUCTS 

^ 

6 5-

INTRODUCTION 

3.01. 

Definition:  Products  are  all  goods  and  services  that  are  created  within  the  production 

boundary. The latter is defined  in paragraph  3.07. 

3.02. 

The following  main categories of transactions  in products are distinguished  in the ESA: 

Transaction  categories 

Code 

Output 

Intermediate  consumption 

Final consumption  expenditure 

Actual  final  consumption 

Gross capital  formation 

Exports of goods and services 

Imports of goods and services 

P 1 

P 2 

P 3 

P 4 

P 5 

P 6 

P 7 

3.03. 

Transactions  in products are recorded in the following  accounts: 

- 

- 

- 

- 

- 

- 

In  the  Goods  and  Services  Account,  output  and  imports  are  recorded  as  resources  and 
the other transactions in products are registered as uses. 

In  the  Production  Account,  output  is  recorded  as  a  resource  and 
consumption  is recorded as a use. 

intermediate 

In the Use of Disposable Income Account,  final  consumption  expenditure  is recorded  as 
a use. 

In  the  Use  of  Adjusted  Disposable  Income  Account,  actual  final  consumption  is 
recorded  as a use. 

In  the  Capital  Account,  gross  capital  formation  is  registered  as  a  use  (a  change  in 
assets). 

In  the  External  Account  of  Goods  and  Services,  imports  of  goods  and  services  are 
recorded  as a resource, while exports of goods and services are registered  as uses. 

3.04. 

3.05. 

In  the  supply  table,  output  and  imports  are  recorded  as  supplies.  In  the  use  table, 
intermediate  consumption,  gross  capital  formation,  final  consumption  expenditure  and 
exports  are  registered  as uses. In the  symmetric  input-output  table, output  and  imports  are 
recorded  as supplies and the other transactions in products as uses. 

Supplies  of products  are valued at basic prices (basic prices are defined  in para 3.38.).  Uses 
of  products  are  valued  at  purchasers'  prices  (purchaser's  prices  are  defined  in  para  3.06.). 
For  some  types  of  supplies  and  uses,  more  specific  valuation  principles  are  used,  e.g.  for 
imports and exports of goods. 

66 

3.06. 

Definition:  At the time of purchase, the purchaser's  price  is the  price the purchaser  actually 

pays  for  the products: 

- 

- 

including  any  taxes  less  subsidies  on  the  products  (but  excluding  deductible  taxes  like 
VAT  on the  products); 

including  any  transport  charges  paid  separately  by  the  purchaser  to  take  delivery  at  the 
required  time and place; 

-  after  deductions  for  any  discounts  for  bulk  or  off-peak-purchases  from  standard  prices 

or charges; 

-  excluding  interest or services charges added under credit  arrangements; 

-  excluding  any extra charges  incurred  as a result of failing  to pay  within the period  stated 

at the time the purchases  were made. 

If the time  of use does not coincide with the time of purchase,  adjustments  should  be  made 
in  such  a  way  to  take  account  of  the  changes  in  price  due  to  the  lapsing  of  time  (in  a 
manner  symmetrical  with  changes  in the prices  of the  inventories).  Such  modifications  are 
especially  important  if the prices of the products involved  change  drastically  within a year. 

PRODUCTION  AND  OUTPUT 

3.07. 

General  definition  of production: 

Production  is an  activity  carried  out  under  the  control 
and  responsibility  of  an  institutional  unit  that  uses 
inputs  of  labour,  capital  and  goods  and  services  to 
produce  goods  and  services.  Production  does  not 
cover  purely  natural  processes  without  any  human 
involvement  or  direction,  like  the  unmanaged  growth 
of fish stocks  in  international  waters  (but  fish  farming 
is production). 

3.08. 

Production  includes: 

a)  the production  of all  individual  or collective  goods or  services  that  are  supplied  to  units 

other than their producers (or intended to be so supplied). 

b)  the  own-account  production  of  all  goods  that  are  retained  by  their  producers  for  their 
own  final  consumption  or  gross  fixed  capital  formation.  Own  account  production  for 
includes  the  production  of  fixed  assets  such  as 
gross  fixed  capital  formation 
construction,  the  development  of  software  and  mineral  exploration  for  own  gross  fixed 
capital  formation  (for  the  concept  of  gross  fixed  capital  formation,  see  paras  3.90.-
3.117.); 

Own-account  production of goods by households  pertains  in general to: 

-  own-account  construction of dwellings; 

- 

- 

the production  and storage of agricultural  products; 

the  processing  of agricultural  products,  like  the  production  of flour  by  milling, 
the  preservation  of  fruit  by  drying  and  bottling;  the  production  of  dairy 
products  like butter and cheese and the production  of beer, wine and spirits; 

6 7-

- 

the  production  of  other  primary  products,  like  mining  salt,  cutting  peat  and 
carrying  water; 

-  other  kinds  of  processing,  like  weaving  cloth,  the  production  of  pottery  and 

making  furniture. 

Own-account  production  of  a  good  by  households  should  be  recorded  if  this  type  of 
production  is significant,  i.e. if it is believed  to be quantitatively  important  in relation to 
the total supply of that good  in a country. 

By  convention,  in  the  ESA,  only  own-account  construction  of  dwellings  and  the 
production,  storage  and  processing  of  agricultural  products  is  included;  all  other  own-
account  production  of  goods  by  households  are  deemed  to  be  insignificant  for  EU 
countries. 

c)  the own-account production of housing  services by  owner-occupiers; 

d)  domestic and personal  services produced by employing  paid domestic  staff; 

e)  volunteer  activities  that  result  in  goods,  e.g.  the  construction  of  a  dwelling,  church  or 
other building  are to be recorded  as production.  Volunteer  activities that do not result  in 
goods, e.g. caretaking and cleaning without payment, are  excluded; 

All  such  activities  are  included  even  if  they  are  illegal  or  not-registered  at  tax,  social 
security, statistical and other authorities. 

3.09. 

Production  excludes  the  production  of  domestic  and  personal  services  that  are  produced 
and  consumed  within the same household  (with  the exception  of employing  paid  domestic 
staff  and the services of owner-occupied  dwellings). Cases in point are: 

a)  cleaning,  decoration  and  maintenance  of  the  dwelling  as  far  as  these  activities  are  also 

common  for tenants; 

b)  cleaning, servicing and repair of household  durables; 

c)  preparation and serving of meals; 

d)  care, training and instruction of children; 

e)  care of sick, infirm  or old people; 

f)  transportation of members of the household  or their goods. 

Principal, secondary  and ancillary  activities 

3.10.  Definition:  The principal activity of a local KAU is the activity whose value added  exceeds 
that  of any other activity  carried  out within the  same  unit. The classification  of 
the  principal  activity  is  determined  by  reference  to  NACE.Rev  1,  first  at  the 
highest level of the classification  and then at more detailed  levels. 

3.11.  Definition:  A  secondary  activity  is  an  activity  carried  out  within  a  single  local  KAU  in 
addition  to  the  principal  activity.  The  output  of  the  secondary  activity  is  a 
secondary  product. 

6 8-

3ri 2. 

Definition:  The output of an ancillary  activity  is not intended  for  use outside the  enterprise. 
An ancillary  activity  is a supporting  activity  undertaken  within  an  enterprise  in 
order to create the conditions within which the principal  or secondary  activities 
of local KAUs can be carried out. Ancillary  activities typically  produce  outputs 
that  are commonly  found  as  inputs  into almost  any  kind  of productive  activity, 
small as well as large. 

Ancillary  activities  may  be, e.g  purchasing,  sales,  marketing,  accounting,  data  processing, 
transportation,  storage,  maintenance,  cleaning  and  security  services.  Enterprises  may  have 
a  choice between  engaging  in ancillary activities or purchasing  such  services on the market 
from  specialist  service producers. 

Own-account  capital formation  is not considered  to be an ancillary  activity. 

3.13. 

Ancillary  activities  are treated  as integral  parts  of the principal  or  secondary  activities  with 
which they  are associated. As a result: 

-  The  output  of  an  ancillary  activity  is not  explicitly  recognised  and  recorded  separately. 

It follows  that the use of this output is also not  recorded. 

-  All  the  inputs  consumed  by  an  ancillary  activity  -materials,  labour,  consumption  of 
fixed  capital,  etc.- are treated  as  inputs  into  the principal  or  secondary  activity  which  it 
supports. 

Output  (PI) 

3.14. 

Definition:  Output consists of the products created during the accounting  period. 

Particular  cases included are: 

- 

- 

the  goods  and  services  which  one  local  KAU  provides  to  a  different  local  KAU 
belonging to the same institutional  unit. 

the  goods  which  are  produced  by  a  local  KAU  and  remain  in  inventories  at  the  end  of 
the period  in which they are produced, whatever their subsequent  use. 

However,  goods  or  services  produced  and  consumed  within  the  same  accounting  period 
and  within  the  same  local  KAU  are  not  separately  identified.  They  are  therefore  not 
recorded as part of the output or intermediate consumption of that local  KAU. 

3.15.  When  an  institutional  unit  contains  more  than  one  local  KAU,  the  output  of  the 
institutional  unit  is the sum of the outputs  of its component  local  KAUs, including  outputs 
delivered  between the component local KAUs. 

3.16. 

Three types of output are distinguished  in the ESA: 

-  market  output (P  11); 

-  output  produced  for own final use (P  12); 

-  other non-market output  (P 13). 

- 6 9-

This distinction  is fundamental,  because it determines the valuation principles  to be applied 
to  output:  market  output  and  output  produced  for  own  final  use  are  valued  at  basic  prices, 
while  other  non-market  output  is valued  from  the costs  side  (see  para  3.43.).  Furthermore, 
the  distinction  is  used  to  classify  producers  as  market  producers,  producers  for  own  final 
use or other non-market producers (see paras  3.26.-3.35.). 

Market output (P11) 

3.17. 

Definition:  Market  output  consists  of  output  that  is  disposed  of  on  the  market  (see  para 

3.18.)  or intended  to be disposed  of on the market. 

3.18.  Market  output  includes : 

a)  products  sold at economically  significant  prices; 
b)  products  bartered; 
c)  products used for payments  in kind (including compensation  in kind); 

d)  products  supplied  by  one  local  KAU  to  another  within  the  same  institutional  unit  to  be 

used as intermediate  inputs or for final uses; 

e)  products  added  to  the  inventories  of  finished  goods  and  work-in-progress  intended  for 
one  or  other  of  the  above  uses  (including  natural  growth  of  animal  and  vegetable 
products  and uncompleted  structures for which the buyer is unknown). 

•» 

3.19.  Definition:  An  economically  significant  price  is  a  price  that  is  employed  on  the  market. 
The  market  consists  of  all  output  that  is  supplied  under  market  conditions. 
Under  market  conditions, producers  are  free  to  decide  what  they produce,  how 
they  produce  and  to  whom  they  supply;  they  should  only  meet  some  general 
regulations,  e.g.  pertaining  to the  conditions  of employment  and  the  quality  of 
the  product.  Regulation  of  (changes  in)  prices  is  in  general  compatible  with 
market  conditions,  as  competition  can  continue  on  the  basis  of  variables  other 
than the price, like service and the quality of the product. 

By  convention,  in the ESA,  an economically  significant  price  (excluding  taxes 
on products and included  subsidies on products)  should generally  cover  at  least 
50% of the production costs of the product. 

3.20. 

Sales  at  economically  significant  prices  may  consist  of  various  elements.  For  example,  in 
case of the health care services provided by a hospital, sales may correspond to: 

-  purchases  by  employers  to  be  recorded  as  income  in  kind  paid  to  their  employees  and 

final  consumption expenditure by these employees; 

-  purchases by private insurance  companies; 

-  purchases  by  social  security  funds  and  general  government  to  be  classified  as  social 

benefits  in kind; 

-  purchases by households without reimbursement  (final  consumption  expenditure). 

Only  subsidies  and gifts  (e.g. from  charities) received  are not treated  as sales. 

70 

Similarly,  the  sale  of  transport  services  by  an  enterprise  may  correspond  to  intermediate 
consumption  by  producers,  income  in kind  provided  by  employers,  social  benefits  in  kind 
provided  by the government  and purchases by households  without  reimbursement. 

3.21. 

In  case  a  producer  produces  only  one  product  (or:  all  the  products  fall  within  the  same 
product  group), the production  costs  of the  product  should  include  the  costs  of  production 
as  defined  in  para  3.43.  In  all  the  other  cases,  the  costs  of  ancillary  activities  should  be 
allocated  to calculate the production costs by product. 

In  statistical  practice,  it  may  be  difficult  to  make  a  clear  distinction  between  the  different 
products of local  KAUs of government  institutions and NPISHs.  Even more, this is true  for 
the production  costs in relation to the different  products. 

In  that  case,  a  simple  solution  is to  treat  all  revenues  of  other  non-market  producers  from 
their  secondary  activitie(s)  as the  revenues  for  one  type  of  market  output.  This  applies  for 
example  to a museum's revenues  from  the sale of posters  and  cards  (though these  revenues 
may  not  be  sufficient  to  cover  50% of  all the  costs  of  the  museumshop,  e.g.  because  that 
also includes  compensation  of employees of the museum  shop personnel).. 

Other  non-market  producers  may  also  have  revenues  from  the  sale  of  their  other  non-
market  output  at  not  economically  significant  prices,  e.g.  the  museum's  revenues  from 
tickets  for  entrance.  These  revenues  pertain  to  other  non-market  output.  However,  if  both 
types  of  revenues  (revenues  from  tickets  and  those  from  the  sale  of posters  and  cards)  are 
difficult  to  distinguish,  they  can  all  be  treated  as  either  revenues  for  market  output  or 
revenues  from  other  non-market  output.  The  choice  between  these  two  alternative 
registrations  should  depend  on  the  assumed  relative  importance  of  both  types  of  revenues 
(from  tickets versus those from  the sale of posters and cards). 

By  convention,  output  by  a  market  producer  can  never  be  other  non-market  output  (see 
para  3.34.).  So, the primary and  secondary outputs  of a market  producer  are always  market 
output  or for  own final use. 

Output for own final  use (P12) 

3.22.  Definition:  Output  produced  for  own  final  use  consists  of  goods  or  services  that  are 
retained  either  for  final  consumption  by the  same  institutional  unit  or  for  gross 
fixed  capital formation  by the same local  KAU. 

71 -

3.23. 

Products  retained  for  own  final  consumption  can  only  be  produced  by  the  household 
sector. Typical examples are: 

-  agricultural  products retained by  farmers 

-  housing  services produced  by  owner-occupiers 

-  household  services produced  by employing paid  staff. 

3.24. 

Products  used  for  own  gross  fixed  capital  formation  can  be  produced  by  any  sector. 
Examples are: 

-  special  machine tools produced by engineering  enterprises; 

-  dwellings, or extensions to dwellings, produced  by households; 

-  own-account  construction,  including  communal  construction  undertaken  by  groups  of 

households. 

Other non-market  output (P13) 

3.25.  Definition:  Other  non-market  output  covers  output  that  is  provided  free,  or  at  prices  that 

are not economically  significant,  to other units. 

Three types of  producers 

3.26. 

Producers can be subdivided  into: 

-  market  producers; 
-  producers  for own final use; 
-  other non-market  producers. 

3.27.  Definition:  Market  producers  are  local  KAUs  the  major  part  of  whose  output  is  market 
output,  i.e. whose sales (excluding taxes on products) cover generally the  major 
part of their production costs. 

A  local  KAU  belonging  to  the  institutional  sector  government  that  mostly  applies 
economically  significant  prices  should  be treated  as a market  producer  and  not  as an  other 
non-market  producer. 

3.28.  Definition:  Producers  for  own final use are local  KAUs  the major  part  of whose  (value  of) 
output  is for own final use. By convention,  in the ESA, this will only pertain  to 
the  producers  of  the  services  of  owner-occupied  dwellings  and,  to  a  very 
limited  extent,  the  own-account  production  of  goods  by  households  (see  para 
3.08.b). 

3.29.  Definition:  Other  non-market  producers are local  KAUs whose major  part of (the value  of) 

output  is provided  free  or at not economically  significant  prices. 

3.30. 

In  general,  the  term  "major  part"  used  in  paras  3.27.-3.29.  refers  to  at  least  50%  of  the 
output  (or,  for  para  3.27.,  production  costs).  In  an  extreme  case,  it  could  refer  to  34%,  as 
three categories  are  involved  and the minor parts could  be both  33%. However,  in practice, 
one or two types of output will tend to dominate. 

72-

3.31. 

If  the  major  part-criterion  holds  for  several  years  or  holds  for  the  present  year  and  is 
expected  to  hold  for  the  near  future,  it  should  be  applied  strictly.  However,  in  case  of 
different  types  of  output  of  rather  similar  size,  fluctuations  in  the  relative  sizes  from  one 
year to another do not necessitate a reclassification  of local  KAUs. 

3.32. 

Given  the  negligible  number  of separate  local  KAUs  who  are  producers  of  output  for  own 
final  use  in  Europe,  except  owner-occupiers  of  dwellings,  only  two  subcategories  of 
industries  are actually used in the ESA: 

-  market producers and producers for own final use; 

-  other non-market  producers. 

3.33. 

The  relationship  between  the  various  types  of  producers  and  their  outputs  is  shown  in  the 
following  table: 

Market 
producers 

Producers  for 
own final use 

Other  non-
market 
producers 

Total 

Market  output 

Output  for  own 
final  use 

Other  non-
market  output 

X 

X 

0 

0 

Services of 
owner-
occupied 
dwellings 

0 

X 

X 

X 

Total 

Total output by 
market 
producers 

Total output by 
producers  for 
own final use 

Total output by 
other non-
market 
producers 

X = large output; x = small output; 0 = no output (by  convention) 

Total  market 
output 

Total  output 
for  own  final 
use 

Total  other 
non-market 
output 

Total  output 

3.34. 

In  principle,  market  producers  and  producers  for  own  final  use  could  also  supply  other 
non-market  output.  However,  by  convention  such  secondary  output  is  assumed  to  be 
zero!1).  As  a consequence, this output  is recorded  either  as part  of their  other  output  or  -by 
the  creation  and  registration  of  a separate  local  KAU  concerned  solely  or  mainly  with  the 
production  of  this  other  non-market  output-  as  part  of  the  output  of  other  non-market 
producers. 

(i) 

Provided  sufficient  information  is  available  (see  para  2.106.),  a  separate  local  KAU  can  be  drawn  up  for  recording  the  other  non-
market output of a market producer. 

73 

3.35. 

Other  non-market  producers  can supply  as secondary  output  market  outputs  and  output  for 
own  final  use.  This  might  be  the  case  for  instance  when  government  hospitals  charge 
economically  significant  prices  for 
their  services.  Other  examples  are  sales  of 
reproductions  by  government  museums  and  sales  of  weather  forecasts  by  meteorological 
institutes. 

Time of  recording  and valuation  of output 

3.36. 

Output  is to be recorded  and valued when  it is generated  by the production  process. 

3.37. 

3.38. 

3.39. 

3.40. 

3.41. 

All  output  is  to  be  valued  at  basic  prices.  For  the  valuation  of  other  non-market  output, 
specific  conventions are used (see paras  3.43.-3.45.). 

Definition:  The basic price is the price receivable by the producers  from  the purchaser  for a 
unit of a good  or service produced  as output  minus  any  tax payable  on that  unit 
as  a consequence  of  its  production  or  sale, plus  any  subsidy  receivable  on  that 
unit  as  a  consequence  of  its  production  or  sale.  It  excludes  any  transport 
charges  invoiced  separately  by  the  producer.  It  includes  any  transport  margins 
charged  by the producer  on the same invoice, even when  they are included  as a 
separate item on the invoice. 

Output  for  own  final  use  (PI2)  is to  be  valued  at  the  basic  prices  of  similar  products  sold 
on  the  market;  as  a  consequence,  a  net  operating  surplus  or  mixed  income  can  occur  for 
such  output.  This  also  applies  to  services  of  owner-occupied  dwellings  (see  para  3.54. 
below). However,  it will usually  be necessary  to  value  output  of  own-account  construction 
by costs of  production. 

Additions  to  work-in-progress  are valued  in proportion  to the  estimated  current  basic  price 
of the  finished  product. 

If the value of output treated as work-in-progress  is to be estimated  in advance, it should be 
based  on the actual  costs incurred, plus a mark-up  for the estimated  operating  surplus or an 
estimate  of  mixed  income.  The  provisional  estimates  should  subsequently  be  replaced  by 
those  obtained  by  distributing  the  actual  value  (when  it  becomes  known)  of  the  finished 
products. The latter is the sum of the values  of: 

- 

finished  products sold or bartered; 

-  entries of finished  products  into inventories, less withdrawals; 

- 

finished  products consumed  by their  producer. 

3.42. 

For  buildings  and  structures  acquired  in an incomplete  state, a value  is estimated  based  on 
costs  to  date,  including  a  mark-up  for  operating  surplus  or  mixed  income  (this  mark-up 
results  when  the value  can be estimated  on the basis of the  prices  of  similar  buildings  and 
structures).The amounts  of stage payments  may  be used  to approximate  the values  of  gross 
fixed  capital  formation  undertaken  by  the  purchaser  at  each  stage  (assuming  no  advance 
payments  or arrears). 

-  74 

If the  own-account  construction  of a structure  is not  completed  within  a  single  accounting 
period,  the  value  of  the  output  and  the corresponding  gross  fixed  capital  fojmation  should 
be  estimated  by  applying  the  fraction  of  the  total  costs  of  production  incurred  during  the 
relevant period to the estimated current basic price. If it is not possible to estimate the basic 
price of the  finished  structure,  it must be valued  by  its total  costs  of  production.  If some or 
all  of  the  labour  is  provided  free,  as  may  happen  with  communal  construction  by 
households,  an estimate  of what the cost of paid  labour  would  have  been  is  included  in  the 
estimated  total  production  costs using  wage rates  for  similar  kinds  of  labour  in the  vicinity 
or  region. 

3.43. 

The  output  of an other non-market  producer  is to be valued  at the total  costs  of  production, 
i.e. the  sum  of: 

- 

intermediate  consumption; 

-  compensation  of employees; 

-  consumption  of fixed capital; 

-  other taxes on production (D29). 

3.44. 

3.45. 

By  convention,  interest payments are not included  as costs  of other  non-market  production. 
The  same  applies  to  the  rental  value  of  the  non-residential  buildings  owned  and  used  in 
other non-market  production. 

In  the  absence  of  secondary  market  output  by  other  non-market  producers,  other  non-
market  output  is to  be  valued  at  the  costs  of  production.  In  the  case  of  secondary  market 
output  by  other  non-market  producers,  other  non-market  output  is  valued  as  a  residual 
item,  i.e.  as  the  difference  between  the  total  costs  of  production  of  other  non-market 
producer  minus their revenues from  market  output. 

In  principle,  market  output  by  other  non-market  producers  is  to  be  valued  at  basic  prices. 
However,  in  some  instances  it  may  be  difficult  to  determine  whether  some  secondary 
activities  by  other  non-market  producers  result  in  market  output  (see  para  3.21.).  For 
practical  reasons, all revenues from their secondary activities can then be regarded as either 
revenues from market output or revenues from  other non-market  output. 

3.46. 

The  revenues  from  the  sales  of  other  non-market  output  do  not  influence  the  value  of 
output,  because: 

- 

- 

- 

they  are  irrelevant  for  determining  the  value  of  the  total  output  of  an  other  non-market 
producer  (para 3.43.); 

they  are  irrelevant  for  determining  the  value  of  other  non-market  output  by  an  other 
non-market  producer (para 3.44.); 

they  are irrelevant  for  the value of market output  by an other  non-market  producer  (para 
3.21.; only  for  practical  reasons they  may  be recorded  in  some  cases  as part  of  revenues 
from  the sale of secondary  market output). 

3.47. 

For  some  specific  types  of  output,  the  times  of  recording  and  the  valuation  of  output  are 
subject  to the following  clarifications  and exceptions, given  in order of CPA  sections. 

75 -

3.48.  A. Products  of agriculture, hunting and forestry;  B. Fish 

The  output  of  agricultural  products  should  be  recorded  as  being  produced  continuously 
over  the  entire  period  of  production  (and  not  simply  when  the  crops  are  harvested  or 
animals  slaughtered). 

Growing  crops,  standing  timber  and  stocks  of  fish  or  animals  reared  for  purposes  of  food 
should  be  treated  as  inventories  of  work-in-progress  during  the  process,  and  transformed 
into  inventories of finished  products when the process  is completed. 

3.49. 

D. Manufactured  products; F. Construction  work 

When  a  contract  of  sale  is  agreed  in  advance  for  the  construction  of  a  building  or  other 
structure  extending  over  several  accounting  periods,  the  output  produced  each  period  is 
treated  as  being  sold  to  the  purchaser  at  the  end  of  the  period:  i.e.  in  the  purchaser's  fixed 
capital  formation  rather  than  work-in-progress  in  the  construction  industry.  In  effect,  the 
output  produced  is treated  as being  sold  to  the  purchaser  in  stages  as  the  latter  takes  legal 
possession  of  the  output.  When  the  contract  calls  for  stage  payments,  the  value  of  the 
output  may  often  be approximated  by the value of stage payments  made each period. In the 
absence  of  a  contract  of  sale,  however,  the  incomplete  output  produced  each  period  is 
recorded  as  work-in-progress. 

3.50. 

G.  Wholesale  and  retail  trade  services;  repair  services  of  motor  vehicles,  motorcycles  and 
personal  and household  goods 

The  output  of  wholesale  and  retail  services  is  measured  by  the  trade  margins  realised  on 
the goods they purchase for resale. 

Definition:  A trade margin is the difference  between the actual or imputed price realised  on 
a  good  purchased  for  resale  and  the  price  that  would  have  to  be  paid  by  the 
distributor to replace the good at the time it is sold or otherwise disposed  of. 

« 
By  convention,  holding  gains and  losses are not  included  in the trade  margin.  However,  in 
practice, data sources may not allow to separate out all the holding gains and losses. 

3.51. 

H. Hotel  and restaurant  services 

The  output  of  the  services  of  hotels,  restaurants  and  cafes  includes  the  value  of  the  food, 
beverages, etc. consumed. 

3.52. 

I. Transport,  storage and communication  services 

The  output  of  transport  services  is  measured  by  the  value  of  the  amounts  receivable  for 
transporting  goods  or  persons.  Transportation  for  own  use  within  the  local  KAU  is 
considered  ancillary  activity  and is not separately  identified  and  recorded. 

The  output  of storage  services  is measured  as the value  of an addition  to  work-in-progress, 
either  additional  output  in  the  sense  of  transportation  over  time  (e.g.  storage  on  behalf  of 
other  local  KAUs) or a physical change (e.g. in case of the maturing  of wine). 

- 76 

The  output  of  travel  agency  services  is  measured  as  the  value  of  service  charges  of 
agencies  (fees  or  commission  charges)  and  not  by  the  full  expenditures  made  by  travellers 
to the travel  agency. The latter may e.g. also include charges  for  transport  by third  parties. 

The  output  of tour operator  services  is measured  by the  full  expenditure  made  by  travellers 
to the tour  operator. 

The  distinction  between  travel  agency  services  and  tour  operator  services  is  that  travel 
agency  services  amount  only  to  intermediation  on  behalf  of  the  traveller,  while  tour 
operator  services  create  a  new  product,  i.e.  a  tour  is  arranged  of  which  the  prices  of  its 
various  components  (e.g.  travel,  accommodation  and  entertainment)  are  not  recognizable 
as such  for  the  traveller. 

3.53. 

J. Financial  intermediation  services (insurance  services  and  pension  funding  services) 

(as  such 

income  does  not  arise  from 

The  output  of financial  intermediation  for  which no  explicit  charges  are  made  is  measured, 
by  convention,  as  the  total  property  income  received  by  the  unit  providing  the  service 
minus  their  total  interest  payments,  excluding  the  value  of  any  income  received  from  the 
investment  of 
financial 
their  own  funds 
intermediation),  and,  in  the  case  of  secundary 
insurance  activities  by  a  financial 
intermediairy,  excluding  the  income  from  investment  of  insurance  technical  reserves. 
Holding  gains  and  losses  should  be  ignored  in  measuring  this  output,  because  throughout 
the  system  holding  gains  are  not  recorded  in  the  production  account  but  in  a  separate 
account  (Other  changes  in  assets  account).  This  applies  also  to  holding  gains  on  foreign 
exchange  and  securities  by  professional  dealers  (though  their  holding  gains  may  be 
generally  positive  and  be  regarded  by  the  dealers  themselves  as  part  of  their  normal 
revenues). However, the trade margins on foreign  exchange and  securities  (i.e. the  common 
differences  between  the  purchasers'  prices  for  the  dealer  and  the  purchasers'  price  for  the 
buyer) are to be included  in output,  like for  wholesale  and retail traders. Analogously,  there 
may  also  be  data  problems  in  distinguishing  such  trade  margins  from  the  holding  gains; 
these should be overcome as best as possible. 

The  output  of  services  of  financial  intermediation  provided  by  central  banks  should  be 
measured  in the same way as those provided by other financial  intermediaries. 

The  activity  of  money  lenders  who  lend  only  their  own  funds  is  not  treated  as  the 
production  of services. 

Financial  intermediairies  may also provide various  financial  services  and  business  services 
for  which  fees  or  commissions  are  explicitly  charged.  Cases  in  point  can  be  e.g.  currency 
exchange  and  advice  about  investments,  the  purchase  of  real  estate  or  advice  on  taxation. 
The output  of such services is valued on the basis of the fees  or commissions  charged. 

- 77 

Output  of insurance  services (service charge) is measured as: 

+  total actual  premiums  earned 

+  total  premium  supplements  (equal  to  the  income  from  the  investment  of  the  insurance 

technical  reserves) 

the total  claims  due 

the change  in the actuarial  reserves and reserves  for with-profits  insurance. 

- 

- 

Holding  gains  and  losses  are to  be  ignored  in  the  measurement  of  the  output  of  insurance 
services:  they  are  not  to be regarded  as income  from  investment  of  the  insurance  technical 
reserves  and  they  are not to be considered  as changes  in the actuarial  reserves  and  reserves 
for  with-profits  insurance. 

Notice  that  insurance  technical  reserves  may  be  invested  in  secondary  activities  of  the 
insurance  company,  e.g.  the  letting  of  dwellings  or  offices.  In  that  case,  the  net  operating 
surplus  on  these  secondary  activities  is income  from  the  investment  of  insurance  technical 
reserves. 

Similarly,  the output of pension funding  services is measured  as: 

+  total actual pension  contributions 

+  total  supplementary  contributions  (equal to the  income  from  investment  of the  pension 

funds  technical  reserves) 

the benefits  due 

the change  in the actuarial reserves. 

- 

- 

3.54. 

K. Real estate, renting and business  services 

The  output  of  services  of  owner-occupied  dwellings  should  be  valued  at  the  estimated 
value  of  rental «that  a  tenant  would  pay  for  the  same  accommodation,  taking  into  account 
factors  such as location, neighbourhood  amenities, etc. as well as the size and quality  of the 
dwelling  itself.  However,  this output  is still  to  be  valued  at  basic  prices.  This  implies  that 
any  taxes  normally  paid  by tenants  but  not  by  enterprises  are  to  be  excluded.  For  garages 
located  separately  from  dwellings,  which  are  used  by  the  owner  for  final  consumption 
purposes  in  connection  with  using  the  dwelling,  a  similar  imputation  is  to  be  made.  No 
imputation  is  to  be  made  for  garages  used  by  their  private  owner  only  for  the  purpose  of 
parking  near  the  workplace.  The  rental  value  of  owner-occupied  dwellings  abroad,  e.g. 
holiday  homes,  should  not  be  recorded  as  part  of  domestic  production,  but  as  imports  of 
services  and  the  corresponding  net  operating  surplus  as  primary  income  received  from 
the  Rest  of  the  World.  For  owner-occupied  dwellings  owned  by  non-residents,  analogous 
entries  should  be  made.  In  case  of  time-sharing  apartments,  a  proportion  of  the  service 
charge  should  be  recorded  as  such. 

The  output  of  real  estate  services  of  non-residential  buildings  is  measured  by  the  value  of 
the rentals  due. 

- 7 8-

The  output  of  operating  leasing  services  (renting  out  machinery  or  equipment,  etc.)  is 
measured  by  the  value  of  rental  which  the  lessee  pays  to  the  lessor.  It  is  clearly 
distinguished  from  financial  leasing which  is a method  of  financing  the acquisition  of fixed 
asset,  i.e.  by  making  a  loan  from  the  lessor  to  the  lessee.  In  the  case  of  financial  leasing 
rentals  consist  (mainly)  of repayments  and  interest  payments,  and  the  value  of  services  are 
very  small compared  with the total rentals paid  (see Annex  on  leasing). 

When  possible,  a  separate 
for  research  and 
development  activities  (R&D).  When  this  is  not  possible,  all  R&D  of  a  significant  size 
(compared  to  the principal  activity)  should  be  recorded  as  a secondary  activity  of the  local 
KAU. 

local  KAU  should  be  distinguished 

The output  of R&D  services is measured  as  follows: 

-  R&D  by  specialised  commercial  research  laboratories  or  institutes  is  valued  at  the 

revenues  from  sales, contracts, commissions, fees, etc. in the usual  way. 

- 

the  output  of R&D  for  use within the  same  enterprise  should,  in principle,  be valued  on 
the  basis  of  the  estimated  basic  prices  that  would  be  paid  if  the  research  were  sub 
contracted  commercially.  However,  in  practice,  it  is  likely  to  have  to  be  valued  on  the 
basis of the total production costs. 

-  R&D  by  government  units,  universities,  non-profit  research  institutes,  etc.  is  usually 
other  non-market  production  and  is thus  valued  on  the  basis  of the  costs  of  production. 
Revenues  from  the  sale  of  R&D  by  other  non-market  producers  of  R&D  are  to  be 
recorded  as revenues from  secondary  market  output. 

Expenditure  on  R&D  should  be  distinguished  from  those  on  education  and  training. 
Expenditure  on  R&D  does  not  include  the  costs  of  developing  software  as  a  principal  or 
secondary  activity.  However,  their  accounting  treatment  is  nearly  the  same;  the  only 
difference  is that software  is regarded as a produced  intangible  asset and  is not  patented. 

3.55. 

L. Public administration  and defence  services, compulsory  social  security  services 

Public  administration,  defence  services and  compulsory  social  security  services  are  always 
provided  as other non-market  services and should thus be valued  accordingly. 

3.56.  M. Education  services; N. Health and social  services 

For  education  services  and  health  services  it  may  often  be  necessary  to  draw  precise 
borderlines  between  between  market  and  other  non-market  producers  and  between  their 
market  and  other  non-market  output.  For  example,  for  some  types  of  education  and 
medical  treatment  nominal  fees  can  be  levied  by  government  institutions  (or  by  other 
institutions  due  to  specific  subsidies),  but  for  other  education  and  special  medical 
treatments  they  may  charge  commercial  tariffs.  Another  common  case  in  point  is  that  the 
same  type  of  service  (e.g.  higher  education)  is  provided  by,  on  the  one  hand,  the 
government  (or  its  intermediation)  and,  on  the  other  hand,  commercial  institutes.  Then, 
often  large differences  exist between the prices charged  and the quality  of the services. 

79 

Education  and  health  services exclude  R&D activities; health  services  exclude  education  in 
health  care, e.g.  by academic hospitals. 

3.57. 

O. Other community,  social and personal  services 

The  production  of  books,  recordings,  films,  software,  tapes,  disks,  etc.  is  a  two  stage 
process and  measured  accordingly: 

(i) 

The  output  from  the  production  of originals  - an  intangible  fixed  asset  -  is  measured 
by  the  price  paid  if sold,  or,  if not  sold,  by  the  basic  price  paid  for  similar  originals, 
its  production  costs  or  the  discounted  value  of  the  future  receipts  expected  from 
using  it in production. 

(ii)  The owner of this asset may use it directly  or to produce  copies  in subsequent  periods 
(recorded  as consumption  of fixed capital).  If the  owner  has  licensed  other  producers 
to  make  use  of  the  original  in  production,  the  fees,  commissions,  royalties,  etc.  he 
receives  from  the  licenses are his output  of the services.  In this  second  stage, the  sale 
of the intangible asset is negative fixed capital  formation. 

3.58. 

P. Private households  with employed  persons 

The  output  of  household  services  produced  by  employing  paid  staff  -  by  convention  -  is 
valued  by  the  compensation  of  employees  paid;  this  includes  any  compensation  in  kind 
such as food  or  accommodation. 

INTERMEDIATE  CONSUMPTION  (P2) 

3.59. 

Definition:  Intermediate  consumption  consists  of  the  value  of  the  goods  and  services 
consumed  as  inputs  by  a  process  of  production,  excluding  fixed  assets  whose 
consumption  is  recorded  as  consumption  of  fixed  capital.  The  goods  and 
services may be either transformed  or used up by the production  process. 

3.60. 

Intermediate  consumption  includes the following  borderline cases: 

a)  the  value  of  all  the  goods  or  services  used  as  inputs  into  ancillary  activities.  Common 
examples  are  purchasing,  sales,  marketing,  accounting,  data  processing,  transportation, 
storage, maintenance,  security, etc. These  goods and  services are not distinguished  from 
those consumed  by the principal  (or secondary) activities of a local  KAU; 

b)  the value of goods and  services which  are received  from  another  local KAU  of the  same 

institutional  unit (only if they comply to the general definition  in para  3.59.); 

c)  the costs of using rented fixed assets, e.g. the operational  leasing of machines  or cars; 

d)  the subscriptions, contributions or dues paid to non-profit  business  associations; 

e)  items not treated  as gross capital  formation,  like: 

-  small  tools  which  are  inexpensive  and  used  for  relatively  simple  operations, 
such  as saws, hammers,  screwdrivers  and  other  hand  tools;  small  devices,  such 
as  pocket  calculators.  By  convention,  in  the  ESA,  all  expenditure  on  such 
durables  which  does  not  exceed  500  ECU  (in  prices  of  1995)  per  item  (or, 
when  bought  in quantities,  for  the  total  amount  bought),  should  be  recorded  as 
intermediate  consumption; 

80 

(6) 

- 

the ordinary, regular maintenance  and repair of  fixed  assets used  in  production; 

-  military  weapons  of destruction  and  the equipment  needed  to deliver  them  (but 
not  light  weapons  or armoured  vehicles  acquired  by  police  and  security  forces, 
which are treated as gross fixed capital  formation); 

-  services  of  research  and  development,  staff  training,  market  research  and 
similar  activities,  purchased  from  an  outside  agency  or  provided  by  a  separate 
local  KAU of the same institutional  unit; 

f)  payments  for  the use of intangible non-produced  assets  like patented  assets, trade marks, 
copyrights,  etc. (excluding  payments  for  the  purchase  of  such  property  rights:  these  are 
treated  as acquisition  of an intangible non-produced  asset); 

g)  expenditure  by  employees,  reimbursed  by  the  employer,  on  items  necessary  for  the 
employers'  production,  like contractual  obligations  to  purchase  on own-account  tools  or 
safety-wear; 

h)  expenditure  by  employers  which  is  to  their  own  benefit  as  well  as  to  that  of  their 
employees, because  it is necessary for the employers' production.  Cases  in point are: 

- 

reimbursement  of  employees 
entertainment  expenses incurred  in the course of their duties; 

travelling, 

separation, 

for 

removal  and 

-  providing  amenities at the place of work. 

A  more  extensitive  list  is presented  in  the  paragraphs  on  compensation  of  employees 
(Dl). 

i)  non-life  insurance  service  charges  paid  by  local  KAUs:  in  order  to  record  only  the 
service  charge  as  intermediate  consumption  the  premiums  paid  should  be  discounted 
for,  e.g.  claims  paid  out  and  the  net  change  in  actuarial  reserves.  The  latter  can  be 
allocated  to local KAUs as a proportion  of the premiums  paid. 

j)  only  for  the  total  economy:  all  financial  intermediation  services  indirectly  measured 

(FISIM) provided  by resident producers. 

3.61. 

Intermediate  consumption  excludes: 

a)  items treated  as gross capital formation,  like: 

-  valuables; 

-  mineral  exploration; 

-  major  improvements  which  go considerably  beyond  what  is required  simply  to 
keep  the  fixed  assets  in  good  working  order,  e.g.  renovations,  reconstructions 
or  enlargements; 

-  software  purchased or produced  on  own-account. 

b)  expenditure  by employers treated as wages and  salaries  in kind  (see 4.05.); 

; 

c)  use  by  market  or  own-account  producer  units  of  collective  services  provided  by 

government  units (treated as collective consumption  expenditure  by  government); 

d)  goods  or services produced  and consumed  within the same accounting  period  and  within 

the same  local  KAU (they are also not recorded  as output);. 

e)  payments  for  government  licenses  and  fees  that  are  treated  as  taxes  on  production  (see 

paras 4.14., 4.15.); 

Time of recording  and valuation  of intermediate  consumption 

3.62. 

3.63. 

Products  used  for  intermediate  consumption  should  be recorded  and  valued  at the time they 
enter  the  process  of  production.  They  are to  be valued  at  the  purchasers'  prices  for  similar 
goods or services at that time. 

In  practice,  producer  units  do  not  usually  record  the  actual  use  of  goods  in  production 
directly.  They  record  the  purchases  intended  to  be  used  as  inputs  and  the  changes  in  the 
amounts  of  such  goods  held  in  inventory.  Intermediate  consumption  has  therefore  to  be 
estimated  by  subtracting  from  the purchases  the changes  in  inventories  of inputs  (see  paras 
3.111.-3.114. for  the correct valuation of the latter). 

FINAL  CONSUMPTION  (P3, P4) 

3.64. 

Two  concepts  of final consumption  are used: 

-  final  consumption  expenditure (P3); 

-  actual  final  consumption  (P4). 

Final  consumption  expenditure  is  a  concept  that  refers  to  a  sector's  expenditure  on 
consumption  goods  and  services.  In  contrast,  actual  final  consumption  refers  to  its 
acquisition  of consumption  goods and  services. The difference  between  these  concepts  lies 
in  the  treatment  of  certain  goods  and  services  financed  by  the  government  or  NPI  serving 
households  but supplied  to households as social transfers  in  kind. 

Final consumption  expenditure  (P3) 

3.65. 

Definition:  Final  consumption  expenditure  consists  of  expenditure  incurred  by  resident 
institutional  units  on goods  or  services  that  are  used  for  the  direct  satisfaction 
of  individual  needs  or  wants  or  the  collective  needs  of  members  of  the 
community.  Final  consumption  expenditure  may  take  place  on  the  domestic 
territory  or abroad. 

3.66. 

Household  final  consumption  expenditure  includes the following  borderline cases: 

a)  services  of owner-occupied  dwellings; 

b)  income  in kind,  like: 

-  goods  and  services received  as income  in kind  by  employees; 

-  goods  or  services  produced  as  outputs  of  unincorporated  enterprises  owned  by 
households  that  are  retained  for  consumption  by  members  of  the  household. 
Cases  in  point  are  food  and  other  agricultural  goods,  housing  services  by 
owner-occupiers  and  household  services  produced  by  employing  paid  staff 
(servants, cooks, gardeners, chauffeurs,  etc). 

82-

c)  items not treated  as intermediate consumption,  like: 

-  materials  for  small  repairs  to  and  interior  decoration  of  dwellings  of  a  kind 

typically  carried out by tenants as well  as owners; 

-  materials  for  repairs  and  maintenance 

to  consumer  durables, 

including 

vehicles; 

d)  items  not  treated  as  capital  formation,  in  particular  consumer  durables,  that  continue  to 
perform  their  function  in  several  accounting  periods;  this  includes  the  transfer  of 
ownership  of  some  durables  from  an  enterprise  to  a  household  (see  transactions  in 
existing  goods, para 3.137.); 

e)  financial  services directly  charged; 

f)  insurance  services  by amount of the implicit  service charge (see para  3.53.); 

g)  pension  services by amount of the implicit  service charge (see para  3.53.); 

h)  payments  by  households  for  licences,  permits,  etc.  which  are  regarded  as  purchases  of 

services (see paras 4.14., 4.15.); 

i)  the  purchase  of  output  at  not  economically  significant  prices,  e.g.  entrance  fees  for  a 

museum  (see para 3.21.). 

3.67. 

Household  final  consumption  expenditure  excludes: 

a)  social 

transfers 

in  kind, 

like  expenditures 

initially 

incurred  by  households  but 

subsequently  reimbursed  by social security, e.g.  some medical  expenses 

b)  items treated  as intermediate consumption  or gross capital  formation,  like 

-  expenditures  by  households  owning  unincorporated  enterprises  when  incurred 
for  business  purposes  -  e.g.  on  durable  goods  such  as  vehicles,  furniture  or 
electrical  equipment  (gross  fixed  capital  formation),  and  also  on  non-durables 
such as fuel  (intermediate  consumption); 

-  expenditure  that  an  owner-occupier  incurs  on  the  decoration,  maintenance  and 
repair  of  the  dwelling  not  typically  carried  out  by  tenants  (treated  as 
intermediate consumption  in producing  housing  services). 

- 

the purchase of dwellings (treated  as gross  fixed  capital  formation); 

-  expenditure  on valuables (treated as gross capital  formation); 

c)  items treated as acquisition-of a non-produced  asset,  in particular the purchase of  land; 

d)  all those  payments  by  households  which  are  to  be  regarded  as  taxes,  such  as  licences  to 
own  vehicles,  boats  or  aircraft  and  also  licences  to  hunt,  shoot  or  fish  (see  para  4.14., 
4.15.). 

e)  subscriptions,  contributions  and  dues  paid  by  households  to  NPISHs,  like  to  trade 
unions,  professional  societies,  consumers'  associations,  churches  and  social,  cultural, 
recreational  and  sports clubs; 

f)  voluntary  transfers  of  cash  or  in  kind  by  households  to  charities,  relief  and  aid 

organizations. 

3.68. 

Final consumption  expenditure of NPISH  includes two  separate  categories: 

a)  The  value of the goods and  services produced  by NPISH  other  than own-account  capital 

formation  and other than expenditure  made by households and  other units; 

b)  Expenditures  by  NPISH  on  goods  or  services  produced  by  market  producers  that  are 
supplied  -  without  any  transformation  -  to  households  for  their  consumption  as  social 
benefits  in kind. 

3.69. 

Final  consumption  expenditure  by  government  includes  two  categories  of  expenditures, 
similar to those of the NPISH: 

a)  The  value of the goods and  services produced  by general  government  itself  (assumed  by 
convention  to  be  consumed  by  the  government  itself)  other  than  own-account  capital 
formation  and other than expenditure  made by other units; 

b)  Purchases  by  general  government  of  goods  and  services  produced  by  market  producers 
that are  supplied  to households  - without  any  transformation  - as social  benefits  in  kind. 
This  implies  that  general  government  just  pays  for  goods  and  services  that  the  sellers 
provide  to households. 

3.70. 

Corporations  do  not  make  final  Consumption  expenditures.  Their  purchases  of  the  same 
kind  of  goods  or  services  as  used  by  households  for  final  consumption  are  either  used  for 
intermediate  consumption  or  provided  to  employees  as  compensation  of  employees  in 
kind,  i.e.  imputed  household  final  consumption  expenditure.  Even  where,  for  example 
through  advertising,  they  finance  individual  consumption,  this  expenditure  is  treated  as 
intermediate. 

Actual final  consumption  (P4) 

3.71. 

3.72. 

Definition:  Actual  final  consumption  consists  of the  goods  or  services  that  are  acquired  by 
resident  instutional  units  for  the  direct  satisfaction  of  human  needs,  whether 
individual  or collective. 

Definition:  Goods  and  services  for 

individual  consumption  ('individual  goods  and 
services')  are  acquired  by  a household  and  used  to  satisfy  the  needs  and  wants 
of  members  of  that  household.  Individual  goods  and  services  have  the 
following  characteristics: 

(a) 

It  must  be  possible  to  observe  and  record  the  acquisition  of  the  good  or 
services  by an  individual  household  or  member  thereof  and  also  the  time 
at which  it took place; 

(b)  The  household  must  have  agreed  to  the  provision  of  the  good  or  service 
and  take  whatever  action  is  necessary  to  make  it  possible  -  for  example, 
by attending  a school  or clinic; 

(c)  The good or service must be such that  its acquisition  by one household  or 
person,  or  possibly  by  a  small,  restricted  group  of  persons,  precludes  its 
acquisition  by other households or persons. 

84 

3.73. 

3.74. 

3.75. 

Definition:  Services 

for  collective  consumption 

('collective  services')  are  provided 
simultaneously  to all members of the community  or all  members  of a particular 
section  of  the  community,  such  as  all  households  living  in  a particular  region. 
Collective  services have the following  characteristics: 

(a)  They  can  be delivered  simultaneously  to every  member  of the  community 
or  to  particular  sections  of  the  community,  such  as  those  in  a  particular 
region  of  locality; 

(b)  The  use  of  such  services  is  usually  passive  and  does  not  require  the 
individuals 

explicit  agreement  or  active  participation  of  all 
concerned; 

the 

(c)  The  provision  of  a  collective  service  to  one  individual  does  not  reduce 
the  amount  available  to  other  in  the  same  community  or  section  of  the 
community. There is no rivalry  in  acquisition. 

All  household  final  consumption  expenditure  is  individual.  By  convention,  all  goods  and 
services  provided  by NPISH  are treated as individual. 

For  the  goods  and  services  provided  by  government  units,  the  borderline  between 
individual  and  collective  goods  and  services  is  drawn  on  the  basis  of  the  Classification  of 
the  Functions  of Government  (COFOG). 

By  convention,  all government final consumption  expenditures  under  each of the  following 
headings  should  be  treated  as  expenditures  on  individual  consumption  services  except  for 
expenditures  on general  administration,  regulation,  research,  etc. in each  category: 

-  04  Education; 

-  05  Health; 

-  06  Social  Security  and  Welfare; 

-  08.01  Sport  and  recreation; 

-  08.02  Culture. 

In  addition,  expenditures  under  the  following  sub-headings  should  also  be  treated  as 
individual  when they are  important: 

-  07.11  (part of)  the provision  of housing; 

-  07.31  (part of)  the collection  of household  refuse; 

-  12.12 (part of)  the operation  of transport  system. 

The  collective  consumption  expenditure  is  the  remainder  of  the  government  final 
consumption  expenditure.  It consists in particular  of: 

-  management  and regulation  of society; 

- 

- 

the  provision  of security  and  defence; 

the maintenance  of law and order, legislation  and  regulation; 

- 

- 

- 

- 

the maintenance  of public health; 

the protection  of the  environment; 

research and  development; 

infrastructure  and economic  development. 

3.76. 

The relationships  between  the various concepts employed  can be shown  in a table 

Individual 
consump 
tion 

Collective 
consump 
tion 

Total 

Sector 

making 

expenditure 

Govern 
ment 

NPISH 

House 
holds 

Total 
acquisi-tions 

X 

X 

X 

(= Social 
transfers  in 
kind) 

X 

0 

0 

Govern 
ment  final 
cons, 
expen 
diture 

NPISH 
final cons, 
expen 
diture 

Household 
final cons, 
expen 
diture 

Actual 
individual 
final 
consump 
tion 

Actual 
collective 
final 
consump 
tion 

Actual  final 
consump 
tion = Total 
final  cons, 
expenditure 

3.77. 

3.78. 

Final  consumption  expenditure  of  NPISH 
individual.  As  a 
consequence,  total  actual  final  consumption  is  equal  to  the  sum  of  household  actual  final 
consumption  and actual final consumption  of general  government. 

is  by  convention  all 

By  convention,  there  are  no  social  transfers  in  kind  with  the  Rest  of  the  World  (though 
there  are  such  transfers 
total  actual  final 
consumption  is equal to total final consumption  expenditure. 

in  monetary  terms).  As  a  consequence, 

Time  of  recording  and valuation  of final consumption  expenditure 

3.79. 

3.80. 

3.81. 

3.82. 

3.83. 

As  explained  in  chapter  I,  goods  and  services  should  in  general  be  recorded  when  the 
payables  are created, that  is, when the purchaser  incurs a liability  to the  seller.  This  implies 
that  expenditure  on a good  is to be recorded  at the time  its ownership  changes;  expenditure 
on a service  is recorded  when the delivery of the service  is  completed. 

Expenditure  on a good  acquired under a hire purchase  or  similar  credit  agreement  (and  also 
under  a financial  lease) should be recorded  at the time  the  good  is delivered  even  if there is 
no  legal  change of ownership at this point. 

Own-account  consumption  should  be  recorded  when  the  output  retained  for  own  final 
consumption  is produced. 

The  final  consumption  expenditure  of households  is recorded  at  purchasers'  prices. This  is 
the  price  the  purchaser  actually  pays  for  the  products  at  the  time  of  the  purchase.  A  more 
detailed  definition  can be found  in para 3.06. 

Goods  and  services  supplied  as  compensation  of  employees  in  kind  are  valued  at  basic 
prices  when  produced  by the employer  and  at the purchasers'  prices  of  the  employer  when 
bought  in by the  employer. 

3.84. 

Retained  goods or services for own consumption  are valued  at basic prices. 

3.85. 

3.86. 

Final  consumption  expenditures  by  general  government  or  NPISH  on  products  produced 
by themselves  are recorded  at the time they are produced,  which  is also the time of  delivery 
of such services by government  or NPISH. For the final consumption  expenditure  on goods 
and  services supplied  via market producers, the time of delivery  is the time of recording. 

Final  consumption  expenditures  by  general  government  or NPISH  are  equal  to  the  sum  of 
their  output,  plus the expenditure  on products  supplied  to  households  via market  producers 
(i.e. social  transfers  in kind) minus the payments  by  other  units  minus  own-account  capital 
formation. 

Time  of  recording  and valuation  of actual  final  consumption 

3.87. 

Goods  and  services  are  acquired  by  institutional  units  when  they  become  the  new  owners 
of the  goods or when the delivery  of goods or services to them  is  completed. 

87  -

3.88. 

Acquisitions  -  actual  final  consumption  - are valued  at  the  purchasers'  prices  for  the  units 
that incur the  expenditures. 

Transfers  in  kind  other  than  social  transfers  in  kind  from  government  and  NPIs  serving 
households  are  treated  as  if  they  were  transfers  in  cash.  Accordingly,  the  values  of  the 
goods  or  services  are  actually  recorded  as expenditures  by  the  institutional  units  or  sectors 
that acquire  them. 

3.89. 

The  values  of  the  two  aggregates  of  final  consumption  expenditure  and  actual  final 
consumption  are  the  same.  The  goods  and  services  acquired  by  resident  households 
through  social transfers  in kind, thus, are valued at the same prices at which they are valued 
in the expenditure  aggregates. 

GROSS  CAPITAL  FORMATION  (P5) 

3.90. 

Gross capital  formation  consists  of: 

-  gross  fixed  capital formation  (P51); 

-  changes  in inventories  (P52); 

-  acquisitions  less disposals of valuables (P53). 

3.91. 

Gross  capital  formation  means gross of consumption of  fixed  capital. Net capital  formation 
is arrived  at by deducting  consumption of fixed capital  from  gross capital  formation. 

Gross  fixed  capital  formation 

3.92. 

Definition:  Gross  fixed  capital  formation  consists  of  resident  producers'  acquisitions,  less 
disposals,  of  fixed  assets  during  a  given  period  plus  certain  additions  to  the 
value  of non-produced  assets  realised  by  the  productive  activity  of  producer  or 
institutional  units.  Fixed  assets  are  tangible  or  intangible  assets  produced  as 
outputs  from  processes  of  production  that  are  themselves  used  repeatedly,  or 
continuously, in processes of production  for more than one  year. 

3.93. 

Gross  fixed  capital formation  consists of both positive and negative values: 

a)  positive  values: 

new or existing fixed assets purchased; 

fixed  assets produced and retained  for  producers' own use (including  own 
account production of fixed assets not yet completed or fully  mature); 

new or existing fixed assets acquired  through  barter; 

new or existing fixed assets received  as capital transfers  in kind; 

new or existing fixed assets acquired  by the user under a  financial  lease; 

major  improvements to fixed assets and  existing  historic  monuments; 

natural  growth of those natural  assets that yield repeat  products; 

88-

b)  negative values (i.e. disposals of fixed assets recorded  as negative  acquisitions): 

existing fixed assets sold; 

existing fixed assets demolished,  scrapped  or slaughtered  by their  owner; 

existing fixed assets surrendered  in  barter; 

existing fixed assets surrendered  as capital  transfers  in kind. 

3.94. 

The disposals components  of fixed assets exclude: 

-  consumption  of fixed capital (which  includes anticipated  normal  accidental  damage); 

-  exceptional  losses,  such  as those  due  to  drought  or  other  natural  disasters  (recorded  as 

an other change in the volume of assets). 

3.95. 

The following  types of gross fixed capital  formation  may  be  distinguished: 

a)  acquisitions, less disposals, of tangible fixed assets: 

dwellings; 

other buildings and structures; 

machinery  and equipment; 

and cultivated assets (trees and  livestock); 

b)  acquisitions, less disposals, of intangible fixed assets: 

mineral  exploration; 

computer  software; 

entertainment,  literary or artistic originals; 

other intangible fixed assets. 

c)  major  improvements  to  tangible  non-produced  assets,  in  particular  those  pertaining  to 

land  (though the acquisition of non-produced  assets is not  included); 

d)  costs  associated  with  the  transfers  of  ownership  of  non-produced  assets,  like  land  and 

patented assets (though the acquisition of these assets themselves  is not included). 

3.96.  Major  improvements to land include: 

- 

reclamation  of  land  from  sea  by  the  construction  of  dykes,  sea  walls  or  dams  for  this 
purpose; 

-  clearance of forests, rocks, etc. to enable land to be used in production  for the first time; 

-  draining  of marshes or the irrigation of deserts  by  the construction  of dykes, ditches  and 

irrigation channels; 

-  prevention of flooding  or erosion by the sea or rivers by the construction  of  breakwaters, 

sea walls or flood  barriers. 

- 89 

These  activities  may  lead  to  the  creation  of  substantial  new  structures  such  as  sea  walls, 
flood  barriers  and  dams  but  these  are  not  themselves  used  directly  to  produce  other  goods 
and  services  in the way  that  most  strucmres  are. Their  construction  is undertaken  to  obtain 
more  or  better  land,  and  it  is the  land,  a non-produced  asset,  that  is needed  for  production. 
For example, a dam  built to produce electricity  serves  quite  a different  purpose  from  a dam 
built  to  keep  out  the  sea.  Only  building  the  latter  type  of  dam  should  be  classified  as  an 
improvement  to  land. 

3.97. 

Gross  fixed  capital  formation  includes borderline cases  like: 

-  acquisitions  of  houseboats,  barges,  mobile  homes  and  caravans  used  as  residences  of 

households  and any associated  structures  such as garages; 

-  structures  and  equipment  used  by  the  military  -  similar  to  those  utilised  by  civilian 

producers  - such as airfields,  docks, roads and  hospitals; 

- 

light  weapons  and armoured  vehicles used by non-military  units; 

-  changes  in  livestock  used  in  production  year  after  year,  such  as  breeding  stock,  dairy 

cattle, sheep reared  for wool and draught  animals; 

-  changes  in trees that are cultivated year after  year,  such as fruit  trees, vines, rubber trees, 

palm trees, etc.; 

- 

improvements  to existing  fixed  assets  that  go  well  beyond  the  requirements  of  ordinary 
maintenance  and repairs; 

- 

the acquisition  of fixed assets by  financial  leasing. 

3.98. 

Gross  fixed  capital  formation  excludes: 

a)  transactions  included  in intermediate consumption,  like: 

purchase of small tools for production  purposes  (see para  3.60.e); 
ordinary maintenance  and repairs; 

purchase of military weapons and their supporting  systems ; 

the  purchase  of  fixed  assets  to  be  used  under  an  operational  leasing 
contract (see also Annex on leasing and hire purchase of durable goods); 

b)  transactions  recorded as changes in inventories; 

animals raised  for  slaughter, including  poultry; 

trees grown for timber  (work-in-progress); 

c)  machinery  and  equipment  acquired  by  households  for  purposes  of  final  consumption 

(final  consumption  expenditure); 

d)  holding  gains and losses on fixed assets (other changes  in assets). 

e)  catastrophic  losses  on  fixed  assets  (other  changes  in  assets),  e.g.  destruction  of 
cultivated  assets  and  livestock  by  outbreaks  of  disease  (and  not  normally  covered  by 
insurance)  or  damage  due  to  abnormal  flooding,  wind  damage  or  forest  fires  (see 
chapter  VI). 

-90 

3.99. 

Gross  fixed  capital  formation  in the  form  of  improvements  to  existing  fixed  assets  is to  be 
classified  with acquisitions  of new fixed assets of the same  kind. 

3.100. 

Intangible  fixed  assets  typically  consist  of  new  information,  specialized  knowledge,  etc. 
and  comprise: 

-  mineral  exploration  comprising  costs  of  actual  test  drilling,  aerial  or  other  surveys, 

transportation  costs, etc.; 

-  computer  software  and  large data bases to be used  in production  for  more than one year; 

- 

literary  and  artistic  originals  of  manuscripts,  renderings,  models,  films,  sound 
recordings, etc. 

3.101.  For  both  fixed  assets  and  non-produced  non-financial  assets,  the  costs  of  ownership 

transfer  incurred  by their new owner consist  of: 

a)  charges  incurred  in  taking  delivery  of  the  asset  (new  or  existing  asset)  at  the  required 
location  and time, such as transport  charges, installation  charges, erection  charges, etc.; 

b)  professional  charges  or commissions  incurred,  such  as fees  paid  to surveyors,  engineers, 

lawyers, valuers, etc., and commissions  paid to estate agents, auctioneers, etc.; 

c)  taxes payable by the new owner on the transfer  of ownership  of the  asset. 

All  these  costs  are to  be recorded  as gross  fixed  capital  formation  by  the  new  owner.  Note 
that  the  taxes  are  to  be  treated  as  taxes  on  the  services  of  intermediairies  and  not  as  taxes 
on the asset  bought. 

Time of recording  and valuation  of gross fixed capital  formation 

3.102.  Gross  fixed  capital  formation  is  recorded  when  the  ownership  of  the  fixed  assets  is 

transferred  to the institutional  unit that intends to use them in  production. 

Modification  to this general rule  is needed  in case  of: 

- 

financial  leasing  (a change of ownership is then  imputed); 

-  own-account  fixed  capital  formation. 

Assets  acquired  under  a  financial  lease  are recorded  as  if the  user  became  owner  when  he 
takes possession  of the goods. Own account capital formation  is recorded when  produced. 

3.103.  Gross  fixed  capital  formation  is valued  at  purchasers'  prices  including  installation  charges 
and  other  costs  of  ownership  transfer.  When  produced  on  own-account  it  is  valued  at  the 
basic  prices  of  similar  fixed  assets  (which  implies  a  mark-up  for  net  operating  surplus  or 
mixed  income) or at the costs of production  if such prices are not  available. 

3.104.  Acquisitions  of intangible fixed assets are valued  in different  ways: 

a)  For  mineral  exploration:  by  the  costs  of  actual  test  drillings  and  borings,  and  the  costs 

incurred  to make it possible to carry out tests (such  as aerial  or other  surveys); 

b)  For  computer  software:  by  purchasers'  prices  when  purchased  on  the  market,  while 
valued  at  its  estimated  basic  price  (or  at  its  costs  of  production  if  not  feasible)  when 
developed  in-house; 

c)  For  entertainment,  literary  or artistic originals: valued  at the price paid  by  the  purchaser 
when  it is sold, or  if not  sold,  at the basic price  paid  for  similar  originals,  its  production 
costs or the discounted  value of the future  receipts expected  from  using  it in  production. 

3.105.  Disposals  of  existing  fixed  assets  by  sale  are  valued  at  the  (basic)  prices  after  deducting 

any  costs of ownership  transfer  incurred  by the seller. 

3.106.  Costs  of  ownership  transfer  apply  to  both  produced  asses,  among  which  fixed  assets,  and 

non-produced  assets, like  land. 

These  costs  are  integrated  in  the  purchasers'  prices  in  the  case  of  produced  assets.  They 
must  be  separated  from  the  purchases  and  sales  themselves  in  the  case  of  land  and  other 
non-produced  assets  and  recorded  under  a  separate  heading  in  the  classification  of  gross 
fixed  capital  formation. 

Changes  in inventories  (P52) 

3.107.  Definition:  Changes  in inventories are measured  by the value of the entries  into  inventories 
less  the  value  of  withdrawals  and  the  value  of  any  recurrent  losses  of  goods 
held  in inventories. 

3.108.  Due to physical  deterioration,  or accidental  damage or pilfering,  recurrent  losses may  occur 

to all kinds of goods in inventories, such as: 

- 

- 

- 

- 

losses of materials and  supplies; 

losses  in the case of  work-in-progress; 

losses of finished  goods; 

losses  of goods  for resale (e.g.  shoplifting). 

3.109. 

Inventories consists of the following  categories: 

a)  materials and  supplies; 

Materials  and  supplies  consist  of  all  commodities  held  in  stock  with  the  intention  of 
using them as intermediate  inputs in production; this includes commodities  held  in  stock 
by  the  government.  Items  such  as  gold,  diamonds,  etc.  are  included  when  intended  for 
industrial  use or other  production. 

b)  work-in-progress; 

Work-in-progress  consists  of  output  produced  that  is  not  yet  finished.  It  is  recorded  in 
the inventories  of its producer.  It can take a variety  of different  forms,  e.g.: 

92 -

growing crops; 

maturing  trees and  livestock; 

uncompleted  structures  (except  those  produced  under  a  contract  of  sale 
agreed  in  advance  or  on  own-account  which  are  treated  as  fixed  capital 
formation); 

uncompleted  other fixed assets, e.g.  ships and  oil rigs; 

partially  completed  research  for a legal or consultant's  dossier; 

partially  completed  film  productions; 

partially  completed  computer  programs. 

Work-in-progress  must  be recorded  for any production  process  that  is not  finished  at the 
end  of  the  given  period.  In  particular,  this  is  significant  in  quarterly  accounts,  e.g. 
agricultural  crops not being completed  within a quarter  of a year. 

Reductions  in  work-in-progress  take  place  when  the  production  process  is  completed. 
At that point, all work-in-progress  is transformed  into a finished  product. 

c)  finished  goods; 

Finished  goods  as  part  of  inventories  consist  of  outputs  that  their  producer  does  not 
intend  to  process  further  before  supplying  them  (also  when  supplied  for  intermediate 
input  into other processes of production). 

d)  goods  for  resale. 

Goods  for  resale  are  goods  acquired  for  the  purpose  of  reselling  them  in  their  present 
state. 

Time  of recording  and valuation  of changes  in  inventories 

transactions 

in  products.  This  applies 

3.110.  The  time  of  recording  and  valuation  of  changes  in  inventories  should  be  consistent  with 
that  of  other 
intermediate 
consumption  (e.g.  for  materials  and  supplies),  output  (e.g.  work-in-progress  and  output 
from  storage  of  agricultural  products)  and  gross  fixed  capital  formation  (e.g.  work-in-
progress).  Consistency  is  also  required  for  processing-to-order  flows.  For  example,  if 
goods  are  processed  abroad  and  it involves  a substantial  physical  change  in  the  goods,  the 
goods  are to be  included  in exports  (and,  later,  in imports)  (see para  3.125.).  This  export  is 
reflected  by  a concomittant  reduction  in the  inventories  and  the  related  import  is  later  also 
recorded  as an increase  in the inventories (when not immediately  used or sold). 

in  particular 

to 

3.111.  Changes  in  inventories  should  be  valued  at  the  time  of  entering  the  inventories  (for  goods 

entering)  or at the time of withdrawal  (for  goods  withdrawn). 

-  91 

3.112.  The  prices  used  should  be consistent  with  those of  other  flows,  implying  more  specifically 

that: 

a)  Output  of  finished  goods transferred  into the producer's  inventories  are  valued  as if they 

were  sold  at that time, at current basic prices; 

b)  Additions  to  work-in-progress  is  valued  in  proportion  to  the  estimated  current  basic 

price of the  finished  product; 

c)  Reductions  in  work-in-progress  (as  withdrawn  from  inventories  when  production  is 

finished)  is valued  at basic prices; 

d)  Goods  transferred  out of inventories  for sale are valued  at basic prices; 

e)  Goods  for  resale  entering  the  inventories  of  wholesalers  and  retailers,  etc.  are  valued  at 

their  actual  or estimated purchasers' prices of the  trader; 

f)  Goods  for  resale  withdrawn  from  inventories  are  valued  at  the  purchasers'  prices  at 

which  they  can be replaced  at the time they are withdrawn  (not when  acquired). 

3.113.  Losses  as  a  result  of  physical  deterioration,  insurable  accidental  damage  or  pilfering  are 

recorded  and  valued  as  follows: 

-  For  materials  and  supplies:  as materials  and  supplied  actually  withdrawn  to  be  used  up 

in production  (intermediate  consumption). 

-  For  work-in-progress:  as  deduction  from  the  additions  accruing  to  production  carried 

out  in the same  period; 

-  For  finished  goods  and  goods  for  resale:  treated  as  withdrawals  at  the  current  price  of 

undeteriorated  goods; 

3114.  The  previous  paragraphs  have  described  the  conceptually  correct  valuation  of  each 
individual  transaction  in  and  out  of  inventories  necessary  to  be  consistent  with  the 
valuation  of  output,  intermediate  consumption  and  final  uses.  In  practice,  this  will  often 
prove too  difficult  to apply and approximation  methods  should  be used: 

(a)  When  changes  in  the  volume  of  inventories  are  fairly  regular,  a  practical  method 
which  comes  close  to  the  theoretical  valuation  principle  is  to  multiply  the  volume 
change  of  the  inventories  by  the  average  prices  for  the  period  (purchasers'  prices  for 
inventories  held  by  users  or  by  wholesalers  or  retailers,  basic  prices  for  inventories 
held by their producers). 

(b)  In case  the  prices  of the goods  involved  remain  fairly  constant,  even  large  fluctuations 
in  the  volume  of  inventories  may  not  invalidate  a  simple  approximation,  i.e.  the 
multiplication  of  the volume change with the average price. 

(c)  If  both  the  volume  and  the  prices  of  the  inventories  change  substantially  within  the 
accounting  period,  more  sophisticated  approximation  methods  are  required.  For 
example,  quarterly  valuation  of  the  changes  in  inventories  or  the  use  of  a  priori 
information  about  the  distribution  of  the  fluctuation  within  the  accounting  period 
(fluctuations  may be largest  at the end of the calendar  year, during harvest  time, etc.). 

94 -

(d)  If  only  information  about  the  values  at  the  beginning  and  end  of  the  period  are 
available  (e.g.  in  case  of  whole  sale  or  retail  trade  in  which  inventories  often  exist  of 
many  different  products), the changes  in volume  between  the  beginning  and end  of the 
period  should  also  be estimated.  This  can  be done  by  estimating  (assuming)  turn-over 
rates by type of  product. 

Note  that  seasonal  changes  in  prices  may  partly  reflect  a  difference 
in  quality,  e.g. 
clearance  prices  or  off-season  prices  for  fruit  and  vegetables.  These  changes  in  quality 
should  be treated as changes  in the volume. 

Acquisitions  less disposals of valuables  (P53) 

3.115.  Definition:  Valuables  are non-financial  goods that  are  not  used  primarily  for  production  or 
consumption, do not deteriorate  (physically)  over time  under  normal  conditions 
and that are acquired and held primarily  as stores of value. 

3.116.  Valuables  encompass  the following  types of goods: 

a)  precious  stones and metals, such as diamonds, non-monetary  gold, platihum, silver, etc.; 

b)  antiques  and other art objects, such as paintings, sculptures, etc.; 

c)  other  valuables,  such  as  jewellery  fashioned  out  of  precious  stones  and  metals  and 

collectors  items. 

These types of goods are to be recorded  as acquisition  or disposal  of valuables  in case  of: 

- 

- 

the  acquisition  or  disposal  of  non-monetary  gold,  silver,  etc.  by  (central)  banks  and 
other  financial  intermediairies; 

the  acquisition  or  disposal  of  these  goods  by  enterprises  whose  principal  or  secondary 
activity  does  not  involve  the  production  or  trade  in  such  types  of  goods;  as  a 
intermediate 
this  acquisition  or  disposal 
consequence, 
consumption  or fixed capital  formation  of these  enterprises; 

included 

is  not 

the 

in 

- 

the  acquisition  or  disposal  of  such  goods  by  households;  as  a  consequence,  such 
acquisitions  are not included  in final consumption  expenditure  by  households. 

In  the  ESA,  by  convention  also the  following  cases  are  recorded  as  acquisition  or  disposal 
of valuables: 

- 

- 

the  acquisition  or  disposal  of  these  goods  by jewelleries  and  art  dealers  (following  the 
general  definition  of  valuables  the  acquisition  of  these  goods  by  jewelleries  and  art 
dealers should be recorded  as changes in stocks); 

the  acquisition  or disposal  of these  goods by  museums  (following  the  general  definition 
of  valuables  the  acquisition  by  a  museum  of  these  goods  should  be  recorded  as  fixed 
capital  formation). 

This  convention  avoids  frequent  reclassification  between  the  three  main  types  of  capital 
formation,  i.e.  between  acquisition  less  disposal  of  valuables,  fixed  capital  formation  and 
changes  in  stocks  (e.g.  in  the  case  of  transactions  of  such  goods  between  households  and 
art  dealers). 

3.117.  The  production  of valuables  is valued  at  basic  prices  (see  also  para  3.57.  on  production  of 
originals).  All  other  acquisitions  of  valuables  are  valued  at  the  purchasers'  prices  paid  for 
them,  including  any  agents'  fees  or" commissions.  They  also  include  trade  margins  when 
bought  from  dealers.  Disposals  of  valuables  are  valued  at  the  prices  received  by  sellers, 
intermediaries. 
after  deducting  any  fees  or  commissions  paid 
Disregarding  the production  of valuables, in aggregate,  acquisitions  less disposals  between 
resident  sectors cancel out, leaving only agents or dealers  margins. 

to  agents  or  other 

IMPORTS  AND  EXPORTS  OF GOODS AND SERVICES  (P6 and  P7) 

3.118.  Definition:  Exports  of  goods  and  services  consist  of  transactions  in  goods  and  services 
(sales, barter, gifts  or grants) from  residents to  non-residents. 

3.119.  Definition:  Imports  of  goods  and  services  consist  of  transactions  in  goods  and  services 

(purchases, barter, gifts  or grants) from  non-residents to residents. 

3.120. 

Imports and exports of goods and services do not  include: 

-  establishment  trade, i.e.: 
resident 
to  non-residents  by  non-resident  affiliates  of 
deliveries 
* 
enterprises,  e.g.  sales  abroad  by  foreign  affiliates  of  a  multinational 
owned/controlled  by residents; 

* 

deliveries  to  residents  by  resident  affiliates  of  non-resident  enterprises, 
e.g. sales by domestic affiliates  of a foreign  multinational. 

-  primary  income  flows  with  abroad,  like  compensation  of  employees,  interest  and 
revenues  from  direct  investment;  the  revenues  from  direct  investment  may  include  an 
indisguishable  part  for  the  provision  of  various  services,  e.g.  training  of  employees, 
management  services and the use of patents and trade  marks; 

- 

the sale or purchase of financial  assets or non-produced  assets, like land and patents. 

3.121. 

Imports and exports of goods and services should be distinguished  into: 

- 

Intra-EU deliveries; 

- 

Imports  and exports outside the EU. 

For convenience they will both be referred  to as imports and  exports here. 

Imports  and  exports of goods (P61 and P71) 

3.122. 

Imports and exports of goods occur when there are changes  of ownership  of goods  between 
residents  and  non-residents  (whether  or  not  there  are  also  corresponding  physical 
movements  of goods across  frontiers). 

3.123.  However,  in  four  instances  the  change  of  ownership  principle  is  modified  in  recording 

imports  and  exports of goods: 

a)  Financial  leasing:  a  change  of  ownership  from  lessor  to  lessee  is  to  be  imputed  for 
goods  under  a  financial  lease;  it  is  to  be  recorded  when  the  lessee  takes  possession  of 
the good  (see Annex  on  leasing and hire purchase of durable  goods); 

- 96 -

(7) 

b)  Deliveries  between  affiliated  enterprises  (branch  or  subsidiary,  or  foreign  affiliate):  a 
change  of  ownership  is  to  be  imputed  whenever  goods  are  delivered  between  affiliated 
enterprises; 

c)  Goods  for  significant  processing  to  order  or  repair  are  recorded  both  in  imports  and 

exports although  no change  of ownership  occurs; 

d)  Merchanting:  no  import  or  export  is  recorded  when  merchants  or  commodity  dealers 
buy  from  non-residents  and  then  sell  again  to non-residents  within  the  same  accounting 
period.  A similar treatment  is to be employed  for  merchanting  by  non-residents. 

3.124. 

In the  following  cases exports of goods occur without  the  goods ever crossing  the  country's 
frontier: 

a)  Goods  produced  by  resident  units  operating  in  international  waters  are  sold  directly  to 
non-residents  in  foreign  countries  (oil,  natural  gas,  fishery  products,  maritime  salvage, 
etc.); 

b)  Transportation  equipment  or other  movable  equipment  not  tied  to  a  fixed  location  need 
not  cross the  frontier  of the exporting  country  as a result  of being  sold  by  a resident  to a 
non-resident; 

c)  Goods  are  lost  or  destroyed  after  changing  ownership  before  they  have  crossed  the 

frontier  of the exporting  country. 

Analogous  cases pertain to imports of goods. 

3.125. 

Imports and exports of goods include transactions  between  residents and non-residents  in: 

-  non-monetary  gold, i.e. gold not used (anymore)  for  the purposes  of monetary  policy; 

-  silver bullions, diamonds  and other precious  metals and  stones; 

-  paper  money  and  coins  not  in circulation  and  unissued  securities  (valued  as  goods,  not 

at face  value); 

-  electricity, gas and  water; 

- 

livestock  driven across  frontiers; 

-  parcel  post; 

-  government exports including  goods financed  by grants and loans; 

-  goods transferred  to or from  the ownership of a buffer  stock  organization; 

-  goods delivered  by  a resident  enterprise  to  its  non-resident  affiliates; 

-  goods received  by a resident enterprise  from  its non-resident  affiliates; 

-  smuggled  goods; 

-  other  unrecorded  shipments,  such  as  gifts  and  those  of  less  than  a  stated  minimum 

value; 

-  goods  processed  to  order  abroad  when  a  substantial  physical  change  in  the  goods  is 
involved.  Similar goods processed  on the domestic territory  on behalf of  non-residents; 

9 7-

- 

investment  goods  repaired  abroad  when  a substantial  amount  of  reconstruction  work  or 
manufacturing  is involved.  Similar goods repaired  on the domestic territory  on behalf of 
non-residents. 

3.126. 

Imports  and  exports  of  goods  exclude  the  following  goods  which  nevertheless  may  cross 
the national  frontier: 

-  goods  in transit through  a country; 

-  goods  shipped  to  or  from  a  country's  own  embassies,  military  bases  or  other  enclaves 

inside the national  frontiers  of another  country; 

- 

transportation  equipment  and  other  movable  kinds  of  equipment  which  leave  a  country 
temporarily,  without  any  change  of  ownership  (e.g.  construction  equipment  for 
installation  or construction  purposes  abroad); 

-  equipment  and  other  goods  which  are  sent  abroad  for  minor  processing,  maintenance, 

servicing or repair; 

-  other goods which leave a country  temporarily, being generally  returned  within  a year in 
their  original  state  and  without  change  of  ownership  (e.g.  goods  sent  abroad  for 
exhibition  and  entertainment  purposes, goods under  an operating  lease,  including  leases 
for  several years, goods returned  because expected  sales did  not  materialize); 

-  goods  on  consignment  lost  or  destroyed  after  crossing  a  frontier  before  change  of 

ownership  occurs. 

3.127. 

In  principle,  imports  and  exports  of  goods  should  be  recorded  when  the  ownership  of  the 
goods  is  transferred.  In  practice,  a change  of  ownership  is  considered  to  occur  at  the  time 
the  parties  to  the  transaction  record  it  in  their  books  or  accounts.  This  may  not  coincide 
with the various  stages of the contractual  process, like: 

- 

- 

the time of commitment  (contract date); 

the  time  of  provision  of  goods  and  services  and  acquisition  of  a  claim  for  payment 
(transfer  date); 

- 

the time of settlement of that claim (payment date). 

3.128. 

Imports  and  exports  of goods  are to be  valued  free  on  board  at the  border  of the  exporting 
country  (fob).  This value consists  of: 

- 

the value of the goods at basic prices; 

-  plus  the  related  transport  and  distributive  services  up  to  that  point  of  the  border, 
including  the  cost  of  loading  on  to  a  carrier  for  onward  transportation  (where 
appropriate)  (see table 3.1, second  column in the second part of the table); 

-  plus any  taxes less subsidies  on the goods exported;  for  intra-EC  deliveries  this  includes 

VAT  and other taxes on the goods paid  in the exporting  country. 

In the  supply  and  use and  symmetrical  input-output  tables,  imports  of goods  for  individual 
product  groups  has  to  be  valued  differently:  at  the  cost-insurance-freight  (cif)  price  at  the 
border of the importing  country. 

98 

Definition:  The  cif  price  is  the  price  of  a  good  delivered  at  the  frontier  of  the  importing 
country,  or  the  price  of  a  service  delivered  to  a  resident,  before  the  payment 
of  any  import  duties  or  other  taxes  on  imports  or  trade  and  transport  margins 
within  the  country  (for  the  trade  and  transport  margins  included,  see  also 
table  3.2,  third  column  in second  part  of  the  table). 

3.129.  Proxies  or  substitute  measures  for  the  fob  value  may  be  necessary  under  certain 

circumstances,  such as: 

a)  Barter  of goods should  be valued at the basic  prices that would  have been  received  if the 

goods had  been  sold  for  cash. 

b)  Transactions  between  affiliated  enterprises:  as  a  rule,  actual  transfer  values  should  be 
used.  However,  if they  largely  differ  from  market  prices, they  should  be  replaced  by  an 
estimated  market  price  equivalent,  or  at  least  be  separately  identified  for  analytical 
purposes. 

c)  Goods transferred  under a financial  lease: the goods  should  be valued  on the basis of the 
purchasers'  price paid  by the lessor (not by the cumulative  value of the rental  payments). 

d)  Imports  of  goods  to  be  estimated  on  the  basis  of  customs  data  (for  extra-EC  trade)  or 
Intrastat-information  (for  intra-EC trade). Both  data  sources  do not  apply  fob  valuation, 
they  use respectively  the cif value at the EC border  and  cif values  at the  national  border. 
As  fob-values  are  only  used  at  the  most  aggregate  level  and  cif-values  are  used  at  the 
product  group  level,  these  modifications  have  only  to  be  applied  at  the  most  aggregate 
level, i.e. the cif/fob  adjustment. 

e)  Imports  and  exports  of  goods  to  be  estimated  on  the  basis  of  survey  information  or 
various  types  of  ad  hoc  information.  In  such  instances,  usually  only  the  total  value  of 
sales  split  out  by product  can be obtained.  As a consequence,  the estimate  will  be  based 
on purchasers' prices and not on fob values. 

Imports  and  exports  of services  (P62 and  P72) 

3.130.  Definition:  Exports  of  services  consist  of  all  services  rendered  by  residents  to  non 

residents. 

3.131.  Definition:  Imports  of  services  consist  of  all  services  rendered  by  non-residents  to 

residents. 

3.132.  Exports  of services  include the following  borderline cases: 

-  Transportation  of  exported  goods  after  they  have  left  the  frontier  of  the  exporting 

country  when provided  by a resident carrier (cases 2 and  3 in table  3.1); 

-  Transportation  of imported goods by a resident  carrier: 

99 

* 

* 

upto  the  frontier  of  the  exporting  country  when  goods  are  valued  fob  to 
offset  the  transportation  value  included  in  the  fob-value  (case  3  in  table 
3.2); 

upto  the  frontier  of  the  importing  country  when  goods  are  valued  cif  to 
offset  the transportation  value  included  in the  cif-value  (cases  3 and  2 cif 
in table  3.2); 

-  Transportation  of goods  by residents  on  behalf  of non-residents  which  does  not  involve 
imports  or exports of the goods (e.g. the transport  of goods that  do not  leave the  country 
as exports or the transport  of goods outside the domestic  territory); 

- 

International  or  national  passenger  transportation  on  behalf  of non-residents  by  resident 
carriers; 

-  Minor processing  and repair activities on behalf of  non-residents; 

-  Construction  services  when  a  construction  site  office  abroad  is  not  treated  as  a  quasi-
corporation.  This  applies  to  construction  projects  lasting  less  than  a  year  and  whose 
output  is  not  gross  fixed  capital  formation  (see  para  2.09.  and  in  particular  the 
corresponding  note  1); 

- 

Installation  of equipment  abroad when a project  is of limited  duration  by  its nature; 

-  Financial  services by the amount of the explicit commissions  and  fees; 

- 

Insurance services by the amount of the services  charge; 

-  Expenditure  by non-resident  tourists and  business  travellers  (by  convention  classified  as 
services;  however,  for  the  purposes  of  the  supply  and  use  and  symmetric  input-output 
tables, a global breakdown  by products may be necessary); 

-  Expenditure  by  non-residents  on  health  and  education  services  provided  by  residents; 
this  includes the provision of these services on the domestic territory  as well  as  abroad; 

-  Services of owner-occupied  holidays homes of non-residents  (see para  3.54.); 

-  Royalties  and  license  fees,  receipts  of  which  are  associated  with  the  authorized  use  of 
intangible  non-produced  non-financial  assets  and  property  rights,  such  as  patents, 
copyrights,  trademarks,  industrial  processes,  franchises,  etc.,  and  with  the  use  through 
licensing  agreements  of  produced  originals  or  prototypes,  such  as  manuscripts, 
paintings, etc. 

3.133.  For  imports  of  services  most  borderline  cases  are the  mirror-image  of  those  for  exports  of 
services;  therefore,  only  a  limited  number  of  specific  clarifications  are  necessary  for 
imports of services. 

100 

3.134. 

Imports  of transport  services  include the following  borderline  cases: 

-  Transportation  of  exported  goods  upto  the  frontier  of  the  exporting  country  when 
provided  by  a non-resident  carrier  to offset  the  transportation  value  included  in the  fob-
value of the exported  goods (case 4 in table  3.1); 

-  Transportation  of imported  goods by a non-resident  carrier 

* 

* 

from  the  frontier  of  the  exporting  country  as  a  separate  transportation 
service  when  imported  goods  are  valued  fob  (cases  4  and  5  fob  in  table 
3-2); 

from  the  frontier  of  the  importing  country  as  a  separate  transportation 
service  when  imported  goods  are  valued  cif:(in  this  case the  value  of  the 
transportation  service  between  the  frontiers  of  the  exporting  and  the 
importing  country  is already  included  in the  cif-value  of the  good;  case 4 
in table  3.2); 

-  Transportation  of  goods  by  non-residents  on  behalf  of  residents  which  does  not  involve 
imports  or exports of goods (but e.g. transport  of goods in transit  or transport  outside the 
domestic  territory); 

- 

International  or  national  passenger  transportation  on  behalf  of  residents  by  non-resident 
carriers. 

Imports  of  transport  services  does  not  include  transportation  of  exported  goods  after  they 
have  left  the  frontier  of  the  exporting  country  when  provided  by  a  non-resident  carrier 
(cases  5 and  6 in table  3.1). Exports of goods  are valued  fob  and  all  such transport  services 
are  thus  to  be  regarded  as  transactions  between  non-residents,  i.e.  between  a  non-resident 
carrier  and  a  non-resident  importer.  This  applies  even  when  these  transportation  services 
are paid under export-cif-contracts  by the  exporter. 

3.135. 

Imports  in respect  of direct purchases  abroad  by residents  cover  all purchases  of goods  and 
services  made  by  residents  while travelling  abroad  for  business  or  personal  purposes.  Two 
categories must be distinguished  because they require different  treatment: 

-  expenditures  by business travellers are intermediate  consumption; 

-  expenditures  by  other  travellers  on  personal  trips  are  household  final  consumption 

expenditure. 

3.136. 

Imports  and  exports  of  services  are recorded  at the  time  at which  they  are  rendered,  which 
mostly  coincides  with the time at which the services are produced.  Imports are to be valued 
at purchasers'  price and exports of services at basic prices: 

Table 3.1  The  treatment  of transportation  of exported  goods.  Explanation  of how to read  this 
table:  The  first  part  of  this  table  indicates  that  there  are  six  different  possibilities  of 
transportation  of  exported  goods,  depending  on  whether  the  carrier  is  resident  or  not 
and  depending  on  where  the  transport  takes  place:  from  a  place  on  the  domestic 
territory  to the  national  border,  from  the national  border  to the  border  of the  importing 
country  or  from  the  border  of  the  importing  country  to  a  place  within  the  importing 
country.  In  the  second  part  of  this  table,  for  each  of  these  six  possibilities,  it  is 
indicated  whether  they  are  to  be  recorded  as  exports  of  goods,  exports  of  services, 
imports of goods or imports of services. 

Domestic territory 

Territory  in between 

Territory 

of 
country 

importing 

1. resident carrier => 

2. resident carrier => 

3. resident  carrier => 

4. non-resident  carrier  =^> 

5. non-resident  carrier => 

6. non-resident  carrier => 

Exports  of 
goods 
(fob) 

Exports of 

services 

Imports of 
goods 
(cif/fob) 

Imports  of 

services 

X 

X 

X 

X 

1. 

2. 

3. 

4. 

5. 

6. 

-

X 

102 -

Table 3.2  The treatment  of transportation  of imported  goods. Explanation  of how to read  this 
table:  The  first  part  of  this  table  indicates  that  there  are  six  different  possibilities  of 
transportation  of  imported  goods,  depending  on  whether  the  carrier  is  resident  or  not 
and  depending  on  where  the  transport  takes  place:  from  a  place  in  the  exporting 
country  to  the  border  of  this  exporting  country,  from  the  border  of  the  exporting 
country  to  the  border  of  the  importing  country  and  from  the  border  of  the  importing 
country  to  a  place  within  the  importing  country.  In  the  second  part  of  this  table,  for 
each of these six possibilities, it is indicated  whether they are to be recorded  as  imports 
of  goods,  imports  of  services,  exports  of  goods  or  exports  of  services.  In  some 
instances  (cases 2 and  5), this recording  depends  on the valuation  principle  applied  for 
imported  goods. 

Domestic territory 

Territory  in between 

Territory 

of 

exporting 

country 

1. resident  carrier <= 

2. resident  carrier <= 

3. resident carrier <= 

4. non-resident  carrier <= 

5. non-resident earner <= 

6. non-resident  carrier <= 

Valuation 
of 
imported 
goods 

1. 

cif/fob 

2. 

fob 

3. 

4. 

5. 

cif 

cif7fob 

cif/fob 

fob 

cif 

6. 

cif/fob 

Imports of 
goods 

Imports of 

services 

Exports of 
goods 
(fob) 

Exports  of 

services 

-

X 

X 

X 

X 

X 

X 

X 

X 

Note that the transition  from  valuation of imported  goods at cif to fob consists  of: 

cif/fob  adjustment,  i.e. from  2 cif to 2 fob (reduces total  imports and exports); 

cif/fob  reclassification,  i.e. from  5 cif to 5 fob (leaves total imports and exports  unchanged). 

103 

TRANSACTIONS  IN EXISTING  GOODS 

3.137.  Definition:  Existing goods are goods that already have had a user (other than  inventories). 

3.138.  Existing  goods  include: 

-  existing  buildings  and  other  fixed  capital  goods  which  are  sold  by  producer  units  to 

other  units: 

* 

* 

to be re-used as such; 

to  be  demolished  or  broken  up;  the  resulting  products  usually  become 
raw materials  (e.g. scrap  iron) used  for  the production  of new goods (e.g. 
steel). 

-  valuables which are sold  from  one unit to  another; 

-  existing  consumer durables  which are sold  by households  or military  authorities to other 

units: 

* 

* 

to be re-used as such; 

to be broken  up and converted  into demolition  materials. 

-  existing  non-durable  goods  (e.g.  waste  paper,  rags,  old  clothes,  old  bottles,  etc.)  which 
are  sold  by  any  unit,  either  to  be  used  again  or  to  become  raw  material  for  the 
manufacture  of new goods (recovered  goods) 

3.139.  The  transfer  of  existing  goods  is  recorded  as  a  negative  expenditure  (acquisition)  for  the 

seller and a positive expenditure (acquisition)  for the  purchaser. 

3.140.  This has the following  consequences: 

(a)  When  the  sale  of an existing  fixed  asset  or  valuable  takes  place  between  two  resident 
producers,  the positive  and  negative  values  recorded  for  gross  fixed  capital  formation 
cancel  out for the economy  as a whole except for the costs of ownership  transfer. 

(b)  When  an  existing  immovable  fixed  asset  (e.g. a building)  is  sold  to a non-resident,  by 
convention  the  latter  is  treated  as  purchasing  a  financial  asset,  i.e.  the  equity  of  a 
notional  resident  unit. This notional  resident  unit  is then  deemed  to purchase  the fixed 
asset.  As  a consequence;  the  sale  and  purchase  of  the  fixed  asset  takes  place  between 
residents. 

(c)  When  an  existing  movable  fixed  asset,  such  as  a  ship  or  aircraft,  is  exported,  no 
positive  gross  fixed  capital  formation  is  recorded  elsewhere  in  the  economy  to  offset 
the seller's negative gross fixed capital  formation. 

(d)  Some durable goods, such as vehicles, may  be classified  as fixed assets or as  consumer 
durables  depending  upon  the  owner  and  the  purpose  for  which  they  are  used.  If, 
therefore,  the  ownership  of  such  a  good  is  transferred  from  an  enterprise  to  a 
household  to  be  used  for  final  consumption,  negative  gross  fixed  capital  formation  is 
recorded  for  the enterprise  and  positive  consumption  expenditure  by  the household.  In 
the less common  case where ownership  of such  a good  is transferred  from  a  household 
to  an  enterprise,  for  the  household  negative  final  consumption  expenditure  should  be 
recorded  and  for the enterprise  positive gross  fixed  capital  formation. 

104 

(e)  Transactions  in  existing  valuables  are  to  be  recorded  as  the  acquisition  of  a  valuable 
(positive  gross  capital  formation)  by  the  purchaser  and  as  the  disposal  of  a  valuable 
(negative  gross  capital  formation)  by  the  seller.  In  case  of  a transaction  with  the  Rest 
of  the  World,  the  import  or  export  of  a  good  is  to  be  recorded  (see  para  3.125.).  The 
sale  of  a  valuable  by  a household  is not to  be  recorded  as  negative  final  consumption 
expenditure. 

(f)  When  existing  military  durables  are  sold  abroad  by  the  government,  this  should  be 
recorded  as  an  export  of  goods  and  as  negative  intermediate  (and  final)  consumption 
by the  government. 

3.141.  For  the  selling  costs  incurred  by the former  owner  (costs  of ownership  transfer),  a  holding 
loss has to be recorded. A similar entry is to be made for  the part  of his original  acquisition 
costs that have not been written down as consumption  of  fixed  capital. 

3.142.  Transactions  in  existing  goods  should  be  recorded  at  the  time  ownership  changes.  The 
valuation  principles  to  be  applied  are  those  appropriate  to  the  type(s)  of  transactions  in 
product  involved. 

105 

CHAPTER IV 

DISTRIBUTIVE TRANSACTIONS 

Sl*i 

107 

INTRODUCTION 

4.01. 

Distributive  transactions  consist  of  transactions  by  means  of  which  the  value  added 
generated  by  production 
is  distributed  to  labour,  capital  and  government,  and  of 
transactions  involving the redistribution  of income and  wealth. 

The  system  draws  a  distinction  between  current  and  capital  transfers,  with  the  latter 
deemed  to redistribute  saving or wealth rather than  income. 

COMPENSATION  OF EMPLOYEES  (Dl) 

4.02. 

Definition:  compensation of employees (Dl)  is defined  as the total  remuneration,  in cash 
or in kind, payable by an employer to an employee  in return  for  work done by 
the latter during the accounting  period. 

Compensation  of employees is broken down into: 

-  wages and  salaries (Dl 1): wages and salaries in cash  ; wages and  salaries  in kind 

-  employers'  social  contributions  (D12):  employers'  actual  social  contributions  (D121); 

employers' imputed  social contributions  (D122). 

Wages  and  salaries  ( D l l) 

1. 

Wages  and salaries  in cash: 

4.03.  Wages and salaries in cash include the values of any social  contributions,  income taxes, etc 
payable  by  the  employee  even  if  they  are  actually  withheld  by  the  employer  and  paid 
directly to social insurance schemes, tax authorities, etc on behalf of the employee: 

Wages and salaries in cash include the following  kinds of  remuneration: 

a)  basic wages and salaries payable at regular  intervals, 

b)  enhanced  rates  of  pay  for  overtime,  nightwork,  weekend  work,  disagreeable  or 

hazardous  circumstances 

c)  cost of living allowances, local allowances and expatriation  allowances 

d)  bonuses  based  on  productivity  or  profits,  Christmas  and  New  Year  bonuses  excluding 
employee  social  benefits  (see 4.07. c),  "13th  -  14th  month"  pay  (annual  supplementary 
pay) 

e)  allowances  for  transport  to  and  from  work,  excluding  allowances  or  reimbursement  of 
employees  for  travelling,  separation,  removal  and  entertainment  expenses  incurred  in 
the course of their duties (see 4.07. a). 

f)  holiday pay  for official  holidays or annual  holidays 

g)  commissions, tips, attendance and directors' fees  paid to  employees 

h)  ad-hoc  bonuses  or  other  exceptional  payments  linked  to  the  overall  performance  of  the 

enterprise  made under incentive  schemes 

i)  payments made by employers to their employees under  saving  schemes 

j)  exceptional  payments  to employees  who  leave  the  enterprise,  if  those  payments  are  not 

linked to a collective  agreement 

k)  housing allowances  paid  in cash by employers to their employees. 

108 

2. 

Wages  and  salaries  in kind: 

4.04. 

Definition:  Wages  and  salaries  in  kind  consist  of  goods  and  services,  or  other  benefits, 
provided  free  or at reduced  prices by employers, that can be used by  employees 
in  their  own  time  and  at  their  own  discretion,  for  the  satisfaction  of  their  own 
needs or wants or those of other members  of their  households.  Those goods and 
services,  or  other  benefits,  are  not  necessary  for  the  employers'  production 
process.  For  the  employees,  those  wages  and  salaries  in  kind  represent  an 
additional  income:  they  would  have  paid  a  market  price  if  they  had  bought 
these goods or services by themselves. 

4.05. 

The most  common  are: 

a)  meals  and  drinks,  including  those  consumed  when  travelling  on  business  (because  they 
would  have  been  taken  anyway)  but  excluding  special  meals  or  drinks  necessitated  by 
exceptional  working  conditions.  Price  reductions  obtained 
in  free  or  subsidized 
canteens, or  obtained  by  luncheon  vouchers,  are  to  be  included  in wages  and  salaries  in 
kind. 

b)  own  account  and  purchased  housing  or  accommodation  services  of  a  type  that  can  be 

used  by all members of the household  to which  the employee  belongs 

c)  uniforms  or other  forms  of special  clothing  which  employees  choose  to wear  frequently 

outside of the workplace as well as at work 

d)  the services of vehicles or other durables provided  for  the personal  use of  employees 

e)  goods  and  services  produced  as  outputs  from 

the  employer's  own  processes  of 
production,  such  as  free  travel  for  the  employees  of  railways  or  airlines,  free  coal  for 
miners, or free  food  for employees  in agriculture 

f)  the provision  of sports, recreation or holiday  facilities  for employees  and their  families 

g)  transportation  to  and  from  work,  except  when  organised  in  the  employer's  time,  car 

parking 

h)  creches for the children of employees 

i)  payments made by employers to works councils or similar  bodies 

j)  bonus  shares distributed  to employees 

k)  remuneration  in  kind  may  also  include  the  value  of  the  interest  foregone  by  employers 
when  they  provide  loans  to  employees  at  reduced,  or  even  zero,  rates  of  interest.  This 
value  may  be  estimated  as  the  amount  the  employee  would  have  to  pay  if  average 
mortgage  (when  buying  houses)  or  consumer  loan  (when  buying  other  goods  and 
services)  interest  rates were charged,  less the amount  of interest  actually  paid. 

An  imputed  payment  from  the  employee  is  rerouted  in  the  primary  distribution  of  income 
account  back to the  employer. 

| 0O 

4.06. 

Goods  and  services,  or  other  advantages,  should  be  valued  at  basic  prices  when  produced 
by  the  employer,  and  at  purchasers'  prices  when  purchased  by  the  employer  (that  is,  the 
price  actually  paid by the employer). 

When  provided  free,  the  whole  value  of  the  wages  and  salaries  in  kind  is  calculated 
according  to  the  basic  prices  (or  purchasers'  prices  of  the  employer  when  purchased  by 
him) of the goods and services, or other advantages, in  question. 

When  provided  at  reduced  prices,  the  value  is  given  by  the  difference  between  the 
calculation  explained  above and the amount  paid by the  employee 

4.07.  Wages  and  salaries do not include: 

a)  expenditure  by  employers  which  is  to  their  own  benefit  as  well  as  to  that  of  their 

employees, because it is necessary  for the employers' production  process 

-  allowances  or reimbursement  of employees  for  travelling,  separation,  removal  and 

entertainment  expenses  incurred  in the course of their  duties 

-  expenditure  on  providing  amenities  at  the  place  of  work,  medical  examinations 
required  because  of the  nature  of  the  work,  supplying  working  clothes  which  are 
worn exclusively, or mainly, at work 

-  accommodation  services  at  the  place  of  work  of  a  kind  which  cannot  be  used  by 
the  households  to  which  the  employees  belong  -  barracks,  cabins,  dormitories, 
huts and so on 

-  special meals or drinks necessitated  by exceptional  working  conditions 

-  allowances  paid  to  employees  for  the  purchase  of  tools,  equipment  or  special 
clothing  needed  exclusively,  or  primarily,  for  their  work,  or  that  part  of  their 
wages  or  salaries  which,  under  their  contracts  of  employment,  employees  are 
required to devote to such purchases. 

Such  expenditure  on  goods  and  services  that  employers  are  obliged  to  provide  to  their 
employees  in  order  for  them  to  be  able  to  carry  out  their  work  is  treated  as  intermediate 
consumption  by employers. 

b)  the  amounts  of wages  and  salaries  which  employers  continue  to  pay  to  their  employees 
temporarily  in the  case  of  sickness,  maternity,  industrial  injury,  disability,  redundancy, 
etc. These payments  are treated  as unfunded  employee  social  insurance  benefits  (D623), 
with  the  same  amounts  being  shown  under  employers'  imputed  social  contributions  (D 
122) 

c)  other  unfunded  employee  social  benefits,  in  the  form  of  children's,  spouses',  family, 
education  or other allowances  in respect of dependants,  and  in the  form  of the  provision 
of  free  medical  services  (other  than  those  necessitated  by  the  nature  of  the  work)  to 
employees  or their  families 

d)  any  taxes  payable  by  the  employer  on  the  wage  and  salary  bill  - for  example,  a  payroll 

tax. Such taxes are treated  as other taxes on  production. 

1  10 

Employers'  social  contributions  (D12) 

4.08. 

An  amount  equal  to the  value of the social  contributions  incurred  by  employers  in order to 
secure  for  their  employees  the  entitlement  to  social  benefits  needs  to  be  recorded  under 
compensation  of  employees.  Employers'  social  contributions  may  be  either  actual  or 
imputed. 

Employers'  actual  social contributions  (D121) 

4.09. 

Definition:  employers' actual  social  contributions  (D121) consist  of the payments  made by 
employers  for  the  benefit  of  their  employees  to  insurers  (social  security  funds 
and  private  funded  schemes).  These  payments  cover  statutory,  conventional, 
contractual  and  voluntary  contributions  in  respect  of  insurance  against  social 
risks or needs (see D6). 

Although  paid  directly  by  employers  to  the  insurers,  these  employers'  contributions  are 
treated  as  a  component  of  the  compensation  of  employees,  who  are  then  deemed  to  pay 
them over to the insurers. 

Employers'  imputed  social  contributions  (D122) 

4.10.  Definition:  employers'  imputed  social  contributions  (D122)  represent  the  counterpart  to 
unfunded  social  benefits  (less  eventual  employees'  social  contributions)  paid 
directly  by  employers  to  their  employees  or  former  employees  and  other 
eligible  persons(l)  without  involving  an  insurance  enterprise  or  autonomous 
pension  fund,  and  without  creating  a special  fund  or  segregated  reserve  for  the 
purpose. 

The  fact  that  certain  social  benefits  are  paid  directly  by  employers,  and  not  through  the 
medium  of  social  security  funds  or  other  insurers,  in  no  way  detracts  from  their  character 
as  social  welfare  benefits.  However,  since  the  costs  of  these  benefits  form  part  of 
employers'  labour costs, they should also be included  in the compensation  of employees. 

4.11. 

In the accounts  of the  sectors, the costs of direct  social  benefits  appear  first  among  uses  in 
the generation  of income account, as a component  of the compensation  of employees, and a 
second time among uses in the secondary distribution  of income account, as social  benefits. 
In  order  to  balance  the  latter  account,  it  is  assumed  that  the  households  of  employees  pay 
back  to  the  employers'  sectors  the  employers'  imputed  social  contributions  which  finance 
together  with  eventual  employees'  social  contributions  the  direct  social  welfare  benefits 
provided  to  them  by  these  same  employers.  This  notional  circuit  is  similar  to  that  for 
employers'  actual  social  contributions,  which  pass  through  the  accounts  of  households  and 
are then deemed  to be paid  by them to the insurers. 

For the valuation  of employers'  imputed  social  contributions, the amount  of which does not 
necessarily  coincide with that of direct  social benefits,  reference  should be made to  heading 
D612. 

(1) 

Employers'  imputed  social  contributions  include  an  amount  equal  in  value  to  the  wages  and  salaries  which  employers  temporarily 
continue to pay in the event of the sickness, maternity, industrial  injury,  disability,  redundancy, etc. of their employees,  if that amount 
can  be separated 

4.12. 

Time of recording  of compensation  of employees: 

-  wages  and  salaries  (Dll)  are  recorded  in  the  period  during  which  the  work  is  done. 
However,  ad-hoc  bonuses  or other  exceptional  payments,  13th month,  etc.  are  recorded 
when they are due to be paid. 

-  employers'  actual  social  contributions  (D121)  are  recorded  in  the  period  during  which 

the work is done. 

-  employers'  imputed  social contributions  (D122): 

* 

* 

representing  the  counterpart  of  compulsory  direct  social  benefits  are  recorded  in 
the period during which the work  is done 

representing  the counterpart  of  voluntary  direct  social  benefits  are  recorded  at  the 
time these benefits  are provided. 

4.13. 

The compensation  of employees may consist  of: 

a)  the compensation  of resident employees by resident  employers 

b)  the compensation  of resident employees by non-resident  employers 

c)  the compensation  of non-resident  employees by resident  employers. 

These different  items are recorded  in the ESA as  follows: 

- 

- 

- 

- 

the  compensation  of resident  and  non-resident  employees  by  resident  employers  groups 
together  items a) and  c) and  appears among  uses  in the  generation  of income  account  of 
the sectors and industries to which the employers  belong. 

the compensation  of resident  employees by  resident  and  non-resident  employers  groups 
together  items  a)  and  b)  and  appears  among  resources  in  the  allocation  of  primary 
income account of households. 

item  b), compensation  of resident  employees  by  non-resident  employers  appears  among 
uses in the external account of primary incomes and current  transfers. 

item  c), compensation  of non-resident  employees  by  resident  employers  appears  among 
resources in the external account of primary incomes and current  transfers. 

TAXES ON PRODUCTION AND IMPORTS (D2) 

4.14. 

Définition:  Taxes  on  production  and  imports  (D2)  consist  of  compulsory,  unrequited 
payments,  in cash or in kind which are levied  by general  government,  or by the 
the  production  and 
Institutions  of  the  European  Union, 
importation  of goods and  services, the employment  of  labour, the  ownership  or 
use  of  land,  buildings  or  other  assets  used  in  production.  These  taxes  are 
payable whether or not profits  are made. 

in  respect  of 

4.15. 

Taxes on production  and imports are divided into: 

- 

taxes on products (D21 ) 

*  value  added type taxes (VAT) (D211) 

*  taxes and duties on imports excl. VAT (D212) 

- 

- 

import duties (D2121) 

taxes on imports excl. VAT and import duties (D2122) 

*  taxes on products, except VAT and import taxes (D214) 

-  other taxes on production (D29). 

Taxes  on  products  (D21) 

4.16 

Definition:  Taxes  on  products  (D21)  are  taxes  that  are  payable  per  unit  of  some  good  or 
service produced or transacted. The tax may  be a specific  amount  of money  per 
unit  of  quantity  of  a good  or  service,  or  it  may  be  calculated  ad  valorem  as  a 
specified  percentage  of  the  price  per  unit  or  value  of  the  goods  and  services 
produced  or  transacted.  As  a  general  principle,  taxes  in  fact  assessed  on  a 
product,  irrespective  of which  institutional  unit pays the  tax, are to  be  included 
in taxes on products, unless specifically  included in another  heading. 

Value added  type  taxes (VAT)  (D211) 

4.17. 

Definition:  A  value  added  type tax (VAT)  is a tax  on goods  or  services  collected  in  stages 

by enterprises and which is ultimately charged  in full  to the final purchasers. 

This  heading  value  added  type  taxes  (D211)  comprises  the  value  added  tax  which  is 
collected  by  the  General  government  and  which  is  applied  to  national  and  imported 
products,  as  well  as,  where  appropriate,  other  deductible  taxes  applied  under  similar  rules 
to those governing  VAT, for simplicity  henceforth  called  "VAT". 

It also  includes  taxes  characterized  in law as value  added  taxes  but  which  are not  based  on 
a product  as defined  in national accounts (for  instance, sale of plots of  land)(l) 

Producers  are  obliged  to  pay  only  the  difference  between  the  VAT  on  their  sales  and  the 
VAT  on  their  purchases  for  their  own  intermediate  consumption  or  gross  fixed  capital 
formation. 

( I ) 

VAT taxes on sales of land arc treated in supply and use tables as taxes on services of estate agents. 

(8) 

VAT  is recorded  net in the sense that: 

-  outputs  of goods and services and imports are valued  excluding  invoiced  VAT 

-  purchases  of  goods  and  services are recorded  inclusive  of  non-deductible  VAT.  VAT  is 
recorded  as  being  borne  by  purchasers,  not  sellers,  and  then  only  by  those  purchasers 
who  are  not  able  to  deduct  it.  The  greater  part  of  VAT  is  therefore  recorded  in  the 
system  as  being  paid  on  final  uses,  mainly  on  household  consumption.  A  part  of  VAT 
may, however, be paid by enterprises, mainly by those which are exempted  from  VAT. 

For  the  total  economy,  VAT  is  equal  to  the  difference  between  total  invoiced  VAT  and 
total  deductible  VAT. 

Taxes  and  duties  on  imports  excluding VAT (D212) 

4.18 

Definition:  taxes  and  duties  on  imports  excluding  VAT  (D212)  comprise  compulsory 
payments  levied  by  general  government  or  the  Institutions  of  the  European 
Union  on  imported  goods,  excluding  VAT,  in  order  to  admit  them  to  free 
circulation  on the economic territory, and on  services  provided  to resident  units 
by non-resident  units. 

These payments  include: 

a)  Import  duties (D2121): these consist of customs  duties, or other  import  charges,  payable 
according  to  customs  tariff  schedules  on  goods  of  a particular  type  when  they  enter  for 
use  in the economic territory of the country of utilization. 

b)  Taxes on imports, excluding VAT and import duties  (D2122): 

This heading  includes: 

- 

levies on imported agricultural  products 

-  monetary  compensatory  amounts levied on  imports 

-  excise  duties  and  special  taxes  on  certain  imported  products,  provided  such  duties 
and  taxes  on  similar  products  of  domestic  origin  are  paid  by  the  producer  branch 
itself 

-  general  sales taxes payable on imports of goods and  services 

- 

taxes  on  specific  services  provided  by  non-resident  enterprises  to  resident  units 
within the economic  territory 

-  profits  of public enterprises  exercising  a monopoly  over the  imports  of  some  good  or 

service, which are transferred  to the State. 

Net  taxes  and  duties  on  imports  excluding  VAT  are  calculated  by  deducting  import 
subsidies  (D311)  from  taxes and duties on imports  excluding  VAT (D212). 

Taxes  on  products, except  VAT and import taxes  (D214) 

4.19. 

Definition:  taxes  on  products,  except  VAT  and  import  taxes  (D214)  consist  of  taxes  on 
goods  and  services  that  become  payable  as  a  result  of  the  production,  export, 
sale,  transfer,  leasing  or  delivery  of  those  goods  or  services,  or  as  a  result  of 
their use for  own consumption  or own capital  formation. 

4.20. 

This  heading  includes, in particular: 

a)  excise  duties  and  consumption  taxes  (other  than  those  included  in  taxes  and  duties  on 

imports). 

b)  stamp  taxes on the sale of specific  products, such as alcoholic  beverages  or tobacco, and 

on legal documents  or cheques 

c)  taxes  on  financial  and  capital  transactions,  payable  on  the  purchase  or  sale  of  non-
financial  and  financial  assets,  including  foreign  exchange.  They  become  payable  when 
the  ownership  of  land  or  other  assets  changes,  except  as  a  result  of  capital  transfers 
(mainly 
inheritances  and  gifts).  They  are  treated  as  taxes  on  the  services  of 
intermediaries. 

d)  car registration  taxes 

e)  taxes on  entertainment 

f)  taxes on  lotteries, gambling and betting, other than those on  winnings 

g)  taxes on insurance  premiums 

h)  other  taxes  on  specific  services:  hotels  or  lodging,  housing  services,  restaurants, 

transportation,  communication,  advertising 

i)  general  sales  or 

these 
manufacturers'  wholesale and retail sales taxes,  purchase taxes, turnover  taxes 

(excluding  VAT 

turnover 

taxes): 

taxes 

type 

include 

j)  profits  of fiscal  monopolies  which are transferred  to the  State, except  those  exercising  a 
monopoly  over  the  imports  of  some  good  or  services  (included  in  D2122).  Fiscal 
monopolies  are  public  enterprises  which  have  been  granted  a  legal  monopoly  over  the 
production  or  distribution  of  a  particular  kind  of  good  or  service  in  order  to  raise 
revenue  and  not  in  order  to  further  the  interests  of  public  economic  or  social  policy. 
When  a  public  enterprise  is  granted  monopoly  powers  as  a  matter  of  deliberate 
economic  or  social  policy  because  of  the  special  nature  of  the  good  or  service  or  the 
technology  of  production 
and 
telecommunications,  railways  and  so on-  it  should  not  be  treated  as  a  fiscal  monopoly. 
As a general  rule, fiscal  monopolies  are typically  engaged  in the production  of goods or 
services  which  may  be heavily  taxed  in other  countries;  they  tend  to  be  confined  to  the 
production  of  certain  consumer  goods  (alcoholic  beverages,  tobacco,  matches,  etc.)  or 
fuels  . 

-for  example,  public  utilities,  post  offices 

k)  export duties and monetary compensatory  amounts collected  on exports. 

4.21. 

Net taxes on products are obtained  by deducting  subsidies  on products  (D31) from  taxes on 
products  (D21). 

Other taxes  on  production  (D29) 

4.22. 

Definition:  Other taxes on production  (D 29) consist of all taxes that enterprises  incur as a 
result of engaging  in production,  independently  of the quantity or value of the 
goods and  services produced  or sold. 

They  may  be  payable  on  the  land,  fixed  assets  or  labour  employed  in  the  production 
process  or on certain activities or transactions. 

4.23. 

Other taxes on production  (D29) include in particular: 

a)  taxes  on  the  ownership  or  use  of  land,  buildings,  or  other  structures  utilized  in 

production 

b)  taxes  on  the  use  of  fixed  assets  (vehicles,  machinery,  equipment)  for  purposes  of 

production, whether such assets are owned or rented 

c)  taxes on the total wage bill and payroll taxes 

d)  taxes  on  international  transactions  (travel  abroad,  foreign  remittances,  or  similar 

transactions with non-residents)  for purposes of  production 

e)  taxes  paid  by  enterprises  in  order  to  obtain  business  and  professional  licences  if  those 
licences  are  being  granted  automatically  on  payment  of  the  amounts  due.  However,  if 
the  government  carries  out  checks  on the  suitability  or  safety  of  the  business  premises, 
on  the  reliability  or  safety  of  the  equipment  employed,  on  the  professional  competence 
of  the  staff  employed,  or  on  the  quality  or  standard  of  goods  or  services  produced  as  a 
condition  for  granting  such  a licence, the payments  are  treated  as  purchases  of  services 
rendered,  unless  the  amounts  charged  for  the  licences  are  out  of  all  proportion  to  the 
costs of the checks carried out by the  government 

f)  taxes  on pollution  resulting  from  production  activities. These  consist  of  taxes  levied  on 
the  emission  or  discharge  into  the  environment  of  noxious  gases,  liquids  or  other 
harmful  substances. They  do not  include payments  made  for  the  collection  and  disposal 
of  waste  or  noxious  substances  by  public  authorities,  which  constitute  intermediate 
consumption  of enterprises. 

g)  under-compensation  of  VAT  resulting  from  the  flat  rate  system,  frequently  found  in 

agriculture. 

4.24. 

This  heading  excludes  taxes  on the  personal  use  of  vehicles  etc. by  households,  which  are 
recorded  under current taxes on income, wealth, etc. 

Taxes  on  production  and  imports  paid to the Institutions  of the European  Union 

4.25. 

The  taxes  on  production  and  imports  paid  to  the  Institutions  of  the  European  Union 
include, in particular: 

a)  taxes  paid  directly  by  resident  producer  units  to  the  Institutions  of  the  European  Union 

(the ECSC  levy  on mining and iron and  steel producing  enterprises) 

b)  taxes  collected  by  national  governments  on  behalf  of  the  Institutions  of  the  European 

Union,  namely: 

- 1 16 

receipts from  the common  agricultural  policy: 

levies  on  imported  agricultural  products,  monetary  compensatory  amounts  levied 
on  exports  and  imports,  sugar  production  levies  and  the  tax  on  isoglucose,  co-
responsibility taxes on milk and  cereals 

receipts  from  trade  with  third  countries:  customs  duties  levied  on  the  basis  of  the 
Integrated  Tariff  of the European  Union  (TARIC) 

receipts from VAT in each Member  State. 

4.26. 

4.27. 

Recording  of  taxes  on  production  and  imports:  taxes  on  production  and  imports  are 
recorded  when  the  activities, transactions  or other  events  occur  which  create  the  liabilities 
to pay taxes. 

However,  some  economic  activities,  transactions  or  events,  which  under  tax  legislation 
ought to impose on the units concerned  the obligation  to pay  taxes, permanently  escape  the 
attention  of  the  tax  authorities.  It  would  be  unrealistic  to  assume  that  such  activities, 
transactions  or  events  give  rise  to  financial  assets  or  liabilities  in  the  form  of  payables  or 
receivables.  For  this  reason,  the  amounts  to  be  recorded  in  the  System  are  determined  by 
the  amounts  due  for  payment  only  when  evidenced  by  tax  assessments,  declarations  or 
other  instruments  which create  liabilities  in the  form  of clear  obligations  to pay  on the  part 
of taxpayers. The system does not impute missing taxes not evidenced  by tax  assessments. 

For  taxes  evidenced  by tax  assessments  but  which  are  never  paid  (for  instance,  because  of 
bankruptcy) are treated as if they had been paid; there are two  eventualities: 

- 

- 

the  writing-off  of  bad  debt  by  the  government,  which  recognizes  that  its  claim  can  no 
longer  be  collected  ; this  writing  off  is recorded  in  the  other  changes  in  the  volume  of 
assets accounts of the government  and the defaulting  debtor 

the  cancellation  of  the  debt  by  mutual  agreement  between  the  government  and  the 
debtor.  This  cancellation  is  treated  as  a  capital  transfer  from  the  government  to  the 
debtor  in the  capital  account,  with  a simultaneous  extinction  of  a claim  in  the  financial 
account. 

4.28. 

The  total  value  of  the  taxes  which  should  be  recorded  includes  any  interest  charged  on 
arrears  of  taxes  due  and  any  fines  imposed  by  taxation  authorities  if  it  is  impossible  to 
record  such  interest  and  fines  separately  from  taxes;  it  also  includes  any  charges  which 
may  be  imposed  in  connection  with  the  collection  or  recovery  of  taxes  outstanding. 
Correspondingly,  it  is  reduced  by  the  amount  of  any  tax  rebates  made  by  general 
government  as  a matter  of  economic  policy  and  any  tax  refunds  made  as  a result  of  over 
payments. 

4.29. 

In the system of accounts, taxes on production and imports (D2)  appear: 

-  among  uses in the generation of income account  of the total  economy 

-  among  resources  in the allocation of primary  income account  of the general  government 

sector  and in the external  account of primary  incomes and current  transfers. 

17-

Taxes  on  products  are recorded  as resources  in  the  goods  and  services  account  of  the  total 
economy.  This  enables  the  resources  of  goods  and  services  -  valued  exclusive  of  taxes  on 
products  - to be balanced  with the uses, which are valued  inclusive of these taxes. 

Other  taxes  on  production  (D29)  appear  among  uses  in the  generation  of  income  accounts 
of the  industries or sectors which pay them. 

SUBSIDIES  (D3) 

4.30. 

Definition:  Subsidies  (D3)  are  current  unrequited  payments  which  general  government  or 
the  Institutions  of the  European  Union  make  as a matter  of economic  or  social 
policy  to resident(l)  market  producers  and  to  other  resident  producers  for  their 
market  output, with the objective  of influencing  their  levels of production,  their 
prices  and/or  making  it  possible  for  factors  of  production  to  receive  an 
adequate  remuneration. 

4.31. 

Subsidies  granted  by  the  Institutions  of  the  European  Union  cover  only  current  transfers 
made directly  by them to resident producer units. 

4.32.  As the producer units classified  in the market branches may belong to different  institutional 
sectors,  subsidies  may  go to  any  sector,  provided  that  they  are  granted  in  respect  of  some 
productive activity  for the market. 

Subsidies are classified  into: 

-  subsidies on products (D31 ) 

* 

* 

import subsidies (D311) 

other subsidies on products (D319) 

-  other  subsidies on production  (D39). 

Subsidies  on products  (D31) 

4.33. 

Definition:  Subsidies on products (D 31) are subsidies payable per unit of a good or service 
produced  or imported. The subsidy may be a specific  amount of money per unit 
of  quantity  of  a  good  or  service,  or  it  may  be  calculated  ad  valorem  as  a 
specified  percentage  of the price per  unit.  A  subsidy  may  also  be  calculated  as 
the  difference  between  a  specified  target  price  and  the  market  price  actually 
paid  by  a  buyer.  A  subsidy  on  a  product  usually  becomes  payable  when  the 
good is produced, sold or  imported. 

Import  subsidies  (D311) 

4.34. 

Definition:  Import  subsidies  (D  311)  consist  of  subsidies  on  goods  and  services  that 
become  payable  when  the  goods  cross  the  frontier  for  use  in  the  economic 
territory  or  when  the  services  are  delivered  to  resident  institutional  units.  They 
may  include  losses  incurred  as  a  matter  of  deliberate  government  policy  by 
government  trading  organisations  whose  function  is to  purchase  products  from 
non-residents  and then sell them at lower prices to residents. 

(1) 

Subsidies are granted  by the Institutions of the European  Union to units resident anywhere in the Community. 

IX 

Other subsidies  on products  (D319) 

4.35. 

Other  subsidies on products (D 319) include: 

a)  subsidies  on  products  used  domestically:  these  consist  of  subsidies  payable  to  resident 
producers  in  respect  of  their  outputs  which  are  used  or  consumed  within  the  economic 
territory. 

b)  losses  of  government  trading  organisations  whose  function  is  to  buy  and  sell  the 
products  of  resident  producers,  when  they  are  incurred  as  a  matter  of  deliberate 
government  economic or social  policy. 

c)  subsidies  to  public  corporations  and  quasi-corporations  to  compensate  for  persistent 
losses  which  they  incur  on  their  productive  activities  as  a  result  of  charging  prices 
which  are  lower  than  their  average  costs  of  production  as  a  matter  of  deliberate 
government  economic  and social  policy. 

d)  direct  subsidies  on  exports  payable  directly  to  resident  producers  when  the  goods  leave 
the  economic  territory  or the services  are provided  to non-residents  - except  repayments 
at  the  customs  frontier  of  taxes  on  products  previously  paid  and  waivings  of  the  taxes 
that would be due if the goods were to be sold or used  inside the economic  territory. 

e)  losses  of  government  trading  organisations  whose  function  is  to  buy  the  products  of 

resident  enterprises  and then sell them at lower prices to non-residents. 

Other subsidies  on production  (D39) 

4.36. 

Definition:  Other subsidies on production  (D39) received  by resident producer units as a 

consequence  of engaging  in production  are subsidies  not linked to the  quantity 
or value of the goods and services produced  or  sold. 

4.37 

This heading  includes  in particular: 

a)  subsidies  on  payroll  or work  force:  these  consist  of  subsidies  payable  on  the  total  wage 
or  salary  bill,  or  total  work  force,  or  on  the  employment  of  particular  types  of  persons 
such as physically  handicapped  persons or persons  who  have  been  unemployed  for  long 
periods, or on the costs of training schemes organised  or  financed  by enterprises. 

b)  subsidies  to  reduce  pollution:  these  consist  of  current  subsidies  intended  to  cover  some 
or  all  of  the  costs  of  additional  processing  undertaken  to  reduce  or  eliminate  the 
discharge of pollutants  into the environment. 

c)  grants for  interest relief made to resident, producer units, even when they are intended  to 
encourage  capital  formation(l).  In effect,  these  are  current  transfers  designed  to  lighten 
producers' operating  costs. They  are treated  in the accounts as subsidies to the  producers 
benefiting  from  them,  even  when  the  difference  in  the  interest  is,  in  practice,  paid 
directly  by the government  to the credit  institution  making the loan. 

d)  over-compensation  of  VAT  resulting  from  the  flat  rate  system,  frequently  found  in 

agriculture. 

4.38. 

The  following  are not treated  as subsidies: 

(1) 

However,  when  a grant  serves  the dual  purpose of  financing  both  the  amortization  of the  debt  and  the  payment of  interest  on  it, and 
when it is not possible to apportion  it between the two elements, the whole of the grant is treated as an investment grant. 

- I I ' )-

a)  current  transfers  from  general  government  to households  in their  capacity  as  consumers. 

These are treated either as social benefits  or as miscellaneous  current  transfers. 

b)  current  transfers  between  different  parts  of  general  government  in  their  capacity  as 
producers  of non-market  goods and  services. These are shown  under the heading  current 
transfers  within  general  government  (D73). 

c)  current  transfers  to  non-profit  institutions  in  their  capacity  as  producers  of  non-market 
goods  and  services.  These  are  shown  under  the  heading  current  transfers  to  non-profit 
institutions  (D75) 

d)  investment  grants  (D92) 

e)  extraordinary  payments  into  social  insurance  funds,  in  so  far  as  these  payments  are 
designed  to  increase  the  actuarial  reserves  of  these  funds.  Such  payments  are  shown 
under the heading other capital transfers  (D99) 

f)  transfers  made  by  general  government  to  non-financial  corporations  and  quasi-
corporations  to  cover  losses  accumulated  over  several  financial  years,  or  exceptional 
losses  due  to  factors  outside  the  control  of  the  enterprise,  are  classified  under  the 
heading  other capital transfers  (D99) 

g)  the  cancellation  of  debts  which  producer  units  have  incurred  towards  the  government 
(resulting,  for  example,  from  loans advanced by  a government  agency  to a  non-financial 
enterprise  which  has  accumulated  trading  losses  over  several  financial  years).  These 
transactions are treated  in the accounts as other capital transfers  (D99) 

h)  payments  made  by  general  government  or  by  the  rest  of  the  world  for  damage  to,  or 
losses  of,  capital  goods  as  a  result  of  acts  of  war,  other  political  events  or  national 
disasters are shown under the heading other capital transfers  (D99) 

i)  shares  and  other  equities  in  corporate  enterprises  purchased  by  general  government, 

which  are shown under the heading shares and other  equities 

j)  payments  made  by  a general  government  agency  which  has  assumed  responsibility  for 
abnormal  pension  charges  affecting  a  public  enterprise.  These  payments  must  be 
recorded  under miscellaneous current transfers  (D75). 

4.39. 

Time  of  recording:  subsidies  are  recorded  when  the  transaction  or  the  event  (production, 
sale, import, etc .) which gives rise to the subsidy  occurs. 

Particular  cases: 

-  subsidies  which  take  the  form  of  the  difference  between 

the  purchase  price  and  the 
selling  price charged by a government trading  agency  are recorded  at the time the  goods 
are bought  by the agency, if the selling price is known at that  time 

-  subsidies  intended  to  cover  a  loss  incurred  by  a  producer  unit  in  a  market  branch  are 

recorded  at the time the general government  agency  decides  to cover the loss. 

120 

4.40. 

In the system  of accounts, subsidies  appear: 

-  among  negative  uses in the generation of income account of the total  economy 

-  among  negative  resources  in  the  allocation  of  primary  income  account  of  the  general 
government  sector and  in the external account of primary  incomes and current  transfers. 

Subsidies  on products  are recorded  as negative  resources  in the goods  and  services  account 
of the total  economy.  This enables the resources  of goods  and  services to  be  balanced  with 
the uses. 

Other  subsidies  on  production  (D39)  appear  among  negative  uses  in  the  generation  of 
income accounts of the industries or sectors which receive  them. 

Consequences of a system of multiple exchange rates on taxes on production  and imports and on subsidies: 
multiple exchange rates are not currently applicable among the Member States of the EU. In such a system: 

implicit taxes on imports are treated as taxes on imports, excluding VAT and duties (D2122) 

implicit taxes on exports are treated as taxes on products, except VAT and import taxes (D214) 

- 

- 

implicit subsidies on imports are treated as import subsidies (D311) 

implicit subsidies on exports are treated as other subsidies on products (D319). 

PROPERTY  INCOME  (D4) 

4.41. 

Definition:  Property  income (D4) is the income receivable by the owner of a financial  asset 
or a tangible non-produced  asset  in return  for  providing  funds  to, or putting  the 
tangible non-produced  asset at the disposal  of,  another institutional  unit. 

Property  incomes are classified  in the following  way  in the  System: 

- 

interest  (D41) 

-  distributed  income of corporations  (D42) 

-  dividends (D421) 

-  withdrawals  from  income of quasi-corporations  (D422) 

- 

reinvested  earnings on direct foreign  investment  (D43) 

-  property  income attributed to insurance policy holders  (D44) 

- 

rents on land and sub-soil assets' (D45). 

121  -

Interest  (D41) 

4.42. 

Definition:  Under the terms of the financial  instrument  agreed between them,  interest (D 
41) is the amount that the debtor becomes  liable to pay to the creditor over a 
given period of time without reducing the amount  of principal  outstanding. 

4.43. 

Creditors  lend  funds  to  debtors  that  lead  to  creation  of  one  or  other  of  the  financial 
instruments  listed  below. 

This  form  of  property  income  is  receivable  by  the  owners  of  certain  kinds  of  financial 
assets: 

Deposits  (AF2) 

Securities  other than shares  (AF3) 

Loans  (AF4) 

Other accounts receivable (AF7). 

1) 

4.44. 

Interest  on deposits, loans and accounts  receivable  and  payable: 

The interest receivable and payable on these financial  assets and  liabilities  is determined  by 
applying  the  relevant  rate  of  interest  to  the  principal  outstanding  at  each  point  of  time 
throughout the accounting  period. 

2) 

Interest on securities 

a) 

interest on bills and similar  short-term  instruments: 

4.45. 

The  difference  between  the  face  value  and  the  price  paid  at  the  time  of  issue  (i.e.  the 
discount)  measures the interest payable over the  life  of the bill. The increase  in the value of 
a bill due to the accumulation of accrued  interest does not constitute a holding  gain  because 
it  is  due  to  an  increase  in  the  principal  outstanding  and  not  a  change  in  the  price  of  the 
asset. Other changes in the value of the bill are treated  as holding  gains/losses. 

b) 

interest on bonds and  debentures 

4.46. 

Bond  and  debentures  are  long-term  securities  that  give  the  holder  the  unconditional  right 
to:  a  fixed  or  contractually  determined  variable  money  income  in  the  form  of  coupon 
payments,  or a stated fixed sum on a specified  date or dates when  the security  is  redeemed, 
or both these two terms. 

* 

zero-coupon bonds: 

There  are  no  coupon  payments.  The  interest  based  on  the  difference  between  the 
redemption  price and the  issue price has to be  distributed  over  the  years  to  the  maturity  of 
the  bond.  The  interest  accruing  each  year  is  reinvested  in  the  bond  by  its  holder,  thus 
counterpart  entries  equal  to  the  value  of  the  accrued  interest  must  be  recorded  in  the 
Financial  Account  as the  acquisition  of  more  bond  by  the  holder  and  as  a  further  issue  of 
more  bond  by the issuer or debtor (i.e. as a growth  in the  "volume" of the original  bond). 

* 

other bonds, including deep-discounted  bonds: 

3) 

4.47. 

4) 

4.48. 

The  interest  has two components: 

- 

- 

the amount of the money  income receivable  from  coupon payments each  period 

the amount  of interest accruing each period attributable to the difference  between  the 
redemption  price and the issue price, calculated  in the same way as for  zero-coupon 
bonds. 

* 

index-linked  securities: 

The  amounts of the coupon  payments  and/or the principal  outstanding  are linked  to a price 
index.  The  change  in the  value  of the  principal  outstanding  between  the  beginning  and  the 
end  of  a particular  accounting  period  due  to  the  movement  in the  relevant  index  is  treated 
as  interest  accruing  in  that  period,  in  addition  to  any  interest  due  for  payment  in  that 
period.  The  interest  accruing  as  a  result  of  the  indexation  is  effectively  reinvested  in  the 
security  and must be recorded  in the financial  accounts of the holder and  issuer. 

Interest  rate swaps and forward  rate agreements: 

Swaps  are contractual  arrangements  between two  institutional  units  who agree  to  exchange 
streams  of  payables  on  the  same  amount  of  indebtedness  over  time.  Common  varieties  of 
swaps are interest rate swaps and currency  swaps. 

The streams  of interest payments  resulting  from  swap  arrangements  should  be recorded  net 
of the  payments  between  the two  parties  to  the  swap  ; any  payments  to  third  parties,  such 
as specialised  brokers, for  arranging the swaps are recorded  as purchases of services. 

The same principle is applied to transactions under forward  rate agreements. 

Interest on financial  leases: 

A  financial  lease  is  an  alternative  to  lending  as  a  method  of  financing  the  purchase  of 
machinery  and  equipment.  It  is  a  contract  which  channels  funds  from  a  lender  to  a 
borrower:  the  lessor purchases  the equipment  and  the  lessee  contracts  to pay  rentals  which 
enable  the lessor, over the period  of the contract,  to recover  all, or virtually  all, of his  costs 
including  interest. 

The  lessor  is  treated  as  making  a  loan  to  the  lessee  equal  to  the  value  of  the  purchaser's 
price  paid  for  the  asset,  this  loan  being  gradually  paid  off  in  full  over  the  period  of  the 
lease.  The  rental  paid  each  period  by  the  lessee  is  therefore  treated  as  having  two 
components: a repayment  of principal  and a payment  of interest.  The rate of  interest  on  the 
imputed  loan is implicitly determined  by the total amount paid  in rentals over the life  of the 
lease  in  relationship  to  the  purchaser's  price  of  the  asset.  The  share  of  the  rental  that 
represents  interest  gradually  declines  over  the  life  of  the  lease  as  the  principal  is  repaid. 
The  initial  loan  by  the  lessee,  together  with  the  subsequent  repayments  of  principal,  are 
recorded  in  the  Financial  Accounts  of  the  lessor  and  lessee.  The  interest  payments  are 
recorded  under interest  in their respective Primary  Distribution  of Income  Accounts. 

4.49. 

5) 

The following  are also treated  as  interest: 

a)  interest  charged  on  bank  overdrafts,  extra  interest  paid  on  deposits  left  longer  than 
originally agreed, and payments to certain  bond  holders  which  are determined  by  lottery 

b)  interest  received  by  unit  trusts, net  of a part  of  management  costs,  from  the  investments 
they  have  made,  and  which  is  assigned  to  shareholders,  even  if  it  is  capitalized.  It 
excludes  holding gains or losses on  financial  instruments  belonging  to unit trusts,  which 
are not recorded  as property  income. The part of management  costs which  is deducted  is 
proportional  to the share of interest  in the total  interest  plus dividends. 

4.50. 

Time of recording: 

accrual  basis:  that  is,  interest  is  recorded  as  accruing 
Interest  is  recorded  on  an 
continuously  over  time to the creditor  on the  amount  of  principal  outstanding.  The  interest 
accruing  in  each  accounting  period  must  be  recorded  whether  or  not  it  is  actually  paid  or 
added  to  the  principal  outstanding.  When  it  is  not  actually  paid,  the  increase  in  the 
principal  must  also  be  recorded  in  the  Financial  Account  as  a  further  acquisition  of  that 
kind of financial  asset by the creditor and an equal  acquisition  of a liability  by the  debtor. 

4.51. 

Interest  is  to  be  recorded  before  the  deduction  of  any  taxes  levied  on  it.  Interest  received 
and  paid  is  always  recorded  inclusive  of  grants  for  interest  relief,  even  if  those  grants  are 
directly  paid to  financial  institutions and not to the beneficiaries  (see subsidies). 

The  value  of  the  services  provided  by  financial  intemediaries  not  being  allocated  among 
different  customers,  the  actual  payments  or  receipts  of  interest  to  or  from  financial 
intermediaries  are not  adjusted  to  eliminate  the  margins  that  represent  the  implicit  charges 
made  by  financial  intermediaries.  An  adjustment  item  is  needed  in  the  allocation  of 
primary  income  account  of financial  intermediaries  and  of a nominal  industry  to which, by 
convention,  the  whole  output  of  financial  intermediaries  is  allocated  as  intermediate 
consumption. 

4.52. 

In the system of accounts, interest is shown: 

-  among resources and among uses in the allocation  of primary  income account of the 

sectors(l) 

-  among resources and among uses in the external  account  of primary  incomes and 

current  transfers. 

(1) 

This  practice  differs  from  that  of  most  business  accounting,  where  interest  paid  is normally  shown  as a fixed  charge  similar  to other 
costs of production  in the operating account. 

Distributed  income  of corporations  (D42) 

Dividends  (D421) 

4.53. 

Definition:  Dividends  (D 421) are a form  of property  income  received  by owners  of  shares 
(AF5) to which they become entitled  as a result  of placing  funds  at the  disposal 
of  corporations.  Raising  equity  capital  through  the  issue  of  shares  is  an 
alternative  way  of  raising  funds  to  borrowing.  In  contrast  to  loan  capital, 
however, equity  capital does not give rise to a liability  that is  fixed  in  monetary 
terms and  it does not entitle  the  holders  of  shares of a corporation  to  a  fixed  or 
predetermined  income. 

4.54. 

This heading  also includes: 

a)  shares  issued  to  shareholders  in  payment  of  the  dividend  for  the  financial  year. 
However,  issues  of  bonus  shares  which  represent  the  capitalisation  of own  funds  in  the 
form  of reserves  and undistributed  profits  and  give  rise to new  shares to  shareholders  in 
proportion  for their holdings are not  included. 

b)  dividends  received  by  unit  trusts,  net  of  a  part  of  management  costs,  from  the 
investments  they  have  made,  and  which  are  assigned  to  shareholders,  even  if  they  are 
capitalized.  It  excludes  holding  gains  or  losses  on  financial  instruments  belonging  to 
unit  trusts,  which  are  not  recorded  as  property  income.  The  part  of  management  costs 
which  is  deducted  is  proportional  to  the  share  of  dividends  in  the  total  interest  plus 
dividends. 

c)  the  income  paid  to  general  government  by  public  enterprises  which  are  recognized  as 

independent  legal entities though not formally  constituted  as corporate  enterprises. 

4.55. 

Time  of  recording:  Dividends  are  recorded  at  the  time  they  are  due  to  be  paid  as 
determined  by the  corporation. 

In the system of accounts, dividends  appear: 

-  among uses in the allocation of primary  income account of the sectors in which the 

corporations  are  classified 

-  among  resources in the allocation of primary  income account of the sectors in which 

shareholders  are  classified 

-  among  uses and resources  in the external  account  of primary incomes and  current 

transfers. 

Withdrawals  from  the income of quasi-corporations  (D422) 

4.56. 

Definition:  Withdrawals  from  the  income  of  quasi-corporations  (D422)  consist  of  the 
amounts  which  entrepreneurs  actually  withdraw  for  their  own  use  from  the 
profits  earned by the quasi-corporations  which  belong to them. 

4.57. 

These  amounts  are  to  be  recorded  before  the  deduction  of  any  current  taxes  on  income, 
wealth, etc. which are deemed always to be paid  by the owners of the businesses. 

4.58.  When  a  quasi-corporation  makes  a  trading  profit,  the  unit  which  owns  it  may  choose  to 
leave  part  or  all  of  the  profit  in  the  business,  especially  for  investment  purposes.  This 
income  left  in the  business  appears  as saving  by the quasi-corporation,  and  only  the  profits 
actually  withdrawn  by  the  owner  units  are  recorded  in  the  accounts  under  the  heading 
withdrawals  from  the  income of  quasi-corporations. 

4.59.  When  profits  are  earned  in  the  rest  of  the  world  by  the  branch-offices,  agencies,  etc.  of 
resident  enterprises,  in  so  far  as  these  branch-offices  etc.  are  treated  as  non-resident  units, 
retained  earnings  appear  as  reinvested  earnings  on  direct  foreign  investment  (D43).  Only 
the  income  actually  transferred  to  the  parent  enterprise  is  treated  in  the  accounts  as 
withdrawals  from  the  income  of  quasi-corporations  received  from  the  rest  of  the  world. 
The same principles are applied to deal with the relations  between  branch-offices,  agencies, 
etc.  operating  on  the  economic  territory  and  the  non-resident  parent  enterprise  to  which 
they  belong. 

4.60. 

This heading  includes the net operating  surplus  received  by residents  as owners  of land and 
buildings  in the rest of the world,  or by non-residents  as owners of  land or buildings  on the 
economic  territory.  In effect,  in respect  of all transactions  in land  and  buildings  carried  out 
on  the  economic  territory  of  a  country  by  non-resident  units,  the  latter  are  considered,  in 
accordance  with the conventions  adopted  in the ESA, to be notional  resident  units  in  which 
the non-resident  owners own the equity. 
The  rental  value  of  owner-occupied  dwellings  abroad  is  registered  as  imports  of  services 
and  the  corresponding  net  operating  surplus  as  primary  income  received  from  the  rest  of 
the  world;  the  rental  value  of  owner-occupied  dwellings  belonging  to  non-residents  is 
registered  as  exports  of  services  and  the  corresponding  net  operating  surplus  as  primary 
income paid to the rest of the world. 

4.61. 

The  heading  withdrawals  from  the  income  of quasi-corporations  does  not  include  amounts 
which their owners receive: 
- 
- 
- 

from  the sale of existing fixed capital  goods 
from  the sale of land and intangible  assets 
from  withdrawals  of capital (e.g. the total or partial  liquidation of their equity  in the 
quasi-corporation). 

These  amounts  are treated  as withdrawals  from  equity  in the financial  account.  Conversely, 
any  funds  provided  by  the  owner(s)  of  a  quasi-corporation  for  the  purpose  of  acquiring 
assets  or  reducing  its  liabilities  is  treated  as  additions  to  its  equity.  However,  if  the  quasi-
corporation  is owned by government, and  if it runs a persistent  operating  deficit  as a matter 
of  deliberate  government  economic  and  social  policy,  any  regular  transfers  of  funds  into 
the enterprise  made by government  to cover its losses should be treated  as subsidies. 

4.62. 

Time  of  recording:  withdrawals  from  the  income  of  quasi-corporations  are  recorded  when 
they  are made by the owners. 

4.63. 

In the system of accounts, withdrawals  from  the income of quasi-corporations  appear: 

-  among  uses  in the allocation  of primary  income account  of the sectors  in which  the 

quasi-corporations  are  classified 

-  among  resources  in the allocation  of primary  income account  of the owner  sectors 

-  among  uses and  resources  in the external  account  of primary  incomes  and  current 

transfers. 

I2f. 

Reinvested  earnings  on direct  foreign  investment  (D43) 

4.64. 

Definition: 

Reinvested  earnings on direct  foreign  investment  (D43) are equal to: 

the operating  surplus  of the direct  foreign  investment  enterprise 

+  any property  incomes or current  transfers  receivable 

-  any property  incomes or current transfers  payable, including  actual remittances  to 

foreign  direct  investors and any current taxes payable on the income, wealth, etc., of the 
direct  foreign  investment  enterprise. 

4.65. 

A  direct  foreign  investment  enterprise  is  an  incorporated  or  unincorporated  enterprise  in 
which  an  investor  resident  in  another  economy  owns  10 per  cent  or  more  of  the  ordinary 
shares  or  voting  power  (for  an  incorporated  enterprise)  or  the  equivalent  (for  an 
unincorporated  enterprise).  Direct  foreign  investment  enterprises  comprise  those  entities 
that  are  identified  as  subsidiaries  (investor  owns  more  than  50  per  cent),  associates 
(investor  owns  50 per  cent  or  less)  and  branches  (wholly  or jointly  owned  unincorporated 
enterprises),  either  directly  or  indirectly  owned  by  the  investor.  Consequently,  "direct 
foreign  investment  enterprises"  is a broader concept than  "foreign  controlled  corporations". 

4.66.  Actual  distributions  may  be  made  out  of  the  entrepreneurial  income  of  direct  foreign 
investment  enterprises  in  the  form  of  dividends  or  withdrawals  of  income  from  quasi-
corporations. 

In  addition,  retained  earnings  are treated  as if they  were distributed  and remitted  to  foreign 
direct  investors  in  proportion  to  their  ownership  of  the  equity  of  the  enterprise  and  then 
reinvested  by them. 

Reinvested  earnings  on direct foreign  investment can be either positive or negative. 

4.67. 

Time  of  recording:  reinvested  earnings  on  direct  foreign  investment  are  recorded  when 
they are  earned. 

In the system  of accounts, reinvested  earnings on direct foreign  investment  appear: 

-  among  uses and resources  in the allocation  of primary  income account of the  sectors 

-  among uses and resources in the external account of primary  incomes and  current 

transfers. 

Property  income  attributed  to insurance  policy holders  (D44) 

4.68. 

technical  reserves  are 

Definition:  Property  income  attributed  to  insurance  policy  holders  corresponds  to  total 
primary  incomes  received  from  the  investment  of  insurance  technical  reserves. 
Insurance 
insurance  enterprises  and 
autonomous  pension  funds  in financial  assets or  land  (from  which  net  property 
income,  i.e.  after  deducting  any  interest  paid,  are  received)  or  in  buildings 
(which  generate  net  operating  surpluses).  Any  net  income  received  that  results 
from  the  investment  of  insurance  enterprises'  own  funds  is  to  be  excluded  in 
proportion  to  the  ratio  between  own  funds  and  a  sum  of  own  funds  and 
insurance technical  reserves. 

invested  by 

-  127  -

4.69. 

Since  technical  reserves  are  assets  of  insurance  policy  holders,  the  receipts  from  investing 
them  are  shown  in  the  accounts  as  being  paid  by  insurance  enterprises  and  autonomous 
pension  funds  to  the  policy  holders  in the  form  of  property  income  attributed  to  insurance 
policy  holders. 

As  this  income  is  retained  by  insurance  enterprises  and  autonomous  pension  funds  in 
practice,  it  is  therefore  treated  as  being  paid  back  to  the  insurance  enterprises  and 
autonomous  pension  funds  in  the  form  of  premium  and  contribution  supplements  that  are 
additional  to actual  premiums and contributions  payable. 

These  premium  and  contribution  supplements  on  non-life  insurance  policies  and  on  life 
insurance  policies  taken  out under  social  insurance  schemes  are  recorded  together  with  the 
actual  premiums  and  contributions  in the  secondary  distribution  of  income  accounts  of  the 
units  concerned. 

The premium  supplements on individual  life  insurance  not taken out under social  insurance 
schemes,  like  the  actual  premiums,  are  not current  transfers  and  are therefore  not  recorded 
in  the  secondary  distribution  of  income  accounts.  They  are  directly  included  as  one  of  the 
elements  contributing  to  the  change  in  the  "net  equity  of  households  on  life  insurance 
reserves  and  pension  funds  reserves"  recorded  in  the  financial  accounts  of  the  units 
concerned. 

4.70. 

4.71. 

Time of recording: property  income attributed  to insurance  policy  holders  is recorded  when 
it accrues. 

In  the  system  of  accounts,  the  property  income  attributed  to  insurance  policy  holders 
appears: 

-  among resources in the allocation of primary  income account of policy  holders 

-  among  uses in the allocation  of primary  income account of the  insurers 

-  among resources and among uses in the external  account  of primary  incomes  and 

current  transfers. 

Rents  (D45) 

1) 

Rents  on land: 

4.72. 

The rent received  by a landowner  from  a tenant constitutes a form  of property  income. 

This  heading  also  includes  the  rents  payable  to  the  owners  of  inland  waters  and  rivers  for 
the right to exploit  such waters for recreational  or other purposes, including  fishing. 

A  landowner  may  be  liable to pay  land  taxes  or  incur  certain  maintenance  expenses  solely 
as  a  consequence  of  owning  the  land.  By  convention,  such  taxes  and  expenses  are  treated 
as  payable  by  the  person  entitled  to  use  the  land,  who  is  deemed  to  deduct  them  from  the 
rent that he would otherwise be obliged to pay to the  landowner. 

4.73. 

Rents  on  land  do  not  include the rentals  of buildings  and  of dwellings  situated  on  it  ; those 
rentals  are  treated  as the payment  for  a market  service  provided  by  the owner  to  the  tenant 
of  the  building  or  dwelling,  and  are  shown  in  the  accounts  as  the  intermediate  or  final 
consumption  of the tenant  unit.  If there  is no objective  basis  on  which  to  split  the  payment 
between  rent on  land  and rental  on the buildings  situated  on  it, the whole  amount  is treated 
as  rent  when  the value of the land  is believed  to exceed  the value of the buildings  on  it and 
as rental  otherwise. 

2X 

2) 

4.74 

Rents on sub-soil  assets: 

This  heading  includes  the  royalties that  accrue  to  owners  of  deposits  of  minerals  or  fossil 
fuels  (coal, oil  or  natural  gas) who  grant  leases to  other  institutional  units  permitting  them 
to explore  or to extract such deposits over a specified  period of time. 

4.75. 

Time of recording of rents. 

Rents are recorded  in the period when payable. 

4.76. 

In the system of accounts, rents are  recorded: 

-  among resources and among uses in the allocation of primary  income account  of  sectors 

-  among resources and among uses in the external account of primary  incomes  and 

current  transfers. 

CURRENT TAXES  ON INCOME, WEALTH,  ETC. (D5) 

4.77. 

Définition:  current  taxes  on  income,  wealth,  etc  (D5)  cover  all  compulsory,  umequited 
payments, in cash or in kind, levied periodically  by  general  government  and  by 
the rest  of the world  on the  income  and  wealth  of  institutional  units,  and  some 
periodic taxes which are assessed neither on the income nor the  wealth 

Current taxes on income, wealth, etc. are divided  into: 

- 

taxes on income (D51 ) 

-  other current taxes (D59). 

Taxes on income  (D51) 

4.78. 

Definition:  taxes  on  income  (D51)  consist  of  taxes  on  incomes,  profits  and  capital  gains. 
individuals, 
They  are  assessed  on  the  actual  or  presumed 
households,  corporations  or NPIs.  They  include  taxes  assessed  on  holdings  of 
property,  land  or  real  estate  when  these  holdings  are  used  as  a  basis  for 
estimating the income of their owners. 

incomes  of 

Taxes on income  include: 

a)  taxes  on  individual  or  household 

income  (income  from  employment,  property, 
entrepreneurship,  pensions,  etc.),  including  taxes  deducted  by  employers  (pay-as-you-
earn  taxes).  Taxes  on  the  income  of  owners  of  unincorporated  enterprises  are  included 
here 

b)  taxes on the income or profits  of  corporations 

c)  taxes  on holding  gains 

d)  taxes  on  winnings  from  lottery  or  gambling,  payable  on  the  amounts  received  by 
winners  as  distinct  from  taxes  on  the  turnover  of  producers  that  organize  gambling  or 
lotteries which are treated as taxes on products. 

129 

(9) 

Other current  taxes  (D59) 

4.79. 

Other  current taxes (D59) include: 

a)  current  taxes  on  capital  which  consist  of  taxes  that  are  payable  periodically  on  the 
ownership  or use of land or buildings by owners, and  current  taxes on net wealth  and  on 
other  assets  (jewellery,  other  external  signs  of  wealth)  -except  taxes  mentioned  in  D29 
(which  are  paid  by  enterprises  as  a  result  of  engaging  in  production)  and  those 
mentioned  in D51 (taxes on  income) 

b)  poll  taxes, levied per adult or per household,  independently  of income or  wealth 

c)  expenditure taxes, payable on the total expenditures  of persons  or  households 

d)  payments  by households  for  licences to own or use vehicles, boats or aircraft  (which  are 

not used for business purposes), or for  licences to hunt, shoot or  fish,  etc(l) 

e)  taxes  on 

international 

foreign 
investments,  etc.),  except  those  payable  by  producers  and  import  duties  paid  by 
households. 

(travel  abroad, 

remittances, 

transactions 

foreign 

4.80. 

Current taxes on income, wealth, etc do not include: 

a)  inheritance  taxes,  death  duties  or  taxes  on  gifts  inter-vivos,  which  are  deemed  to  be 
levied  on  the  capital  of  the  beneficiaries  and  are  shown  under  the  heading  capital  taxes 
(D91) 

b)  occasional  or  exceptional  levies  on  capital  or  wealth,  which  are  shown  under  the 

heading  capital taxes (D91) 

c)  taxes on land, buildings or other assets owned  or rented  by enterprises  and  used  by them 

for  production,  such taxes being treated as other taxes on production  (D29) 

d)  payments  by households  for  licences  other  than  licences  on the  use of vehicles, boats or 
aircraft,  or licences  to  hunt,  shoot  or  fish:  driving  or  pilot's  licences,  television  or  radio 
licences,  firearm  licences,  museum  or  library  admissions,  garbage  disposal  fees,  etc. 
which are treated in most cases as purchases of services rendered by government  (1). 

4.81. 

The  total  value  of  the  taxes  which  should  be  recorded  includes  any  interest  charged  on 
arrears  of  taxes  due  and  any  fines  imposed  by  taxation  authorities  if  it  is  impossible  to 
record  such  interest  and  fines  separately;  it  also  includes  any  charges  which  may  be 
imposed 
taxes  outstanding. 
Correspondingly,  it  is reduced  by  the  amount  of  any  rebates  made  by  general  government 
as a matter of economic policy and any refunds  made as a result of over-payments. 

the  recovery  and  assessment  of 

in  connection  with 

(1) 

The borderline  between  taxes and purchases of services  from  goverment  is defined  according to the same criteria as those  used  in the 
case of payments made by enterprises  : if the licences  are being granted  automatically  on payment  of the amounts  due, their  payment 
is treated  as taxes.  But  if the goverment  uses the  issue of licences to organize  some  proper  regulatory  function  (such  as checking the 
competence, or qualifications,  of the person concerned), the payments made should be treated  as purchases of services from  goverment 
rather than payments of taxes, unless the payments are clearly out of all proportion  to the cost of providing the services. 

-  130 

4.82. 

Recording  of current  taxes on income, wealth, etc.: 

current  taxes  on  income,  wealth,  etc. are  recorded  at  the  time  when  activities,  transactions 
or other events occur which create the liabilities to pay. 

However,  some  economic  activities,  transactions  or  events,  which  under  tax  legislation 
ought to impose  on the units concerned  the obligation  to pay  taxes, permanently  escape  the 
attention  of  the  tax  authorities.  It  would  be  unrealistic  to  assume  that  such  activities, 
transactions  or  events  give  rise  to  financial  assets  or  liabilities  in  the  form  of  payables  or 
receivables.  For  this  reason,  the  amounts  to  be  recorded  in  the  System  are  determined  by 
the  amounts  due  for  payment  only  when  evidenced  by  tax  assessments,  declarations  or 
other  instruments  which  create  liabilities  in the  form  of clear  obligations  to pay  on the  part 
of taxpayers. The system does not-impute missing taxes not evidenced  by tax  assessments. 

Taxes  evidenced  by  tax  assessments  but  which  are  never  paid  (for  instance,  because  of 
bankruptcy)  are treated as if they had been paid  ; there are two  eventualities: 

- 

- 

the  writing-off  of  bad  debt  by  the  government,  which  recognizes  that  its  claim  can  no 
longer  be  collected  ; this  writing-off  is  recorded  in  the  other  changes  in  the  volume  of 
assets accounts of the government  and the defaulting  debtor 

the  cancellation  of  the  debt  by  mutual  agreement  between  the  government  and  the 
debtor.  This  cancellation  is  treated  as  a  capital  transfer  from  the  government  to  the 
debtor  in the  capital  account,  with  a simultaneous  extinction  of  a claim  in  the  financial 
account. 

In  some  cases,  the  liability  to  pay  income  taxes  can  only  be  determined  in  a  later 
accounting  period  than  that  in  which  the  income  accrues.  Some  flexibility  is  therefore 
needed  in the time at which such taxes are recorded.  Income taxes deducted  at source,  such 
as PAYE taxes and regular prepayments of income taxes, may  be recorded  in the periods in 
which  they  are  paid  and  any  final  tax  liability  on  income  can  be  recorded  in  the  period  in 
which the liability  is determined. 

In the system  of accounts, current taxes on income, wealth, etc. are  recorded: 

-  among  uses in the secondary  distribution  of income account  of the sectors in which the 

taxpayers  are  classified 

-  among  resources in the secondary  distribution  of income account of general  government 

-  among uses and resources in the external account of primary  incomes and  current 

transfers. 

SOCIAL  CONTRIBUTIONS  AND BENEFITS  (D6) 

Definitions: 

4.83. 

Social  benefits  are  transfers  to  households,  in  cash  or  in  kind,  intended  to  relieve  them 
from  the  financial  burden  of  a  number  of  risks  or  needs,  made  through  collectively 
organized  schemes, or outside such schemes by government  units and NPIs. 

4.84. 

The  list  of risks  or needs  which  may  give  rise to  social  benefits  is, by  convention,  fixed  as 
follows: 

a)  sickness 

b)  invalidity,  disability 

c)  occupational  accident  or disease 

d)  old  age 

e)  survivors 

f)  maternity 

g)  family 

h)  promotion  of  employment 

i)  unemployment 

j)  housing(l) 

k)  education 

1)  general  neediness. 

4.85. 

Social benefits  include: 

a)  current  and  lump-sum  transfers  from  schemes  which  receive  contributions,  cover  the 
entire community  or large sections of the community  and are imposed  and controlled  by 
government  units (social security  schemes) 

b)  current and lump sum transfers  from  schemes organized by enterprises on behalf of their 
employees,  ex-employees  or  dependants  (private  funded  and  unfunded  enterprises' 
schemes).  Contributions  may  be  made  by  employees  or  employers  ; they  may  also  be 
made by self-employed  persons 

c)  current  transfers  from  government  units  and  NPISHs  which  are  not  conditional  on 

previous payment of contributions  (assistance) 

(1) 

In  the  case  of  housing,  payments  made  by  public  authorities  to  tenants  in  order  to  reduce  their  rents  are  social  benefits,  with  the 
exception of special  benefits  paid by public authorities  in their capacity as employers. 

132 

4.86. 

Social  benefits  exclude: 

a)  insurance  claims  based  on policies  taken  out  solely  on  the  own  initiative  of the  insured, 

independently  of his employer  or  government 

b)  insurance  claims  on  policies  taken  out  with  the  sole  purpose  of  obtaining  a  discount, 

even  if those policies  follow  from  a collective  agreement. 

4.87. 

In  order  for  an  individual  policy  to  be  treated  as  part  of  a  social  insurance  scheme,  the 
eventualities  or  circumstances  against  which  the  participants  are  insured  must  correspond 
to  the  risks  or  needs  listed  in  4.84  above,  and  in  addition,  one  or  more  of  the  following 
conditions must be  satisfied: 

a)  participation  in  the  scheme  is  obligatory  either  by  law  for  a  specified  category  of 
worker,  whether  employees,  self or non-employed,  or  under  the terms and  conditions  of 
employment  of an employee, or group of employees, 

b)  the  scheme  is a collective  one operated  for  the benefit  of a designated  group of workers, 
whether  employees,  self  or  non-employed,  participation  being  restricted  to  members  of 
that group, 

c)  an  employer  makes  a  contribution  (actual  or  imputed)  to  the  scheme  on  behalf  of  an 

employee, whether or not the employee  also makes a  contribution. 

4.88. 

Social  insurance  schemes  are  schemes  in  which  workers  are  obliged,  or  encouraged,  by 
their  employers  or  by  general  government 
insurance  against  certain 
eventualities  or  circumstances  that  may  adversely  affect  their  welfare  or  that  of  their 
dependants. 

to  take  out 

Social  insurance schemes may be classified  according to the following  types: 

a)  social  security  schemes,  covering  the  entire  community,  or  large  sections  of  the 

community,  that are imposed, controlled  and  financed  by government  units 

b)  private  funded  schemes, which consist  of: 

schemes  in  which  the  social  contributions  are  paid  to  third  parties  (insurance 
enterprises, autonomous pension  funds) 

schemes  in which  employers  maintain  special  reserves  which  are segregated  from 
their  other  reserves,  even  though  such  schemes  do  not  constitute  separate 
institutional  units  from  the  employers.  These  are  referred  to  as  non-autonomous 
pension  funds.  The  reserves  are  treated  as  assets  that  belong  to  the  beneficiaries 
and not the employers. 

c)  unfunded  schemes  in  which  employers  pay  social  benefits  to  their  employees,  ex-
employees  or  their  dependants  out  of  their  own  resources  without  creating  special 
reserves  for the purpose. 

4.89. 

4.90. 

Social  insurance  schemes  organised  by  government  units  for  their  own  employees,  as 
opposed  to  the  working  population  at  large,  are  classified  as  private  funded  schemes  or 
unfunded  schemes as appropriate and are not classified  as social  security  schemes. 

Social  contributions  may  be  divided  into  actual  contributions  payable  under  the  first  two 
categories  of  schemes  mentioned  in  4.88  above  and  imputed  contributions  payable  under 
unfunded  schemes. 

4.91. 

Social  contributions  may  be  divided  into  those  that  are  compulsory  by  law  and  those  that 
are  not. 

Social contributions  (D61) 

Actual  social contributions  (D 611) 

4.92.  Actual  social contributions  include: 

a)  employers' actual  social  contributions  (D6111). These correspond  to flow  D121. 

Employers'  actual  social  contributions  are  paid  by  employers  to  social  security  funds, 
insurance  enterprises  or  autonomous  as  well  as  non  autonomous  pension  funds 
administering  social  insurance schemes to secure social benefits  for their employees. 

As  employers'  actual  social  contributions  are  made  for  the  benefit  of  their  employees, 
their value  is recorded  as one of the components  of compensation  of employees  together 
with  wages  and  salaries  in  cash  and  in  kind.  The  social  contributions  are then  recorded 
as  being  paid  by  the  employees  as  current  transfers  to  the  social  security  funds, 
insurance enterprises  or autonomous as well as non autonomous  pension  funds. 

b)  employees' social contributions  (D 6112): 

schemes.  Employees'  social  contributions  consist  of 

These  are  social  contributions  payable  by  employees  to  social  security,  private  funded 
and  unfunded 
the  actual 
contributions  payable  plus,  in  the  case  of  private  funded  schemes,  the  contribution 
supplements  payable  out  of  the  property  income  attributed  to  insurance  policy  holders 
received  by  employees  participating  in the  schemes,  minus  the  service  charges.  All  the 
service  charges  are  treated  as  charges  against  the  employees'  contributions  and  not  the 
employers'. 

c)  social  contributions  by self-employed  and non-employed  persons  (D6113): 

These  are  social  contributions  payable  for  their  own  benefit  by  persons  who  are  not 
employees  -  namely,  self-employed  persons  (employers  or  own-account  workers),  or 
non-employed  persons.  They  also  include  the  value  of  the  contribution  supplements 
payable  out  of  the  property  income  attributed  to  insurance  policy  holders  received  by 
participating  individuals  that  they  are  recorded  as  paying  back  to  the  insurance 
enterprises  in addition to their other  contributions. 

134  -

4.93. 

Payments  of  actual  social  contributions  may  be  compulsory  by  virtue  of  a  statute  or 
regulation,  or they  may  be  paid  as a result of collective  agreements  in a particular  industry 
or  agreements  between  employer  and employees  in a particular  enterprise, or  because  they 
are  written  into  the  contract  of  employment  itself.  In  certain  cases,  the  contributions  may 
be voluntary. 

The voluntary  contributions  referred  to here cover: 

a)  social  contributions  which  persons who are not, or who are no  longer,  legally  obliged  to 

contribute pay or continue to pay to a social  security  fund 

b)  social  contributions  paid  to  insurance  enterprises  (or  friendly  societies  and  pension 
funds  classified 
in  the  same  sector)  as  part  of  supplementary  insurance  schemes 
organised  by  enterprises  for  the  benefit  ot  their  employees  and  which  the  latter  join 
voluntarily 

c)  contributions  to friendly  societies with membership open to employees  or  self-employed 

workers. 

4.94. 

To  distinguish  between  social  contributions  that  are  compulsory  and  those  that  are  not,  a 
supplementary  level is introduced  in the  classification: 

-  compulsory  employers' actual social contributions (D61 111) 

-  voluntary  employers' actual  social contributions (D61112) 

-  compulsory  employees' social contributions  (D61121) 

-  voluntary  employees' social contributions  (D61122) 

-  compulsory  social contributions by self and non-employed  persons  (D61131) 

-  voluntary  social contributions by self and non-employed  persons  (D61132). 

4.95. 

Actual  social  contributions  to  social  security  funds  or  other  government  agencies  are 
recorded  gross as distributive  transactions. 

On  the  other  hand,  social  contributions  paid  under  private  funded  schemes  to  insurance 
enterprises,  and  to  friendly  societies  and  autonomous  pension  funds  included  in  the  same 
sector,  are  recorded  net,  i.e.  after  deducting  that  part  of  the  contribution  which  represents 
the  value  of  the  insurance  service  provided  to  (resident  and  non-resident)  households. 
Under  the  conventions  adopted,  this  part  of  the  contribution  represents,  in  effect,  the 
payment  for  a market  service  which  forms  part of the  final  consumption  of households  or, 
in the case of contributions  paid by non-resident households, part of exports of services. 

In  the  case  of  non-autonomous  private  funded  social  insurance  schemes,  where  employers 
maintain  their  own  segregated  reserves,  no  service  charge  is  deducted  from  contributions 
paid  by  the employees.  As such  schemes  do not constitute  separate  institutional  units  from 
the  employers,  the  costs  of  managing  and  administering  the  funds  are  assimilated  with  the 
employers'  general  production  costs. 

-  135 

4.96. 

Time of  recording: 

Employers'  actual  social  contributions  (D6111)  and  employees'  social  contributions 
(D6112)  are  recorded  at  the  time  when  the  work  that  gives  rise  to  the  liability  to  pay  the 
contributions  is  carried  out.  Social  contributions  by  self-employed  and  non-employed 
persons (D6113) are recorded  when the liabilities to pay are  created. 

4.97. 

In the system  of accounts, actual  social contributions  are  recorded: 

-  among uses in the secondary  distribution  of income account of  households 

-  among  uses in the external account of primary  incomes and current transfers  (in the case 

of non-resident  households) 

-  among  resources  in the secondary  distribution  of income account of resident  insurers or 

employers 

-  among  resources in the external account  of primary  incomes and current transfers  (in the 

case of non-resident  insurers or employers). 

Imputed  social  contributions  (D612) 

4.98. 

4.99. 

Definition:  Imputed  social  contributions  (D612) represent  the counterpart  to social  benefits 
(less  eventual  employees'  social  contributions)  paid  directly  by  employers  (i.e. 
not  linked  to  employers'  actual  contributions)  to  their  employees  or  former 
employees and other eligible persons. They  correspond  to flow  D  122. 

It  is  necessary  to  introduce  imputed  social  contributions  if  the  social  benefits  distributed 
directly  by  employers  are to  be  included  in the  accounts  under  the  heading  social  benefits 
and  if  the  cost  of  these  benefits  (for  the  part  which  is  not  covered  by  employees'  actual 
contributions)  is to be included  in the compensation  of employees paid by the  employer. 

When  employers  provide  social  benefits  themselves  directly  to  their  employees,  ex-
employees  or  dependants  out  of  their  own  resources  without  involving  a  social  security 
fund,  an  insurance  enterprise  or  an  autonomous  pension  fund,  and  without  creating  a 
special  fund  or  segregate  reserve  for the purpose, beneficiaries  may  be considered  as  being 
protected  against  various  specific  needs,  or  circumstances,  even  though  no  payments  are 
being made to cover them. 

Remuneration  should  therefore  be  imputed  for  employees  equal  in  value  to  the  amount  of 
social  contributions  that  would  be needed  to  secure  the  de  facto  entitlements  to  the  social 
benefits  they  accumulate.  These  amounts  depend  not  only  on  the  levels  of  the  benefits 
currently  payable  but  also  on the  ways  in  which  employers'  liabilities  under  such  schemes 
are  likely  to  evolve  in  the  future  as  a  result  of  factors  such  as  expected  changes  in  the 
numbers,  age  distribution  and  life  expectancies  of  their  present  and  previous  employees. 
Thus, the values that should be imputed  for  the contribution  ought,  in principle, to be  based 
on the  same kind  of actuarial  considerations  that determine  the  levels of premiums  charged 
by  insurance  enterprises.  When  as  a  result  of  political  events  or  economic  changes,  the 
ratio  between  the  number  currently  employed  and  the  number  receiving  pensions  changes 
appreciably  and  becomes  abnormal,  the  value  of  the  imputed  contributions  for  current 
employees  should  be  estimated,  which  will  be  different  from  the  actual  value  of  the 
pensions  paid  out.  A  reasonable  percentage  of  wages  and  salaries  paid  to  current 
employees can be used  for this purpose. 

36 

In  practice,  however,  it  may  be  difficult  to  decide  how  large  such  imputed  contributions 
should  be.  The  enterprise  may  make  estimates  itself,  perhaps  on  the  basis  of  the 
contributions  paid  into  similar  funded  schemes,  in  order  to  calculate  its  likely  liabilities  in 
the  future.  Otherwise,  the  only  practical  alternative  may  be  to  use  the  unfunded  social 
benefits  payable  by  the  enterprise  during  the  same  accounting  period  (after  deducting 
actual  contributions  made  by  employees  themselves)  as  an  estimate  of  the  imputed 
remuneration  that  would  be  needed  to  cover  the  imputed  contributions.  While  there  are 
obviously  many  reasons  why  the  value  of  the  imputed  contributions  that  would  be  needed 
may  diverge  from  the unfunded  social  benefits  actually  paid  in the same period,  such as the 
changing  composition  and  age  structure  of  the  enterprise's  labour  force,  the  benefits 
actually  paid  in  the  current  period  may  nevertheless  provide  the  best  estimates  of  the 
contributions  and associated  imputed  remuneration. 

4.100.  Employers  are  recorded,  in  the  generation  of  income  account,  as  paying  to  their  existing 
employees  as  a  component  of  their  compensation  an  amount  described  as  imputed  social 
contributions  equal  in  value  to  the  estimated  social  contributions  that  would  be  needed  to 
provide  for  the  unfunded  social  benefits  to  which  they  become  entitled.  Employees  are 
recorded,  in  the  secondary  distribution  of  income  account,  as  paying  back  to  their 
employers  the  same  amount  of  imputed  social  contributions  (i.e.  current  transfers)  as  if 
they  were paying them  to a separate social  insurance  scheme. 

4.101.  Time of recording: 

Imputed  social  contributions  which  represent  the  counterpart  of  compulsory  direct  social 
benefits  are recorded  at the time the obligation  to pay the benefits  arises. 

Imputed  social  contributions  which  represent  the  counterpart  of  voluntary  direct  social 
benefits  are recorded at the time the benefits  are  provided. 

4.102. 

In the system of accounts, imputed  social contributions  are  recorded: 

-  among  uses  in  the  secondary  distribution  of  income  account  of  households  and  in  the 

external  account of primary  incomes and current  transfers 

-  among  resources  in the secondary  distribution  of income account  of the sectors to which 
the  employers  belong  and  in  the  external  account  of  primary  incomes  and  current 
transfers. 

Social  benefits  other than social transfers  in kind  (D62) 

4.103.  This heading  includes: 

Social  security  benefits  in cash  (D621) 

payable to households  by social  security  funds  (excluding  reimbursements,  see  D6311). 
Those  benefits  are provided  under social  security  schemes. 

I  >7 

Private  funded  social  benefits  (D622) 

(in cash or in kind), payable to households by insurance  enterprises  or other  institutional 
units administering  private funded  social insurance  schemes 

Unfunded  employee social  benefits  (D623) 

(in cash or  in kind), payable to their employees, their dependants or survivors by  employers 
administering  unfunded  social  insurance schemes. They  typically  include: 

a)  the  continued  payment  of  normal,  or  reduced,  wages  during  periods  of  absence  from 

work  as a result of ill health, accident, maternity, etc. 

b)  the payment of family,  education or other allowances  in respect of  dependants 

c)  the payment  of retirement or survivors' pensions  to ex-employees  or their survivors,  and 
the  payment  of  severance  allowances  to  workers  or  their  survivors  in  the  event  of 
redundancy,  incapacity, accidental death, etc. (if linked  to collective  agreements) 

d)  general  medical  services not related to the employer's  work 

e)  convalescent  and retirement homes. 

Unfunded  employee  social  benefits  payable  by  employers  to  their  former  employees  or 
other  eligible  persons  should  be  recorded 
including  employers'  actual  social 
contributions,  viz  payments  made  by  the  employers  for  the  benefit  of  the  persons 
concerned to insurers. 

Social  assistance  benefits  in cash  (D624) 

payable  to  households  by  government  units  or  NPISHs  to  meet  the  same  needs  as  social 
insurance  benefits  but  which  are  not  made  under  a  social  insurance  scheme  incorporating 
social  contributions  and  social  insurance  benefits.  Such  benefits  do  not  include  current 
transfers  paid  in  response  to  events  or  circumstances  that  are  not  normally  covered  by 
social  insurance  schemes  (i.e.  transfers  made  in  response  to  natural  disasters,  recorded 
under other current transfers  ). 

Social transfers  in kind  (D63) 

4.104.  Definition:  social transfers  in kind (D63) consist of  individual  goods  and services  provided 
as transfers  in kind to individual  households  by  government  units and NPISHs, 
whether  purchased  on  the  market  or  produced  as  non-market  output  by 
government  units  or  NPISHs.  They  may  be  financed  out  of  taxation,  other 
government  income  or  social  security  contributions,  or  out  of  donations  and 
property  income in the case of NPISHs. 

Although  some  of  the  non-market  services  produced  by  NPISHs  have  some  of  the 
characteristics  of collective  services, all the  non-market  services  produced  by  NPISHs  are, 
for simplicity  and  by convention,  treated as individual  in nature.  Services  provided  free,  or 
at  prices  that  are  not  economically  significant,  to  households  are  described  as  individual 
services  to  distinguish  them  from  collective  services  provided  to  the  community  as  a 
whole, or  large  sections  of the community.  Individual  services  consist  mainly  of  education 
and  health  services, although  other  kinds of services  such  as  housing  services, cultural  and 
recreational  services are also frequently  provided. 

The  heading  social  transfers  in kind  (D63)  includes  social  benefits  in  kind  and  transfers  of 
individual  non-market  goods or services: 

Social  benefits  in kind  (D631) 

4.105.  Social  benefits  in  kind  are  social  transfers  in kind  which  answer  to  the  definition  of  social 
benefits  (see  4.83.).  They  can  be  subdivided  into  those  where  beneficiary  households 
actually  purchase  the  goods  and  services  themselves  and  are  then  reimbursed,  and  those 
where the relevant  services are provided  directly to the  beneficiaries. 

a) 

social  security benefits, reimbursements  (D6311): 

These  benefits  consist  of  reimbursement  by  social  security  funds  of  approved 
. expenditures  made by households on specified  goods or  services 

When  a  household  purchases  a  good  or  service  for  which  it  is  subsequently 
reimbursed,  in  part  or  in  whole,  by  a  social  security  fund,  the  household  can  be 
regarded  as  if  it  were  acting  on  behalf  of  the  social  security  fund.  In  effect,  the 
household  provides a short-term  credit to the social  security  fund  that  is liquidated  as 
soon as the household  is reimbursed. 

The  amount  of  the  expenditure  reimbursed  is  recorded  as  being  incurred  directly  by 
the  social  security  fund  at the time the household  makes  the purchase, while  the  only 
expenditure  recorded  for  the  household  is  the  difference,  if  any,  between  the 
purchaser's  price  paid  and  the  amount  reimbursed.  Thus,  the  amount  of  the 
expenditure  reimbursed  is  not  treated  as  a  current  transfer  in  cash  from  the  social 
security  funds  to households. 

b) 

other  social security benefits  in kind (D6312): 

These  consist  of  social  transfers  in  kind,  except  reimbursements,  made  by  social 
security  funds  to households. Most of other  social  security  benefits  in kind  are  likely 
to  consist  of  medical  or  dental  treatments,  surgery,  hospital  accommodation, 
spectacles  or  contact  lenses,  medical  appliances  or  equipment,  and  similar  goods  or 
services associated  with the provision  of health  care. The  service  is provided  directly 
to  the  beneficiaries,  without  reimbursement,  by  market  or  non-market  producers  and 
should  be  valued  accordingly.  Any  nominal  payments  made  by  the  householders 
themselves  should be  deducted. 

c) 

social  assistance benefits  in kind  (D6313): 

these  consist  of  transfers  in  kind  provided  to  households  by  government  units  or 
NPISHs  that  are  similar  in  nature  to  social  security  benefits  in  kind  but  are  not 
provided  in the context  of a social  insurance  scheme. 

Transfers  of individual  non-market  goods or  services  (D632) 

4.106.  Definition:  transfers  of individual  non-market  goods or services  (D632)  consist  of goods or 
services  provided  to  individual  households  free  or  at  prices  which  are  not 
economically  significant,  by  non-market  producers  of  government  units  or 
NPISHs.  They  correspond  to  individual  consumption  expenditure  of  NPISHs 
and  government  (see  3.75.),  less  social  benefits  in  kind  (D631)  granted  to 
households  under social security or social  assistance  arrangements. 

13() 

4.107.  Time of recording of social  benefits: 

- 

- 

in cash, they are recorded  when the claims on the benefits  are  established 

in  kind,  they  are  recorded  at  the  time  the  services  are  provided,  or  at  the  time  the 
changes  of  ownership  of  goods  provided  directly  to  households  by  non-market 
producers take place. 

4.108. 

In  the  system  of  accounts,  social  benefits  other  than  social  transfers  in  kind  (D62)  are 
recorded: 

-  among  uses  in  the  secondary  distribution  of  income  account  of  the  sectors  granting  the 

benefits 

-  among uses in the external  account of primary  incomes and current transfers  (in the case 

of benefits  granted  by the rest of the world) 

-  among resources in the secondary  distribution of income account  of households 

-  among resources in the external account of primary  incomes and current transfers  (in the 

case of benefits  granted to non-resident  households). 

Social transfers  in kind (D63) are  recorded: 

-  among  uses  in  the  redistribution  of  income  in  kind  account  of  the  sectors  granting  the 

benefits 

-  among resources in the redistribution  of income in kind account of households. 

The consumption of the goods and services transferred  is recorded  in the use of  adjusted 
disposable income  account. 

By  convention  there  are  no  social  transfers  in  kind  with  the  rest  of  the  world  (they  are 
registered  in D62 social benefits  other than social transfers  in kind). 

OTHER  CURRENT  TRANSFERS  (D7) 

Net non-life  insurance  premiums  (D71) 

4.109.  Definition:  net  non-life  insurance  premiums  (D71)  are  premiums  payable  under  policies 
taken out by institutional  units. The policies  taken  out by individual  households 
are  those  taken  out  on  their  own  initiative  and  for  their  own  benefit, 
independently  of  their  employers  or  government  and  outside  any  social 
insurance  scheme(l).  Net  non-life  insurance  premiums  comprise  both  the 
actual  premiums  payable by policy  holders to obtain  insurance  cover during  the 
accounting  period  (premiums  earned)  and  the  premium  supplements  payable 
out  of  the  property  income  attributed  to  insurance  policy  holders,  after 
deducting  the service charges of insurance enterprises arranging the  insurance. 

Net  non-life  insurance  premiums  are  the  amounts  available  to  provide  cover  against 
various  events or accidents  resulting  in damage to goods or property,  or harm to persons  as 
a  result  of  natural  or  human  causes  -  fires,  floods,  crashes,  collisions,  sinkings,  theft, 
violence,  accidents,  sickness,  etc.  or  against  financial  losses  resulting  frorn  events  such  as 
sickness, unemployment,  accidents, etc. 

4.110.  Time of recording: net non-life  insurance premiums are recorded  when they are  earned. 

The  insurance  premiums  from  which the service charges are deducted  are those parts of the 
total  premiums  paid  in the  current  period,  or previous  periods, that  cover  risks  outstanding 
in the current  period. 

Premiums  earned  in  the  current  period  must  be  distinguished  from  the  premiums  due  for 
payment  during the current  period,  which  are likely  to cover  risks  in future  periods  as well 
as the current  period. 

4.111. 

In the system  of accounts net non-life  insurance premiums  are  recorded: 

-  among uses in the secondary  distribution of income account of resident policy  holders 

-  among  uses  in the external  account  of primary  incomes and current transfers  (in the  case 

of non-resident  policy  holders) 

-  among  resources  in  the  secondary  distribution  of  income  account  of  resident  insurance 

enterprises 

-  among resources  in the external  account of primary  incomes  and  current transfers  (in the 

case of non-resident  insurance  enterprises). 

( I ) 

Life  insurance  premiums  do  not  appear  as  such  in  the  system  of  accounts.  They  are  divided  into: 

a) 
b) 

premiums  constituting  a  form  of  social  contribution  (they  are  paid  to  social  insurance  schemes) 
individual  life  insurance  premiums 

! he  former  are  included  under  the  heading  actual  social  contributions  and  the  latter  are  not  treated  as  distributive  transactions.  Both  categories  of 
hie  insurance  premiums  increase  the  insurance  technical  reserves  which  appear  in  the  financial  account  and  in  the  balance  sheet. 

Non-life  insurance  claims  (D72) 

4.112.  Definition:  Non-life  insurance  claims  (D72)  represent  the  claims  due  under  contracts  in 
respect  of 
insurance 
enterprises  are  obliged  to  pay  in  settlement  of  injuries  or  damage  suffered  by 
persons or goods (including fixed capital  goods). 

insurance(l);  that  is,  the  amounts  which 

non-life 

4.113.  Non-life  insurance claims do not include payments  which constitute  social  benefits. 

4.114.  As the  service  charges  on  non-life  insurance  are calculated  by  subtracting  claims  due  from 
the  combined  value  of  the  premiums  earned  and  premium  supplements,  it  follows  that  the 
total claims due must equal  the net non-life  premiums  receivable  by an insurance  enterprise 
during  the  same  accounting  period.  This  underlines  the  fact  that  the  essential  function  of 
non-life  insurance  is to redistribute  resources. 

The  settlement  of  a  non-life  insurance  claim  is  treated  as  a  transfer  to  the  claimant.  Such 
payments  are always treated  as current transfers,  even when  large sums may  be  involved  as 
a  result  of  the  accidental  destruction  of  a  fixed  asset  or  serious  personal  injury  to  an 
individual.  The amounts received by claimants are usually  not committed  for  any  particular 
purpose  and  goods  or  assets  which  have  been  damaged  or  destroyed  need  not  necessarily 
be repaired  or  replaced. 

Some  claims  arise  because  of  damage  or  injuries  that  the  policy  holders  cause  to  the 
property  or  persons  of  third  parties.  In  these  cases,  valid  claims  are  recorded  as  being 
payable  directly  by  the  insurance  enterprise  to  the  injured  parties  and  not  indirectly  via  the 
policy  holder. 

4.115.  Time  of recording:  Non-life  insurance claims  are recorded  at the time the accident  or  other 

event  insured  against occurs. 

4.116. 

In the system  of accounts, they are recorded: 

-  among  uses  in  the  secondary  distribution  of  income  account  of  resident  insurance 

enterprises 

-  among  uses  in the external  account  of primary  incomes and current transfers  (in the  case 

of non-resident  insurance  enterprises) 

-  among  resources  in  the  secondary  distribution  of  income  account  of  the  beneficiary 

sectors 

-  among resources  in the external account of primary  incomes  and current transfers  (in the 

case of non-resident  beneficiaries). 

(1 ) 

claims constituting a form of social  benefits 
individual  life  insurance claims. 

Life  insurance claims do not appear as such  in the system of accounts. They are divided  into: 
a) 
b) 
The former  are included  under the heading social  benefits  other than social transfers  in kind and the latter are not treated  as distributive-
transactions. 
Both  categories  of  life  insurance  claims  reduce  the  insurance  technical  reserves  which  appear  in  the  financial  account,  and  in (lie-
balance  sheet. 

I  -12 

Current  transfers  within  general  government  (D73) 

4.117.  Definition:  Current  transfers  within  general  government  (D73)  include  all 

transfers 
between  the  different  sub-sectors  of  general  government  (central  government, 
State,  local  government,  social  security  funds)  with  the  exception  of  subsidies, 
investment  grants and  other capital  transfers. 

4.118.  Current  transfers  within  general  government  do  not  include  transactions  on  behalf  of 
another  unit;  these  are  recorded  only  once  in  the  accounts,  in  the  resources  of  the 
beneficiary  unit  on  whose  behalf  the  transaction  is  made.  This  situation  arises  particularly 
when  a government  agency (e.g. a central government  department)  collects taxes  which  are 
automatically  transferred,  in  total  or  in  part,  to  another  government  agency  (e.g.  a  local 
authority).  In  this  case,  the  tax  receipts  destined  for  the  other  government  agency  are 
shown  as  if they  were  collected  directly  by that agency  and  not  as a current  transfer  within 
general  government.  This  solution  applies  a  fortiori  in  the  case  of  taxes  destined  for 
another  government  agency  which  take the  form  of additional  rates  superimposed  on  taxes 
levied  by  central  government.  Delays  in  remitting  the  taxes  from  the  first  to  the  second 
government  unit  give  rise  to  entries  under  "other  accounts  receivable/payable"  in  the 
Financial  Account. 

On the other hand, transfers  of tax receipts which  form  part  of a block  transfer  from  central 
government  to  another  government  agency  are  included  in current  transfers  within  general 
government.  These  transfers  do  not  correspond  to  any  specific  category  of  taxes  and  they 
are  not  made  automatically  but  mainly  through  certain  funds  (county  and  local  authority 
funds)  in accordance with scales of apportionment  laid  down by central  government. 

4.119.  Time  of recording: current transfers  within general  government  are recorded  at the time  the 

regulations  in force  stipulate they are to be made. 

4.120. 

In the  system  of accounts, current  transfers  within  general  government  are recorded  among 
uses  and  resources  in  the  secondary  distribution  of  income  account  of  the  sub-sectors  of 
general  government 1). 

Current  international co-operation  (D74) 

4.121.  Definition:  Current  international  co-operation  (D74)  includes  all  transfers  in  cash  or  in 
kind  between  general  government  and  governments  or 
international 
organisations(2)  in  the  rest  of  the  world,  except  investment  grants  and  other 
capital  transfers. 

(1) 

(2) 

Current  transfers  within  general  government  are  flows  internal  to the general  government  sector,  and do  not appear  in  a consolidated 
account  for the sector as a whole. 
Internationa!  organisations,  in the  sense  used  in  the  system,  derive  their  authority  either  directly  from  the  national  States  which  are 
their  members or indirectly  from  them through other international  organisations whose members are national States. 

4.122.  Heading  D74 covers: 

a)  the  non-tax  contributions  of  the  government  to  the  Institutions  of  the  European  Union, 

except the "GNP based  fourth  own resource  (1) 

b)  the  contributions  of  the  government  to  international  organisations  (excluding  taxes 

payable  by member governments  to supra-national  organisations) 

c)  any  current  transfers  which  general  government  may  receive  from  the  institutions  or 

organisations  referred  to under a) and  b)(2) 

d)  current  transfers  between  governments, either in cash (e.g. payments  intended to  finance 
the  budget  deficits  of  foreign  countries  or  overseas  territories)  or  in  kind  (e.g. 
counterpart  of gifts  of food,  military  equipment,  emergency  aid  after  natural  disasters  in 
the form  of food,  clothing, medicines, etc). 

e)  Wages  and  salaries  paid  by  a  government,  an  Institution  of  the  European  Union  or  an 
international  organisation,  to  advisers  or  technical  assistance  experts  made  available  to 
developing  countries. 

Current  international  cooperation  includes  transfers  between  general  government  and  international 
organisations  located  in  the  country,  as  international  organisations  are  not  treated  as  resident 
institutional  units of the countries in which they are  located. 

4.123.  Time  of  recording:  the  time  the  regulations  in  force  stipulate  the  transfers  are  to  be  made 

(obligatory  transfers),  or the time the transfers  are made (voluntary  transfers). 

4.124. 

In the system of accounts, current international  co-operation  is recorded: 

-  among uses and resources in the secondary  distribution  of income account  of the  general 

government  sector 

-  among  uses  and  resources  in  the  external  account  of  primary  incomes  and  current 

transfers. 

Miscellaneous  current transfers  (D75) 

1) 

Current  transfers  to NPISHs 

4.125.  Current  transfers  to  NPISHs  include  all  voluntary  contributions  (other  than  legacies), 
membership  subscriptions  and  financial  assistance  which NPISHs  receive  from  households 
(including  non-resident households) and, to a lesser extent,  from  other units. 

4.126.  The following  are  included: 

a)  regular  subscriptions  paid by households to trade unions  and  political, sporting,  cultural, 

religious and  similar organisations classified  in the sector  NPISHs 

(1) 

(2) 

The  levies  paid  by  resident  producer  units  to  the  Institutions  of  the  European  Union  are  recorded  in  the  accounts  as  taxes  on 
production  paid  to  the  rest of  the  world  ; GNP based  fourth  own  resource  created  by  the  Council  Decision  of  24  June  1988 on  the 
system of the Communities' own resources is classified  in D75 Miscellaneous current  transfers. 

The  current  transfers  which  the  Institutions  of  the  European  Union  make  directly  to  resident  market  producer  units  are  shown  as 
subsidies paid by the rest of the world 

144  -

b)  voluntary  contributions  (other than  legacies)  from  households,  corporate  enterprises  and 
the  rest  of the  world  to NPISHs, including  transfers  in kind  in the  form  of gifts  of  food, 
clothing, blankets, medicines, etc; to charities  for  distribution  to resident  or non  resident 
households 

c)  assistance  and  grants  from  general  government,  other  than  transfers  made  for  the 
specific  purpose  of  financing  capital  expenditure,  which  are  shown  under  investment 
grants. 

Excluded  are payments  of membership dues or subscriptions  to market NPIs  serving  businesses, 
such as chambers  of commerce or trade associations, which are treated  as payments  for  services 
rendered. 

4.127.  Time of recording: current transfers  to NPISHs are recorded  at the time they are made. 

4.128. 

In the system of accounts, current transfers  to NPISHs  are  recorded: 

-  among uses in the secondary  distribution of income account of the contributing  sectors 

-  among uses in the external account of primary  incomes and current  transfers 

-  among resources  in the secondary distribution of income account of the NPISHs  sector. 

2) 

Current transfers  between  households 

4.129.  Definition:  Current  transfer  between  households  consist  of  all  current  transfers  in  cash  or 
in kind  made, or received, by resident  households  to, or  from,  other  resident  or 
non-resident  households. In particular, these comprise  remittances by  emigrants 
or  workers  permanently  settled  abroad  (or  working  abroad  for  a  period  of  a 
year  or  longer)  to members  of their  family  living  in  their  country  of  origin,  or 
by parents to children in another  location. 

4.130.  Time of recording: the time the transfers  occur. 

4.131. 

In the system  of accounts, current transfers  between households  are  recorded: 

-  among  uses  and  resources  in  the  secondary  distribution  of  income  account  of 

households 

-  among  uses  and  resources  in  the  external  account  of  primary  incomes  and  current 

transfers. 

3) 

Fines  and  penalties 

4.132.  Definition:  Fines  and  penalties  imposed  on  institutional  units  by  courts  of  law  or  quasi-
judicial  bodies are treated as compulsory  current  transfers. 

4.133.  Not  included  under this heading are: 

a)  fines  and  penalties  imposed  by tax  authorities  for  the  evasion  or  late  payment  of  taxes, 

which  cannot usually  be distinguished  from  the taxes  themselves 

b)  payments  of  fees  to  obtain  licences,  such  payments  being  either  taxes  or  payments  for 

services rendered  by government  units (see D29, D59). 

145 

(10) 

4.134.  Time of recording: fines and penalties are recorded at the time the liabilities arise. 

4) 

Lotteries and gambling 

4.135.  The  amounts  paid  for  lottery  tickets  or  placed  in  bets  consist  of  three  elements:  the 
payment  of  a  service  charge  to  the  unit  organising  the  lottery  or  gambling  ;  a  current 
transfer  between  households  (from  the  losers  to  the  winners)  ; and  a  current  transfer  to 
other  beneficiaries  designated  by  the  organizers  (e.g. charities).  The  current  transfers  are 
recorded at the time they are made. 

5) 

Payments of compensation 

4.136.  Definition:  Payments  of  compensation  consist  of  current  transfers  paid  by  institutional 
units  to  other  institutional  units  in  compensation  for  injury  to  persons  or 
damage  to  property  caused  by  the  former,  excluding  payments  of  non-life 
insurance  claims.  Payments  of  compensation  could  be  either  compulsory 
payments awarded by a court of law, or ex gratia payments agreed out of court. 
This heading covers ex gratia payments made by government units or NPISHs 
in compensation  for  injuries  or damage  caused by natural  disasters  other  than 
those classified  as capital transfers. 

4.137.  Time of recording: Payments of compensation are recorded when they are made (ex gratia 

payments) or when they are to be made (compulsory payments). 

6) 

GNP based fourth own resource 

4.138.  The "GNP based fourth own resource" created by the Council Decision of 24 June  1988 on 
the  system  of  Communities'  own  resources  is  a  current  transfer  paid  by  the  general 
government of each Member State to the Institutions of the European Union. 

It  is  a residual  contribution  to  the  budget  of  those  Institutions,  which  is  assessed  on  the 
levels of GNP of each of the countries. 

Time of recording: GNP based fourth own resource is recorded when it is to be paid. 

In the system of accounts, GNP based fourth own resource appears: 

-  among uses in the secondary distribution of income account of general government 

-  among resources in the external account of primary incomes and current transfers. 

7) 

Other 

4.139.  a)  Current transfers  from NPISHs to general government which are not taxes 

b) payments  by  general  government  to  public  enterprises  classified  in  the  sector  non-
financial corporate  and quasi-corporate  enterprises  intended  to cover  abnormal  pension 
charges 

c)  travelling fellowships and awards paid to resident or non-resident households by general 

government or NPISHs 

46 

d) bonus payments on savings granted at intervals by general government to households in 

order to reward them for their saving during the period 

e)  the  refunds  by  households  of  expenditure  incurred  on  their  behalf  by  social  welfare 

organisations 

f)  current transfers  from NPISHs to the rest of the world 

g)  sponsoring  by  corporations  if  those  payments  cannot  be  regarded  as  purchases  of 
advertising or other services (for instance, transfers  for a good cause, or scholarships). 

4.140.  Time of recording: These transfers  are recorded when they are made, except those from or 

to general government, which are recorded when they are to be made. 

In the system of accounts, miscellaneous current transfers appear: 

-  among resources and uses in the secondary distribution of income account of all sectors 

-  among  resources  and  uses  in  the  external  account  of  primary  incomes  and  current 

transfers. 

ADJUSTMENT FOR THE CHANGE IN THE NET EQUITY OF HOUSEHOLDS ON 
PENSION FUNDS (D8) 

4.141.  Definition:  The adjustment  for the change in the net equity of households on pension  funds 
(D8)  represents  the  adjustment  needed  to  make  appear  in  the  saving  of 
households  the  change  in  the  actuarial  reserves  on  which  households  have  a 
definite  claim (a claim which re-appears at the financial  level as an asset under 
heading F61) and which are fed by premiums and contributions recorded  in the 
secondary distribution of income account as social contributions. 

4.142.  Since households  are treated  in the financial accounts  and balance  sheets of the system  as 
owning the reserves of private funded  schemes, both autonomous and non-autonomous, an 
adjustment  item  is  necessary  to  ensure  that  any  excess  of  pension  contributions  over 
pension  receipts  (i.e.  of  "transfers"  payable  over  "transfers"  receivable)  does  not  affect 
household saving. 

In order to neutralize this effect,  an adjustment  equal to: 

the  total  value  of  the  actual  social  contributions  in  respect  of  pensions  payable  into 
private funded  pension schemes 

+  the  total  value  of  contribution  supplements  payable  out  of  the  property  income 

attributed to insurance policy holders 

the value of the associated service charges 

the  total  value  of  the  pensions  paid  out  as  social  insurance  benefits  by  private  funded 
pension schemes 

- 

- 

4 7 

is added to the disposable income, or adjusted  disposable income, of households in the use 
of income accounts before arriving at saving. 

In  this  way,  the  saving  of  households  is  the  same  as  what  it  would  be  if  pension 
contributions  and  pension  receipts  had  not  been  recorded  as  current  transfers  in  the 
secondary  distribution  of  income  account.  This  adjustment  item  is  necessary  in  order  to 
reconcile  the  saving  of  households  with  the  change  in  their  net  equity  on  pension  funds 
reserves  recorded  in  the  financial  account  of  the  system.  Opposite  adjustments  are,  of 
course, needed  in the  use of  income  accounts  of the  insurance  enterprises  or  autonomous 
pension funds  or employers maintaining non autonomous pension funds. 

4.143.  Time of recording: 

the adjustment  is recorded according to the flows which compose it. 

4.144. 

In the system of accounts, the adjustment  for the change in the net equity of households on 
pension funds  is recorded: 

-  among uses in the use of income accounts of the insurance enterprises sector and  other 

sectors administering non-autonomous pension  funds 

-  among uses in the external account of primary incomes and current transfers  (in the case 

of non-resident  institutions) 

-  among resources in the use of income accounts of the households sector 

-  among resources in the external account of primary incomes and current transfers  (in the 

case of non-resident households). 

CAPITAL TRANSFERS (D9) 

4.145.  Capital  transfers  are  different  from  current  transfers  by  the  fact  that  they  involve  the 
acquisition or disposal of an asset, or assets, by at least one of the parties to the transaction. 
Whether  made  in  cash  or  in  kind,  they  should  result  in  a  commensurate  change  in  the 
financial, or non-financial,  assets shown in the balance sheets of one or both parties to the 
transaction. 

4.146.  A  capital  transfer  in  kind  consists  of  the  transfer  of  ownership  of  an  asset  (other  than 
inventories  and  cash),  or  the  cancellation  of  a  liability  by  a  creditor,  without  any 
counterpart being received in return. 

A capital  transfer  in cash consists of the transfer  of cash that the first party  has raised  by 
disposing  of  an  asset,  or  assets  (other  than  inventories),  or  that  the  second  party  is 
expected,  or  required,  to  use  for  the  acquisition  of  an  asset,  or  assets  (other  than 
inventories). The second party, the recipient,  is often  obliged  to use the cash to acquire an 
asset, or assets, as a condition on which the transfer  is made. 

4.147.  Capital  transfers  cover  capital  taxes  (D91),  investment  grants  (D92)  and  other  capital 

transfers  (D99). 

Capital taxes (D91) 

4.148.  Definition:  capital  taxes  (D91)  consist  of  taxes  levied  at  irregular  and  very  infrequent 
intervals on the values of the assets or net worth owned by institutional units or 
on  the  values  of  assets  transferred  between  institutional  units  as  a  result  of 
legacies, gifts  inter-vivos or other transfers. 

4.149.  Capital taxes include: 

a)  taxes  on capital  transfers:  inheritance  taxes, death duties and  taxes  on gifts  inter-vivos, 
which are deemed to be levied on the capital of the beneficiaries  - except taxes on sales 
of assets, as these are not transfers 

b) capital  levies:  occasional  and  exceptional  levies  on  assets  or  net  worth  owned  by 
institutional  units(l)  . These  include  betterment  levies, that  is  taxes  on  the  increase  in 
the  value  of  agricultural  land  due  to  planning  permission  to  develop  the  land  for 
commercial or residential purposes. 

4.150.  Time of recording: capital taxes are recorded at the time when the tax liabilities arise. 

4.151. 

In the system of accounts, capital taxes are recorded: 

-  among  changes  in  liabilities  and  net  worth  (-)  in  the  capital  account  of  the  sectors  in 

which the taxpayers are classified 

-  among  changes  in  liabilities  and  net  worth  (+)  in  the  capital  account  of  general 

government 

-  among changes in liabilities and net worth in the capital account of the rest of the world. 

Investment grants (D92) 

4.152.  Definition:  Investment  grants (D92) consist of capital transfers  in cash or in kind made by 
governments  or  by  the  rest  of  the  world(2)  to  other  resident  or  non-resident 
institutional  units  to  finance  all  or  part  of  the  costs  of  their  acquiring  fixed 
assets. 

4.153. 

Investment  grants  can  be  made  in  cash  or  in  kind.  Investment  grants  in  kind  consist  of 
transfers  of transport equipment, machinery  and other equipment by governments to  other 
resident  or non-resident  units and also the direct provision of buildings or other  structures 
for resident or non-resident units. 

4.154. 

Investment grants do not include transfers  of military equipment in the form  of weapons or 
equipment  whose  sole  function  is to fire such weapons, as they  are not classified  as fixed 
assets. 

(1) 
(2) 

However, capital  gains taxes arc shown  in the accounts under the heading current taxes on income, wealth, etc. 
Investment  grants  made  by  the  rest  of  the  world  include  those  paid  directly  by  the  Institutions  of  the  European  Union_(e.g.  certain 
transfers  made by the European  Agricultural  Guidance and Guarantee  Fund,  EAGGL-Guidance Section) 

4.155.  The  value  of  capital  formation  carried  out  by  general  government  for  the  benefit  of  other 
sectors  of  the  economy  is  also  to  be  shown  under  investment  grants  whenever  the 
beneficiary  is  identifiable  and  becomes  the  owner  of  the  capital.  In  such  cases,  the  capital 
formation  is  recorded  among  uses  in the  capital  account  of the  beneficiary  and  is  financed 
by an investment  grant which appears  among  resources  in the same  account. 

4.156.  Heading  D92  includes  not  only  single  non-recurrent  payments  designed  to  finance  capital 
formation  during  the  same  period,  but  also  instalment  payments  in  respect  of  capital 
formation  carried  out  during  an  earlier  period.  Thus, those parts  of the  annual  payments  by 
general  government  which,  represent  the  amortization  of  debts,  contracted  by  enterprises 
for  the  purpose  of  capital  formation  projects  for  whose  amortization  the  government  has 
assumed total  or partial  responsibility,  are also treated  as investment  grants. 

Grants  for  interest  relief  made  by  general  government  are, however,  excluded,  even  when 
the  object  of  the  relief  is  to  encourage  capital  formation.  In  practice,  the  assumption  by 
public authorities  of part  of the interest charges constitutes, like the flow  of interest  itself,  a 
current  distributive  transaction.  Nevertheless,  when  a  grant  serves  the  dual  purpose  of 
financing  the  amortization  of  the  debt  contracted  and  the  payment  of  the  interest  on  the 
capital  borrowed,  and  when  it  is not  possible  to  separate  these  two  elements,  the  whole  of 
the grant  is treated  in the accounts as an investment  grant. 

4.157. 

Investment  grants  to  the  sector  non-financial  corporate  and  quasi-corporate  enterprises 
include,  in  addition  to  grants  to  private  enterprises,  capital  grants  to  public  enterprises 
recognized  as  independent  legal  entities,  provided  that  the  government  department  which 
makes the grant does  not retain a claim against the public  enterprise. 

4.158. 

Investment  grants  to  the  households  sector  include  equipment  and  modernisation  grants  to 
businesses  other  than  corporate  or quasi-corporate  enterprises  and  grants  to  households  for 
the construction,  purchase  and  improvement  of dwellings. 

4.159. 

Investment  grants  to  general  government  include  all  payments  (except  grants  for  interest 
relief)  made  to  subsectors  of  general  government 1)  for  the  purpose  of  financing  capital 
formation.  The  most  important  examples  are  transfers  from  central  government  to  local 
authorities  for  the  specific  purpose  of  financing  their  gross  fixed  capital  formation.  It 
intended  for  various  or 
that  transfers  of  a  general  nature 
should  be  emphasized 
indeterminate  purposes  are  shown  under  current transfers  within  general  government,  even 
if they are partly  used  to cover expenditure  on capital  formation. 

4.160. 

Investment  grants  to  non-profit  institutions  from  general  government  and  from  the  rest  of 
the  world  are  distinguished  from  current  transfers  to  non-profit  institutions  by  using  the 
same  criterion. 

(1) 

Investment  grants  within  general  government  are flows internal  to the general  government sector  and  do  not  appear  in  a consolidated 
account  for the sector as whole 

I so 

4.161. 

Investment  grants  to  the  rest  of  the  world  should  also  be  restricted  to  transfers  with  the 
r  specific  objective  of  financing  capital  formation  by non-resident  units.  They  include,  for 
example, unrequited  transfers  for the construction  of bridges, roads, factories,  hospitals or 
schools 
international 
organisations.  They  may  comprise  instalment  payments  over  a period  of  time  as  well  as 
single payments. This heading also covers the supply of fixed capital goods free of charge. 

in  developing  countries,  or  for  constructing  buildings  for 

4.162.  Time of recording:  investment  grants  in cash are recorded  when the payment  is due to be 
made.  Investment  grants  in  kind  are  recorded  when  the  ownership  of  the  asset  is 
transferred. 

4.163. 

In the system of accounts, investment grants are recorded: 

-  among  changes  in  liabilities  and  net  worth  (-)  in  the  capital  account  of  general 

government 

-  among  changes  in  liabilities  and  net  worth  (+)  in  the  capital  account  of  the  sectors 

receiving the grants 

-  among changes in liabilities and net worth in the capital account of the rest of the world. 

Other capital transfers (D99) 

4.164.  Definition:  Other  capital  transfers  (D99) cover  transfers  other than  investment  grants  and 
capital  taxes  which  do  not  themselves  redistribute  income  but  redistribute 
saving  or wealth  among the different  sectors or subsectors  of the  economy  or 
the rest of the world. 

4.165.  Other capital transfers  include the following transactions: 

a)  payments  by  general  government  or  by  the  rest  of the world  to  the  owners  of  capital 
goods  destroyed  or  damaged  by  acts  of war,  other political  events  or  natural  disasters 
(floods  etc.) 

b) transfers  from  general  government  to  non-financial  corporate  and  quasi-corporate 
enterprises  to  cover  losses  accumulated  over  several  financial  years  or  exceptional 
losses from causes beyond the control of the enterprise 

c)  transfers  between  sub-sectors  of  general  government  designed  to  cover  unexpected 

expenditure or accumulated  deficits(l) 

d) non-recurrent  bonus payments on savings granted by general government  to households 

to reward them for their savings carried out over a period of several years 

e)  legacies,  large  gifts  inter-vivos  and  donations  between  units  belonging  to  different 
sectors,  including  legacies  or  large  gifts  to NPIs  (for  example,  gifts  to  universities  to 
cover the costs of building new residential colleges, libraries, laboratories, etc.) 

(1) 

These  transfers  between  sub-sectors  of  general  government  are  flows  within  the  general  government  sector  and  do  not  appear  in  a 
consolidated  account  for the sector as a whole 

f)  the cancellation  of debts  by  agreement  between  institutional  units  belonging  to  different 
sectors  or  sub-sectors  (for  example,  the  cancellation  by  the  government  of  a  debt  owed 
to it by  a non-financial  corporate  enterprise  or a foreign  country;  payments  in  fulfilment 
of  guarantees  which  free  defaulting  debtors  from  their  obligations).  Such  cancellations 
are  treated  as  a  capital  transfer  from  the  creditor  to  the  debtor  equal  to  the  value  of  the 
outstanding  debt  at  the  time  of  cancellation.  However,  the  writing-off  of  debt  is  not  a 
transaction  between  institutional  units  and therefore  does not  appear  in either  the  capital 
account  or the  financial  account  of the  system.  If the creditor  accepts  such  a write-off  or 
default,  it  should  be  recorded  in  the  other  changes  in  the  volume  of  assets  accounts  of 
the  creditor  and  the  debtor.  Provisions  for  bad  debt  are  treated  as  book-keeping  entries 
that  are  internal  to  the  enterprise  and  do  not  appear  anywhere  in  the  system.  The 
unilateral  repudiation  of  debt  by  a debitor  is also  not  a transaction  and  is not  recognised 
in the  system 

g)  that part of realised  capital gains (or losses) which is redistributed  to another  sector 

h)  major  payments  in  compensation  for  extensive  damage  or  serious  injuries  not  covered 
by  insurance  policies  (except  payments  by  general  government  or  by  the  rest  of  the 
world  described  in a)). The payments  may  be awarded  by  courts  of  law  or  settled  out  of 
court.  They  include  payments  of compensation  for  damage  caused  by  major  explosions, 
oil spillages, the side-effects  of drugs, etc. 

i)  extraordinary  payments  into  social  insurance  funds  made  by  employers  (including 
government)  of  by  government  (as  part  of  its  social  function),  in  so  far  as  these 
these  funds.  The 
payments  are  designed 
accompagnying  adjustment  from  social  insurance  funds  to  households  is  also  recorded 
as other capital transfers  (D99) (see annex on insurance para. 20). 

the  actuarial  reserves  of 

increase 

to 

4.166.  Time of  recording: 

-  other capital transfers  in cash are recorded when the payment  is due to be  made 

-  other capital transfers  in kind  are recorded  when the ownership  of the  asset  is  transferred 

or the liability cancelled  by the  creditor. 

4.167. 

In  the  system  of  accounts,  other  capital  transfers  are  shown  among  changes  in  liabilities 
and net worth in the capital  account of sectors and of the rest of the  world. 

!52 

CHAPTER V 

FEVANCIAL TRANSACTIONS 

153 

5.01.  Definition:  Financial  transactions  are transactions  in financial assets  and  liabilities  between 
institutional units, and between them and the rest of the world. 

5.02.  Considering the definition  of a transaction (see  1.33.), a financial  transaction is an interaction 
between  institutional  units,  or  between  an  institutional  unit  and  the  rest  of  the  world,  by 
mutual agreement, involving a simultaneous creation or liquidation of a financial asset and the 
counterpart  liability,  or  a  change  in  ownership  of  a  financial  asset,  or  an  assumption  of  a 
liability. 

5.03.  Financial  assets  are  economic  assets,  comprising  means  of  payment,  financial  claims  and 

economic assets which are close to financial claims in nature. 

5.04.  Means of payment consist of monetary gold, special drawing rights, currency and  transferable 

deposits. 

Financial claims entitle their owners, the creditors, to receive a payment or series of payments 
without  any  counter-performance  from  other  institutional  units,  the  debtors,  who  have 
incurred the counterpart liabilities. 

Examples of economic assets which are close to financial claims in nature are shares and other 
equity  and  partly  contingent  assets.  The  institutional  unit  issuing  such  a  financial  asset  is 
considered to have incurred a counterpart liability. 

5.05.  Contingent assets are contractual arrangements between institutional  units, and between them 
and the rest of the world, which specify  one or more conditions which must be fulfilled  before 
a  financial  transaction  takes  place.  Examples  are  guarantees  of  payment  by  third  parties, 
letters of credit,  lines of credit, underwritten  note  issuance  facilities  (NIFs) and  many  of the 
derivative instruments. In the System, a contingent asset is a financial  asset in cases where the 
contractual arrangement itself has a market value because it is tradable or can be offset  on the 
market. Otherwise, a contingent asset is not recorded in the System^1) 

5.06.  Seven  categories  of  financial  assets  are  distinguished:  monetary  gold  and  special  drawing 
rights (AF.l), currency and deposits (AF.2), securities other than shares (AF.3), loans (AF.4), 
shares  and  other  equity  (AF.5),  insurance  technical  reserves  (AF.6)  and  other  accounts 
receivable/payable (AF.7). 

5.07.  In  the  System,  each  financial  asset  has  a  counterpart  liability,  with  the  exception  of  those 
financial assets  classified  in  the  category  monetary  gold  and  special  drawing  rights  (AF.l). 
Six  categories  of  liabilities  are  distinguished  corresponding  to  the  categories  of  the 
counterpart financial assets. 

5.08. The classification  of financial  transactions corresponds to the classification  of financial  assets 
and  liabilities.  Seven  categories  of  financial  transactions  are  distinguished:  transactions  in 
monetary  gold  and  special  drawing  rights  (F.l),  transactions  in  currency  and  deposits  (F.2), 
transactions  in  securities  other  than  shares  (F.3),  transactions  in  loans  (F.4),  transactions  in 
shares  and  other  equity  (F.5),  transactions  in  insurance  technical  reserves  (F.6)  and 
transactions in other accounts receivable/payable (F.7). 

^  ' 

Insurance technical  reserves (AF.6) are unconditional  liabilities of insurance corporations  and pension  fudns.  However, the counterpart 
financial assets of individual  policy holders and beneficiaries  are contingent assets in most cases. 

I M 

5.09.  The financial  assets held and the liabilities outstanding at a particular point in time (of a sector 
or  the  rest  of  the  world)  are  recorded  in  the  balance  sheet  (see  chapter  VII).  Financial 
transactions  result  in  changes  in  balance  sheets. However,  the  changes  between  the  opening 
balance  sheet  and  the  closing  balance  sheet  may  also  include  other  flows  (see  chapter  VI). 
They  are not  due to  interactions  between  institutional  units, or between  them  and  the  rest of 
the  world,  by  mutual  agreement.  The  other  flows  are  broken  down  into  revaluations  in 
financial  assets and liabilities, and changes in the volume of financial  assets and liabilities not 
due to financial  transactions. The former  are recorded in the revaluation account and the latter 
in the other changes  in the volume of assets account under the categories  catastrophic  losses, 
uncompensated  seizures,  other  volume  changes  in  financial  assets  and  liabilities  n.e.c,  and 
changes in classifications  and structure. 

5.10. Financial transactions between institutional  units are recorded  in the financial accounts of the 
sectors  involved.  Financial  transactions  between  institutional  units  and  the  rest  of  the  world 
are  recorded  in  the  financial  accounts  of  the  sectors  involved  and  the  external  financial 
account, that is the financial  account of the rest of the world (see chapter VIII). 

The financial  account  (of a sector or the rest of the world) shows on  its  left  side  acquisitions 
less  disposals  of  financial  assets, while  its right side shows  the  incurrence  of  liabilities  less 
their  repayment.  The  balancing  item  of  the  financial  account,  that  is  net  acquisition  of 
financial assets less net incurrence of liabilities, is net lending (+) / net borrowing (-) (B.9). 

5.11. The  financial  account  of  a  sector  may  be  consolidated  or  non-consolidated.  The  non-
consolidated  financial  account of a sector shows the changes in financial  assets and  liabilities 
due  to  all  financial  transactions  in  which  institutional  units  classified  in  the  sector  are 
involved. The consolidated financial account of a sector shows the changes in financial assets 
and liabilities due to financial transactions  between institutional  units classified  in the  sector 
under consideration and other institutional units or the rest of the world. Compared to the non-
consolidated financial account, the financial transactions between  institutional  units  classified 
in the sector under consideration  are eliminated  from  the consolidated  financial  account.  The 
external financial  account is consolidated by definition. 

5.12. A financial transaction between two institutional units increases net lending / net borrowing of 
one institutional  unit  and, by the same amount,  decreases  net  lending  / net borrowing  of the 
other institutional unit. Financial transactions between institutional units classified  in the same 
sector do not change net lending / net borrowing of the sector. The consolidated  and the non-
consolidated  financial  account  of  a  sector  show  the  same  amount  of  net  lending  /  net 
borrowing. By the same token, financial transactions between institutional units do not change 
net lending / net borrowing of the total economy. It is of equal amount but opposite sign to net 
lending  /  net  borrowing  in  the  external  financial  account.  Therefore,  total  net  lending  /  net 
borrowing of all institutional units and the rest of the world is zero. 

5.13.  The financial  account  by debtor/creditor^1) (of a sector  or the rest  of the  world)  is an  extension 
of  the  financial  account,  showing  in  addition  a  breakdown  of  the  net  acquisition  of  financial 
assets  by  debtor  sector  and  a breakdown  of the  net  incurrence  of  liabilities  by  creditor  sector. 
Therefore,  it  provides  informations  on  debtor/creditor  relationships  and  it  is  consistent  with 
the  financial  balance  sheet  by  debtor/creditor  (see  7.63.).  In  the  case  of  financial  transactions 
on  secondary  markets,  however,  it  does  not  provide  informations  on  the  institutional  units  to 
whom  financial  assets were  sold  or from  whom  financial  assets were bought,  that  is to  say  the 
financial  account  by  debtor/creditor  provides  not  a  complete  answer  on  the  question  who  is 
financing  whom  in an accounting  period. 

5.14.  The  financial  account  is  the  final  account,  in  the  full  sequence  of  accounts  that  records 
transactions  (see  chapter  VIII).  Therefore,  the  financial  account  does  not  have  a  balancing 
item  that  is  carried  forward  to  another  account.  In  the  System,  the  balancing  item  of  the 
financial  account  is  identical  with  the  balancing  item  of  the  capital  account.  In  practice,  a 
discrepancy  will  usually  be  found  between  them  because  they  are  calculated  on  the  basis  of 
different  statistical  data. 

5.15.  Financial  transactions  have  always  counterpart  transactions  in  the  System., The  counterpart 
transactions  are  either  also  financial  transactions  or  transactions  to  be  recorded  in  accounts 
other than the  financial  account. 

The  simultaneous  rise  or  reduction  of  both  financial  assets  and  liabilities,  or  the  exchange  of 
one financial  asset  for  another  are recorded  wholly  within the  financial  account  (of  a sector  or 
the  rest  of  the  world).  In  cases  where  a  transaction  and  its  counterpart  are  both  financial 
transactions,  they  change  the  portfolio  of  financial  assets  and  liabilities  and  they  may  change 
the totals of both financial  assets and  liabilities  of the institutional  units  involved  or the rest  of 
the world, but they  do not change net lending / net borrowing  or net  worth. 

The  counterparts  of  financial  transactions  may  also  be  transactions  in  products  (see  chapter 
III),  distributive  transactions  (see  chapter  IV)  or  transactions  in  non-financial  non-produced 
assets  (see 6.06.).  In  cases  where the counterpart  transaction  of  a financial  transaction  is not  a 
financial  transaction,  net  lending / net  borrowing  of the  institutional  units  involved  or  the  rest 
of the world will  change. 

5.16.  The  counterpart  transaction  of  a  financial  transaction  may  be  a  (current  or  a  capital)  transfer 
(see  chapter  IV).  In  this  case,  the  financial  transaction  involves  a  change  in  ownership  of  a 
financial  asset, or an assumption  of a liability  as debtor (debt assumption), or the  simultaneous 
liquidation  of  a  financial  asset  and  the  counterpart  liability  (debt  cancellation  or  debt 
forgiveness).  The counterpart  transfer  of debt  assumption  and debt  cancellation  is classified  in 
the  category  capital  transfers  (D.9)  and  is  recorded  in  the  capital  account.  However,  the 
counterpart  transaction  of  debt  assumption  and  debt  cancellation  is  not  always  a  transfer.  In 
cases  where  the  owner  of  a  corporation  or  quasi-corporation  assumes  liabilities  from  or 
cancels  financial  claims  against 
the  counterpart 
transaction  of  debt  assumption  or  debt  cancellation  is  a transaction  in  shares  and  other  equity 
(F.5). 

the  corporation  or  quasi-corporation, 

0) 

The  1993 SNA (11.103 - 11.111) uses the term detailed flow of funds  account. 

156 

Contrary  to  debt  assumption  and  debt  cancellation,  the  writing-off  or  writing-down  of  bad 
debts  by  creditors  and  the  unilateral  cancellation  of  a  liability  by  a  debtor  (debt  repudiation) 
are  not  classified  as  financial  transactions  because  they  do  not  involve  interactions  between 
institutional  units,  or  between  institutional  units  and  the  rest  of  the  world,  by  mutual 
agreement.  The  writing-off  or writing-down  of  bad  debts  by  creditors  is  recorded  in  the  other 
changes  in the volume  of assets account  (see 6.27.d). Debt  repudiation  is not  recognized  in the 
System. 

5.17.  The  counterpart  transaction  of  a  financial  transaction  may  be  interest  (D.41).  Interest  is 
receivable  by  the  creditors  and  payable  by  the  debtors  of  certain  kinds  of  financial  claims 
classified  in  the  categories  currency  and  deposits  (AF.2),  securities  other  than  shares  (AF.3), 
loans (AF.4)  and  other  accounts  receivable/payable  (AF.7). In the  System,  interest  is  recorded 
on an accrual  basis, that is to say interest  is recorded  as accruing  continuously  over time to  the 
creditor  on  the  amount  of  principal  outstanding  (see  4.50.).  The  counterpart  transaction  of  an 
entry  in  interest  (D.41)  is  always  a  financial  transaction  creating  an  additional  financial  claim 
of  the  creditor  against  the  debtor.  The  effect  of  this  financial  transaction  is  that  interest  is 
reinvested.  The  actual  payment  of  interest  is not  recorded  in  interest  (D.41),  but  it  involves  a 
transaction  relating  to  the  change  in  ownership  of  the  means  of  payment.- The  counterpart 
transaction  is a  financial  transaction reducing the net financial  claim  of the creditor  against  the 
debtor.  When  accrued  interest  is  not  paid  when  due,  this  gives  rise  to  interest  arrears.  As 
accrued  interest  is  already  recorded  in  the  System,  interest  arrears  do  not  change  the  total  of 
financial  assets or  liabilities but possibly their classification  (see  5.131.). 

5.18.  The  counterpart  transaction  of  a  financial  transaction  may  be  property  income  allocated  but 
not  distributed.  Examples  are interest  (D.41)  and  dividends  (D.421)  received  by  mutual  funds 
from  the  investments  they  have  made  and  which  are  allocated  but  not  distributed  to 
shareholders  (see  4.49.b  and  4.54.b),  reinvested  earnings  on  direct  foreign  investment  (D.43) 
and  property  income  attributed  to  insurance  policy  holders  (D.44)  in  case  of  individual  life 
insurance policies  not taken out under  social  insurance  schemes. The  effect  of  the  counterpart 
financial  transaction  is that the (positive or negative)  property  income  is  reinvested. 

CLASSIFICATION  OF FINANCIAL  TRANSACTIONS 

5.19. 

The  financial  transactions  are  classified  in  categories  subdivided  into  sub-categories  and 
into  sub-positions.  The  classification  of  the 
some  of  which  are  further  subdivided 
transactions  in  financial  assets  and  liabilities  corresponds  to  the  classification  of  financial 
assets  and  liabilities  (see  5.06.  -  5.08.).  Therefore,  the  definitions  of  the  categories,  sub 
categories  and  sub-positions  and the supplementary  explanations  are provided  only  once  in 
the  ESA  -  in  this  section  of  the  financial  transactions  chapter.  The  balance  sheets  chapter 
does  not  repeat  the  definitions  and  their  explanations  in  its  main  text  but  it  provides  in  its 
annex  1 a summary  of all assets and  liabilities  defined  in the  System. 

5.20. 

The  classification  of  financial  transactions  and  of  financial  assets  and  liabilities  is  based 
primarily  on  the  liquidity  and  the  legal  characteristics  of  the  financial  assets.  The 
classification  does  not  contain  functional  categories  with  the  exception  of  a  memorandum 
item  related to direct  foreign  investment. The definitions  of the categories,  sub-categories 

157 

Code 

F.l 

F.2 

F.3 

F.4 

F.5 

F.6 

F.7 

F.m 

F.ll 
F.12 

F.21 
F.22 
F.29 

F.33 

F.34 

F.41 
F.42 

F.51 

F.52 

F.61 

F.62 

F.71 
F.79 

F.331 
F.332 

F.511 
F.512 
F.513 

F.611 
F.612 

Classification  of financial transactions 

Monetary gold and special drawing rights (SDRs) 

Monetary gold 
Special drawing rights (SDRs) 

Currency and deposits 

Currency 
Transferable  deposits 
Other deposits 

Securities other than shares 

Securities other than shares, excluding financial derivatives 

Short-term 
Long-term 

Financial derivatives 

Loans 

Short-term 
Long-term 

Shares and other equity 

Shares and other equity, excluding mutual funds shares 

Quoted shares 
Unquoted shares 
Other equity 
Mutual funds  shares 

Insurance technical reserves 
equity 

Net 
in pension funds  reserves 

of 

households 

in 

life 

insurance 

reserves 

and 

Net equity of households in life insurance reserves 
Net equity of households in pension funds  reserves 
and 
insurance 

premiums 

Prepayments 
of 
outstanding claims 

reserves 

for 

Other accounts  receivable/payable 
Trade credits and advances 
Other 

Memorandum item: Direct foreign  investment 

-  158-

and  sub-positions  are  in  general  independent  of  the  classification  of  institutional  units.  As  the 
need  arises,  however,  the  classification  of  financial  assets  and  liabilities  can  be  further 
detailed  by  a  cross  classification  with  the  classification  of  institutional  units.  The  class 
deposits between  monetary  financial  institutions would  be an example. The detail  in which  the 
classification  of  financial  assets  and  liabilities  may  be  employed  depends  on  the  institutional 
sector to be  analyzed. 

5.21.  Analyses  of  the  monetary  policy  transmission  channels  may  require  to  identify  measures  of 
money  in the balance  sheets and also in the financial  accounts of the  sectors and the rest of the 
world.  However,  the  definitions  of the  measures  of  money  applied  vary  among  countries  and 
in  time.  In  addition,  they  are  composed  of  components  which  in  most  of  the  cases  do  not 
correspond  with  the  categories,  sub-categories  or  sub-positions  of  financial  assets  and 
liabilities  as  defined  in  the  System.  Moreover,  the  money-creating,  money-holding  and 
money-neutral 
the  monetary  aggregate  under 
consideration.  Therefore,  measures  of  money  are  not  defined  in  the  System.  Nevertheless,  a 
method  is provided  in  the  annex  to, this  chapter  which  allows  to  show  any  measure  of  money 
in the balance  sheets and the  financial  accounts. 

sectors  depend  on 

the  definition  of 

5.22.  Innovations  in  financial  markets  have  diminished  the  usefulness  of  a  short-term  /  long-term 
distinction  for  financial  assets  and  liabilities.  However,  when  maturity  analysis  is  important, 
such  as  for  analysis  of  interest  rates  and  asset  yields,  a  breakdown  of  a  range  of  maturities 
may  be  required.  Therefore,  maturity  distinction  is  recognized  as  a  secondary  classification 
criterion when  relevant. 

Definition:  Short-term  financial  assets  (liabilities)  are  financial  assets  (liabilities)  whose 
original  maturity  is normally  one  year  or  less,  and  in  exceptional  cases  two  years 
at the  maximum^). 

Long-term  financial  assets  (liabilities)  are  financial  assets  (liabilities)  whose 
original  maturity  is  normally  more  than  one  year,  and  in  exceptional  cases  more 
than two years at the  minimum. 

5.23.  Many  of the  categories,  sub-categories  and  sub-positions  of the  financial  assets  and  liabilities 

may  be broken  down by the units in which they  are  denominated. 

Definition:  Financial  assets  (liabilities)  in  national  currency  are  financial  assets  (liabilities) 

which are denominated  in the currency  unit(s) of the country's  legal  tender. 

Financial  assets  (liabilities)  in  foreign  currency  are  financial  assets  (liabilities) 
which  are not denominated  in the currency  unit(s) of the country's  legal  tender. 

Financial  assets  in  foreign  currency  include  financial  assets denominated  in a currency  basket, 
for  example  ECU  or  SDR,  and  financial  assets  denominated  in  gold.  A  distinction  between 
national  and  foreign  currency  is  particularly  useful  for  the  category  currency  and  deposits 
(AF.2). 

( i) 

In certain  cases, securities other  than shares  issued by the general government  sector with  a maturity  up to  five  years  may  be classified 
as short-term. 

I  so 

MONETARY  GOLD AND SPECIAL DRAWING  RIGHTS (SDRs)  (F.l) 

5.24.  Category F.l  consists of two sub-categories of financial  transactions: 

monetary gold (F.ll) 

special drawing rights (SDRs) (F.l2). 

5.25.  The financial assets  classified  in the  category  monetary  gold  and  SDRs  (AF.l)  are  the  only 
financial  assets  for  which  there  are  no  counterpart  liabilities  in  the  System.  Therefore, 
transactions  in  monetary  gold  and  SDRs  (F.l)  always  involve  changes  in  ownership  of 
financial  assets (see 5.02.). 

Monetary gold  (F.ll) 

5.26.  Definition:  The  sub-category  monetary  gold  (F.ll)  consists  of all  transactions  in  monetary 
gold  (AF.l 1) that is gold held  as a component  of foreign  reserves  by  monetary 
authorities or by others who are subject to the effective  control of the authorities. 

5.27.  The monetary  authorities  sector, which is based  on a functional  concept,  consists  of the sub-
sector the central bank (S.121) and central government institutions, which carry out operations 
usually  attributed  to  the  central  bank.  Such  operations  include  the  issue  of  currency, 
maintenance  and  management  of  international  reserves  and  the  operation  of  exchange 
stabilization  funds. 

Therefore,  gold  can  normally  be  a  financial  asset  only  for  the  central  bank  or  central 
government.  However,  in some circumstances,  other financial corporations  may  hold  title to 
gold  that  can  only  be  sold  with  the  specific  consent  of  the  monetary  authorities.  In  such 
restricted  circumstances, the concept of effective  control  can be applied  to the  gold  holdings 
of financial corporations other than the central bank. 

5.28.  Monetary gold normally takes the form of bars with a purity of at least 995/1000. 

5.29.  Transactions in monetary gold consist predominantly  of sales and purchases of monetary gold 
among  monetary  authorities.  Purchases  of  monetary  gold  are  recorded  in  the  financial 
accounts of the domestic monetary authorities as increases in financial  assets. The counterpart 
entries are decreases in financial  assets of the rest of the world. 

5.30.  Transactions  in  non-monetary  gold,  that  is  gold  other  than  monetary  gold,  are  treated  as 
acquisitions less disposals of valuables (if the sole purpose is to provide a store of wealth) and 
otherwise  as final or  intermediate consumption  and/or  change  in inventories. Transactions  in 
non-monetary  gold  include  transactions  by  the  monetary  authorities  in  gold,  that  is  not  a 
component of their foreign reserves. 

5.31.  If  monetary  authorities  add  non-monetary  gold  to their  holdings  of monetary  gold  or  release 
monetary  gold  from  their  holdings  for  non-monetary  purposes,  they  are  deemed  to  have 
monetized  or  demonetized  gold,  respectively.  Monetization  or  demonetization  of  gold  does 
not give rise to entries in the financial  accounts; instead, the change in balance sheet positions 
is  accounted  for  by  entries  in  the  other  changes  in  the  volume  of  assets  account  as  a 
reclassification,  i.e.  the  reclassification  of  gold  as  valuables  (AN. 13)  to  monetary  gold 
(AF.l 1) (see 6.32.). Demonetization of gold is recorded  symmetrically. 

160 

5.32.  Deposits,  securities  and  loans  denominated  in  gold  are  treated  as  financial  assets  other  than 
monetary  gold  and  are  classified  along  with  similar  financial  assets  in  foreign  currency  in  the 
appropriate  category. 

Non-monetary  gold  swaps,  that  is  arrangements  involving  the  temporary  exchange  of  non 
monetary  gold  for  deposits, are treated  as collateralized  loans (see  5.8l.e). 

Special  drawing  rights  (SDRs)  (F.12) 

5.33.  Definition:  The  sub-category  special  drawing  rights 

(F.12)  consists  of  all 
transactions  in  SDRs  (AF.l2)  that  is  international  reserve  assets  created  by  the 
International  Monetary  Fund  (IMF)  and  allocated  to  its  members  to  supplement 
existing reserve assets. 

(SDRs) 

5.34.  SDRs  are  not  considered  liabilities  of  the  IMF,  and  IMF  members  to  whom  SDRs  are 
allocated  do not have an actual  (unconditional)  liability to repay  their  SDRs  allocations.  SDRs 
are held  exclusively  by official  holders, which are normally  central  banks, and  are  transferable 
among  participants  in  the  IMF's  Special  Drawing  Rights  Department  and  other  holders 
designated  by  the  IMF  (other  central  banks  and  certain  international  agencies).  SDRs 
represent  each  holder's  assured  and  unconditional  right  to  obtain  other  reserve  assets, 
especially  foreign  exchange. 

5.35.  Changes  in  SDRs  hold  by  a  monetary  authority  can  arise  through  transactions  in  SDRs 
involving  SDR  payments  to  or  receipts  from  the  IMF, other  participants  in  the  IMF's  Special 
Drawing  Rights  Department,  or  other  holders.  They  are  recorded  in  the  financial  accounts  of 
the  monetary  authorities  and  the  rest  of  the  world,  respectively.  Changes  in  SDRs  can  also 
arise  from  changes  in  the  value  of  SDRs  to  be  recorded  in  the  revaluation  account,  or  from 
allocations  and  cancellations  of  SDRs  to  be  recorded  in  the  other  changes  in  the  volume  of 
assets  account  (see  6.27.a). 

CURRENCY  AND DEPOSITS  (F.2) 

5.36.  Definition:  The  category  currency  and  deposits  (F.2)  consists  of  all  transactions  in  currency 
and  deposits  (AF.2)  that  is  currency  in  circulation  and  all  types  of  deposits  in 
national  and  in foreign  currency. 

5.37.  Category  F.2  is divided  into three sub-categories  of financial  transactions: 

currency  (F.21) 

transferable  deposits  (F.22) 

other deposits  (F.29). 

The  distinction  between  transferable  and  non-transferable  deposits  may  be  difficult  and  not 
very  useful  analytically  in  some  countries  (for  the  distinction  between  deposits  and  loans  see 
5.74.-5.76.). 

Currency  (F.21) 

5.38.  Definition:  The  sub-category  currency  (F.21)  consists  of  all  transactions  in  currency  (AF.21) 

that  is notes  and coins  in circulation  that are commonly  used to make  payments. 

161  -

(11) 

5.39.  Sub-category AF.21 includes: 

a) 

b) 

notes and coins in circulation issued by resident monetary authorities; 

notes  and  coins  in circulation  issued  by  non-resident  monetary  authorities  and  held by 
residents. 

5.40.  Sub-category  AF.21 does not include: 

notes  and  coins  that  are  not  in circulation,  for  example,  a central  bank's  stock  of  own 
notes or emergency stockpiles of notes; 

commemorative coins that are not commonly used to make payment. 

5.41.  All  sectors  and  the  rest  of  the  world  may  hold  currency.  It  is  issued  by  the  central  bank, 
central  government,  the  rest  of the world,  and  in exceptional  cases  other  monetary  financial 
institutions. Currency is deemed to be a liability of the issuing institutional unit. 

Transferable  deposits (F.22) 

5.42.  Definition:  The  sub-category  transferable  deposits  (F.22)  consists  of  all  transactions  in 
transferable  deposits  (AF.22) that  is deposits  (in national  or  in  foreign  currency) 
which  are  immediately  convertible  into  currency  or  which  are  transferable  by 
cheque, banker's order, debit entry or the like, both without any kind of  significant 
restriction or penalty. 

institutions.  They  cover 

5.43.  Sub-category  AF.22  includes  transferable  deposits  with  resident  and  non-resident  monetary 
financial 
financial 
institutions, such as deposits which other monetary financial  institutions hold with the central 
bank to satisfy  compulsory reserve requirements, insofar  as such deposits remain  transferable, 
or  working  balances  and  foreign  exchange  swaps  between  central  banks  or  between  other 
monetary financial  institutions. 

transferable  deposits  between  monetary 

5.44.  All  sectors  and  the  rest  of  the  world  may  hold  transferable  deposits.  They  are  liabilities 
predominantly  of monetary financial institutions  and the rest of the world,  and  sometimes  of 
general  government. 

Other deposits (F.29) 

5.45.  Definition:  The  sub-category  other  deposits  (F.29)  consists  of  all  transactions  in  other 
deposits  (AF.29)  that  is  deposits  (in  national  or  in  foreign  currency)  other  than 
transferable  deposits. Other deposits cannot be used to make payments at any time 
and  they  are  not  convertible  into  currency  or  transferable  deposits  without  any-
kind of significant  restriction or penalty. 

5.46.  Sub-category  AF.29 includes: 

a) 

time deposits. These deposits are not immediately disposable because they are subject to 
a fixed term  or  a period  of prior  notice  before  withdrawal.  They  include,  for  example, 
deposits  with  the  central  bank  as a form  of  compulsory  reserves  to  the  extent  that  the 
depositors cannot realize them without notice or restriction; 

162 

b) 

c) 

d) 

e) 

f) 

savings  deposits,  savings  books,  savings  certificates  or  certificates  of  deposit  all  of 
which  are  not  negotiable,  or  whose  negotiability,  while  theoretically  possible,  is  very 
restricted; 

deposits  resulting  from  a  savings  scheme  or  contract.  These  deposits  often  involve  an 
obligation  on  the  part  of  the  depositor  to  make  regular  payments  over  a  given  period, 
and  the  capital  paid  and  interest  accrued  do  not  become  available  until  a  fixed  term  has 
elapsed.  These  deposits  are  sometimes  combined  with  the  issue,  at  the  end  of  the 
savings  period,  of  loans  which  are  proportionate  to  the  accumulated  savings,  for  the 
purpose  of buying or building  a dwelling; 

evidence  of  deposit  issued  by  savings  and  loan  associations,  building  societies,  credit 
unions,  and  the  like,  sometimes  called  shares,  which  are  legally,  or  in  practice, 
redeemable  on demand  or at relatively  short notice; 

repayable  margin  payments  related  to  financial  derivatives  which  are  liabilities  of 
monetary  financial  institutions  (see 5.81.c); 

short-term  repurchase  agreements  (repos)  which  are  liabilities  of  monetary  financial 
institutions  (see  5.8l.d)(1>. 

5.47.  Sub-category  AF.29  does not  include  negotiable  certificates  of deposit  and  negotiable  savings 
certificates.  They  are  classified  in  category  securities  other  than  shares,  excluding  financial 
derivatives  (AF.33). 

5.48.  Sub-category  AF.29  includes  further: 

a) 

b) 

c) 

Official  ECUs  hold  by  the  central  bank.  These  financial  assets  consist  of  the  ECUs 
issued  by  the  EMI  against  monetary  reserves  from  the  central  banks  of  the  Member 
States  for  the  purpose  of  implementing  the  EMS  Agreement.  These  ECUs  may  be  used 
by the EMI  and the central banks of the Member  States as a means  of settlement  and  for 
transactions  between them and the EMI. The EMI  may  grant  to the monetary  authorities 
of  third  countries  and  to  international  monetary  institutions  the  status  of  Other  Holders 
ofECUs;(2) 

Financial  claims  or  liabilities  of  the  central  bank  arising  from  the  very  short-term 
financing  mechanism  and  the  short-term  monetary  support  mechanism.  They  are 
administered  by the EMI;<3) 

Financial  claims  on  the  IMF  that  are  components  of  international  reserves  and  that  are 
not  evidenced  by  loans.  They  consist  of  an  IMF  member's  reserve  tranche  position 
which  arises  from  the  payment  of part  of  a member's  subscription  in  reserve  assets  and 
the  Fund's  net  use of the member's  currency. 

^ 

Liabilities  to the IMF that are not evidenced  by  loans. They  consist  of use of Fund  credit 
within  the  IMF's  General  Resources  Account;  it  measures  the  amount  of  a  member's 
currency  with the IMF that the member  is obligated to  repurchase. 

'  ' 

(2) 

'  ' 

The  1993  SNA  (11.32,  11.72  and  11.83)  classifies  repurchase  agreements  under  loans  unless  they  involve  bank  liabilities  and  are 
classified  in national  measures of broad money; in the latter case, repurchase agreements are classified  under other deposits. 
Articles 6.2 and 6.3 of the Protocol on the Stature of the European Monetary  Institute annexed  to the Treaty establishing  the  European 
Community. 
Article  6.1  second  indent  of  the  Protocol  on  the  Statute  of  the  European  Monetary  Institute  annexed  to  the  Treaty  establishing  the 
European  Community. 

163 

5.49.  AU  sectors  and  the  rest  of  the  world  may  hold  other  deposits.  They  are 

liabilities 
predominantly  of  monetary  financial  institutions  and  the  rest  of  the  world,  but  also  of  other 
sectors, for  example,  general  government  (see 5.74.  - 5.76.). 

SECURITIES  OTHER  THAN  SHARES  (F.3) 

5.50.  Definition:  The  category  securities  other  than  shares  (F.3)  consists  of  all  transactions  in 
securities  other  than  shares  (AF.3)  that  is  financial  assets  which  are  bearer 
instruments,  are  usually  negotiable  and  traded  on  secondary  markets  or  can  be 
offset  on  the  market,  and  do  not  grant  the  holder  any  ownership  rights  in  the 
institutional  unit  issuing  them. 

5.51.  Category  AF.3  covers  financial  assets  which  are  typically  represented  by  documents  intended 
to  circulate,  and  whose  nominal  value  is  determined  on  issue.  It  includes  bills,  bonds, 
certificates  of  deposit,  commercial  paper,  debentures,  financial  derivatives,  and  similar 
instruments  normally  traded  in  the  financial  markets  (for  the  distinction  between  securities 
other than shares and  loans see 5.77.  - 5.80.). 

5.52.  All  sectors  and  the  rest  of the  world  may  hold  securities  other  than  shares  as  financial  assets. 
They  are  liabilities  predominantly  of  financial  and  non-financial  corporations,  central,  state 
and  local  government,  and the rest of the  world. 

5.53.  Category  F.3  is divided  into two sub-categories  of financial  transactions:^) 

securities  other than  shares, excluding  financial  derivatives  (F.33) 

financial  derivatives  (F.34). 

Securities  other  than shares, excluding  financial  derivatives  (F.33) 

5.54.  Definition:  The  sub-category  securities  other  than  shares  excluding  financial  derivatives 
(F.33)  consists  of  all  transactions  in  securities  other  than  shares  excluding 
financial  derivatives  (AF.33),  that  is  securities  other  than  shares  which  give  the 
holder  the  unconditional  right  to  a  fixed  or  contractually  determined  variable 
money  income  in  the  form  of  coupon  payments  (interest)  and/or  a  stated  fixed 
sum  on a specified  date or dates or starting  from  a date  fixed  at the time  of  issue. 

5.55.  Sub-category  F.33  may  be  divided,  when  relevant,  into  two  sub-positions  of 

financial 

transactions: 

short-term  securities  other than shares, excluding  financial  derivatives  (F.331) 

long-term  securities  other than shares, excluding  financial  derivatives  (F.332). 

'  ' 

The  1993 SNA  (11.79,  11.80  and  11.81)  recommends  an  optional  subclassification  of  transactions  in  securities  other  than  shares  by 
maturity  into  short-term  (T.31)  and  long-term  (F.32).  However,  the  1993  SNA  (11.82)  provides  for  an  additional  optional 
subclassification  of  transactions  in securities other  than shares showing  transactions  in financial derivatives  separately  where  they  are 
important from  the point of view of analysis and policy. This second  option  is adopted  in the ESA. It also facilitates  the  linkage  to the 
sub-category  debt  securities  as  defined  in  the  1993  Balance  of  Payments  Manual,  which  divides  debt  securities  into  bonds,  notes, 
money  market  instruments  and  financial  derivatives.  The  codes  F.31  and  F.32  are  not  used  in  the  ESA  to  avoid  confusion  with  the 
1993 SNA codes. 

164 

Short-term  securities  other  than  shares,  excluding  financial  derivatives  (F.331) 

5.56.  Definition:  The  sub-position  short-term  securities  other  than  shares  excluding  financial 
derivatives  (F.331) consists  of  all  transactions  in  short-term  securities  other  than 
shares  excluding  financial  derivatives  (AF.331)  that  is  securities  other  than 
shares  with  a  short-term  original  maturity 
financial 
derivatives. 

(see  5.22.)  except 

5.57.  Short-term  securities other than  financial  derivatives  are generally  issued  at a  discount. 

5.58.  Sub-position  AF.331  includes: 

a) 

b) 

c) 

d) 

treasury  bills  and  other  short-term  paper  issued  by  general  government,  including  those 
which  are  taken  up  by  other  monetary  financial  institutions  to  satisfy  their  compulsory 
reserve  requirements; 

negotiable  short-term  paper  issued  by  financial  and  by  non-financial  corporations.  A 
variety  of terms  are  used  for  such paper  including:  commercial  paper,  commercial  bills, 
promissory  notes, bills of trade, bills of exchange and certificates  of  deposit; 

short-term  securities  issued  under  long-term  underwritten  note  issuance 
(NIFs); 

facilities 

bankers'  acceptances  (BAs).  A BA  involves  the  acceptance  by  financial  corporations  of 
drafts,  commercial  bills  or  bills  of  exchange  issued  by  non-financial  corporations  and 
the  unconditional  promise  to  pay  a  specific  amount  at  a  specified  date.  The  BA 
represents  an  unconditional  financial  claim  on  the  part  of  the  holder  and  an 
unconditional  liability  on  the  part  of  the  accepting  financial  corporation.  The  financial 
corporation's  counterpart  transaction  is  a  transaction  in  a  short-term  loan  made  by  the 
financial  corporation  to  its  customer.  For  this  reason  it  is  recommended  that  BAs  be 
treated  as  an  actual  liability  of  the  accepting  financial  corporation  and  as  a  financial 
asset  of  the  holder,  even  though  no  funds  may  have  been  exchanged.  Flexibility  in  the 
application  of  this  recommendation  will  be  required  to  take  national  practices  and 
variations  in the nature of these instruments  into  account. 

5.59.  Sub-position  AF.331  does  not  include  securities  whose  negotiability,  while  theoretically 
possible,  is  very  restricted  in practice  and  which  are  therefore  classified  in  the  sub-categories 
other  deposits  (AF.29)  or short-term  loans (AF.41) as appropriate  (see  5.74.  -  5.76.). 

Long-term  securities  other than shares, excluding  financial  derivatives  (F.332) 

5.60.  Definition:  The  sub-position  long-term  securities  other  than  shares  excluding  financial 
derivatives  (F.332)  consists  of  all  transactions  in  long-term  securities  other  than 
shares  excluding  financial  derivatives  (AF.332)  that  is  securities  other  than 
shares with a long-term  original  maturity  (see 5.22.) except  financial  derivatives. 

5.61.  Long-term  securities are generally  issued with  coupons. 

-  165 

5.62.  Sub-position  AF.332  includes: 

a) 

b) 

c) 

d) 

e) 

f) 

g) 

h) 

i) 

j) 

k) 

1) 

bearer  bonds; 

subordinated  bonds, often  referred  to as subordinated  debt; 

bonds  with optional  maturity  dates, the  latest  of which  is more than  one year  away; 

undated  or perpetual  bonds; 

floating  rate notes  (FRNs); 

index-linked  securities,  where  the  value  of  the  principal  is  linked  to  a  price  index,  the 
price of a commodity,  or to an exchange rate  index; 

deep-discount  bonds and zero-coupon  bonds; 

eurobonds.  A  bond  issue  that  is  placed  simultaneously  on  the  market  of  at  least  two 
countries  and  is  denominated  in  a  currency  which  need  not  be  that  of  either,  usually 
through  international  syndicates of financial  corporations of several  countries; 

privately  issued  bonds,  that  is  bonds  restricted  by  bilateral  agreement  to  certain 
investors,  if they  are at least potentially  transferable;  if not, they  are treated  as  long-term 
loans; 

loans  that  have  become  negotiable  de  facto.  This  should  be  interpreted  to  mean  only  if 
they  are traded  on an organized  secondary  market  (see  5.79.); 

securities  resulting  from  the  conversion  of  loans.  A  conversion  involves  two  financial 
transactions: the  liquidation of the loan and the creation of the new  securities; 

debentures  and  loan  stock  convertible  into  shares,  whether  shares  of  the  issuing 
corporation  or  shares  of  another  corporation,  so  long  as  they  have  not  yet  been 
converted.  A  conversion  involves  two  financial  transactions:  the  liquidation  of  the 
debenture  or  loan  stock  and  the  share  issue.  Where  separable  from  the  underlying  bond, 
the  conversion  option  should  be  regarded  as  a  separate  financial  asset  classified  in  the 
sub-category  financial  derivatives  (AF.34)  (see 5.67.a and  5.67.b); 

m) 

shares  or  stocks  that  pay  a  fixed  income  but  do  not  provide  for  participation  in  the 
distribution  of  the  residual  value  of  a  corporation  on  dissolution,  including  non 
participating  preference  shares. 

5.63.  Sub-position  AF.332  includes  further  financial  assets  issued  as  part  of  the  securitization  of 
loans,  mortgages,  credit  card  debt,  accounts  receivable  and  other  assets.  Sometimes  the  new 
liquidated. 
security  is  issued  as  replacement  for  the  original  asset,  which  is  effectively 
Alternatively,  the  original  asset  is  transferred  to  another  institutional  unit  and  the  new 
securities  replace  the  original  asset  on  the  original  institutional  unit's  balance  sheet.  In  this 
case  the  original  asset  should  be  recorded  on  the  balance  sheet  of  the  new  institutional  unit 
that  holds  it. 

5.64.  Sub-position  F.332  does not  include: 

transactions  in  securities  as  part  of  repurchase  agreements.  Repurchase  agreements  are 
classified  in  the  sub-category  other  deposits  (see  5.46.f)  or  in  the  category  loans  (see 
5.81 .d)  depending  on  the  institutional  units  involved.  The  stock  lent  or  subject  to 
repurchase  does  not change balance sheet and  remains classified  in AF.332; 

I 66  -

transactions  in  non-negotiable  securities.  They  are  classified  in  sub-category  long-term 
loans; 

transactions  in  non-negotiable  loans,  including  those  which  have  been  sold  to  a  third 
party,  but  for  which  no organized  secondary  market  exist  (see  5.79.). 

Financial  derivatives  (F.34) 

5.65.  Definition:  The  sub-category  financial  derivatives  (F.34)  consists  of  all  transactions  in 
financial  derivatives  (AF.34)  that  is  financial  assets  based  on  or  derived  from  a 
different  underlying  instrument.  The  underlying  instrument  is  usually  another 
financial  asset, but may also be a commodity  or an  index. 

5.66.  Financial  derivatives  are also referred  to as  secondary  instruments  and  since  risk  avoidance  is 
frequently  a  motivation  for  their  creation,  they  are  also  referred  to  as  hedging  instruments. 
Only those  secondary  instruments, which have a market value because they  are tradable  or  can 
be  offset  on  the  market,  are  financial  assets  in  the  System  and  are  classified  in  the  sub 
category  AF.34  (see  5.05.). 

5.67.  Sub-category  AF.34  includes: 

a) 

b) 

c) 

d) 

options, tradable  and  over-the-counter  (OTC). Options  are  contingent  assets  which  give 
their  holders  the  right,  but  not  the  obligation,  to  purchase  from  (in  the  case  of  a  call 
option)  or  to  sell  to  (in  the  case  of  a  put  option)  the  issuer  of  the  option  (the  option 
writer)  financial  or  non-financial  assets  (the  underlying  instrument)  at  a  predetermined 
price  (the  strike  price)  within  a  given  time  span  (American  option)  or  on  a  given  date 
(European  option).  The  purchaser  of  the  option  pays  a  premium  (the  option  price)  for 
the  commitment  of  the  option  writer  to  sell  or  to  purchase  the  specified  amount  of  the 
underlying  asset  or  to  provide,  on  demand  of  the  purchaser,  appropriate  remuneration. 
By  convention,  that commitment  is treated  as a liability  of the  option  writer  because  the 
option  price  represents  the current  cost to the option  writer  of  buying  out  his  contingent 
liability; 

warrants.  They  are  a  form  of  tradable  options,  which  give  their  holders  the  right  to 
purchase  from  the  issuer  of  the  warrant  (usually  a  corporation)  a  certain  number  of 
shares  or  bonds  under  specified  conditions  for  a  designated  period  of  time.  There  are 
also  currency  warrants,  the  value  of  which  is  based  on  the  amount  of  one  currency 
required  to purchase  another currency  at or before  the expiration  date of the warrant  and 
cross-currency  warrants tied to third currencies. By convention,  the issuer  of the  warrant 
is considered  to  have  incurred  a liability  representing  the  current  cost  of  buying  out  the 
issuer's  contingent  liability; 

futures,  but  only  if they  have  a market  value  because  they  are  tradable  or  can  be  offset. 
Futures  are  commitments  to  deliver,  or  to  take  delivery  of,  a  specified  quantity  of  a 
standard  grade  of a commodity,  foreign  exchange, or a security  at a  fixed  price and  for  a 
specified  delivery  date  or  period.  Futures  may  also  be  based  on  an  index  rather  than  a 
specific  financial  or non-financial  asset; 

swaps,  but  only  if  they  have  a market  value  because  they  are  tradable  or  can  be  offset. 
Swaps  are  contractual  arrangements  between  two  parties  who  agree  to  exchange,  over 
time  and  according  to  predetermined  rules,  streams  of  payment  on  the  same  amount  of 
indebtedness.  The  two  most  prevalent  varieties  are  interest  rate  swaps  and  currency 
swaps.  Interest  rate  swaps  involve  an  exchange  of  interest  payments  of  different 

167 

character,  such  as fixed rate  for  floating  rate, two  different  floating  rates,  fixed  rate  in 
one  currency  and  floating  rate  in  another,  etc.  (see  4.47.).  Currency  swaps  involve  an 
exchange of specified  amounts of two different  currencies with subsequent  repayments, 
which include both interest and repayment flows, over time according to  predetermined 
rules; 

e) 

forward  rate agreements  (FRAs), but only  if they have a market value  because  they  are 
tradable  or  can  be  offset.  FRAs  are  contractual  arrangements  in  which  two  parties,  in 
order to protect  themselves against  interest rate changes, agree on an interest  rate to be 
paid,  at  a  specified  settlement  date,  on  a  notional  amount  of  principal  that  is  never 
exchanged.  The payments are related  to the difference  between the agreed  forward  rate 
agreement  rate  and  the  prevailing  market  rate  at  the  time  of  settlement.  They  are 
recorded as property income in the System (see 4.47.). 

5.68.  Sub-category AF.34 does not include: 

the underlying instrument upon which the financial derivative is based; 

repayable  margin payments related to financial  derivatives. They  are classified  in other 
deposits (AF.29) (see 5.46.e) or loans (AF.4) (see 5.81.c) depending on the  institutional 
units involved; 

secondary  instruments, which are not tradable and cannot be offset  on the market. 

LOANS (F.4) 

5.69.  Definition:  The  category  loans  (F.4)  consists  of  all  transactions  in  loans  (AF.4)  that  is 
financial  assets  created  when  creditors  lend  funds  to  debtors,  either  directly  or 
through brokers, which are either evidenced by non-negotiable documents or not 
evidenced by documents. 

5.70.  Generally loans are characterized by the following  features: 

the conditions governing a loan are either fixed by the financial  corporation granting the 
loan or negotiated by the lender and the borrower directly or through a broker; 

the initiative concerning a loan normally lies with the borrower; 

a  loan  is  an  unconditional  debt  to the  creditor  which  has  to  be  repaid  at  maturity  and 
which is interest-bearing. 

5.71.  Category F.4 may be divided, when relevant, into two sub-categories of financial  transactions: 

short-term loans (F.41) 

long-term loans (F.42). 

Short-term loans (F.41) 

5.72.  Definition:  The  sub-category  short-term  loans  (F.41)  consists  of  all  transactions  in  short-
term  loans  (AF.41)  that  is loans  with  a short-term  original  maturity  (see  5.22.) 
and loans repayable on demand. 

168-

Long-term  loans  (F.42) 

5.73.  Definition:  The  sub-category  long-term  loans  (F.42)  consists  of  all  transactions  in  long-term 

loans (AF.42) that  is loans with  a long-term  original  maturity  (see  5.22.). 

5.74.  The  distinction  between  transactions  in  loans  (F.4)  and  transactions  in  deposits  (F.22,  F.29) 
may  often  be  based  on  the  criterion  who  is  taking  the  initiative  for  the  transaction.  In  cases 
where  the  initiative  is taken  by  a borrower,  the transaction  is to classify  in the  category  loans. 
In  cases  where  the  initiative  is  taken  by  a  lender,  the  transaction  is  to  classify  in  one  of  the 
deposit  sub-categories.  However,  the  criterion  of  who  is taking  the  initiative  is  often  a  matter 
of judgement. 

5.75.  By  convention,  short-term  loans  granted  to  monetary  financial  institutions,  resident  or  non 
resident,  are  normally  classified  in  one  of  the  deposit  sub-categories  (AF.22,  AF.29),  and 
short-term  deposits  accepted  by  institutional  units  other  than  monetary  financial  institutions, 
resident  or  non-resident,  are  normally  classified  in  sub-category  short-term  loans  (AF.41). 
Therefore,  deposits  are  liabilities  predominantly  of  resident  and  non-resident  monetary 
financial  institutions  (see 5.44. and  5.49.), while monetary  financial  institutions  have  normally 
no  short-term  loan  liabilities  in the  System. 

5.76.  It might  be useful  analytically  to allow for  exceptions to the above  conventions.  Examples  are 
savings  deposits  with  general  government  and  non-monetary  gold  swaps  between  monetary 
financial  institutions  (see  5.8l.e)(1). 

5.77.  The  distinction  between  transactions  in  loans  (F.4)  and  transactions  in  securities  other  than 
shares  (F.3)  can  be  based  on  the  degree  of  marketability  of  the  financial  assets  and  its 
implications. 

5.78.  Security  issues  consist  of  a  large  number  of  identical  documents,  each  evidencing  a  round 
sum,  which  together  form  the  total  amount  borrowed.  Compared  with  this,  loans  are 
evidenced  in  most  cases  by  a  single  document  and  transactions  in  loans  are  carried  out 
between  one  creditor  and  one  debtor.  In  the  case  of  syndicated  loans,  however,  the  loan  is 
granted  by several  creditors. 

5.79.  Secondary  trade  in  loans  exists.  However,  individual  loans  are  only  traded  incidentally.  In 
cases where  a loan  becomes negotiable on an organized  market, it is to classify  in the  category 
securities  other  than  shares.  An  explicit  conversion  of  the  original  loan  is  normally  involved 
(see 5.62J  and  5.62.k). 

5.80.  Standard  loans  are  offered  in  most  cases  by  financial  corporations  and  they  are  often  granted 
to  households.  The  financial  corporations  determine  the  conditions  and  the  households  have 
only  the  choice  either  to  accept  or  not  to  accept.  Compared  with  this,  the  conditions  of  non 
standard  loans  are  usually  the  result  of negotiations  between  the  creditor  and  the  debtor.  This 
is  an  important  criterion  which  facilitates  a  distinction  between  non-standard  loans  and 
securities  other  than  shares.  In  the  case  of  public  security  issues,  the  issue  conditions  are 
determined  by  the  borrower,  possibly  after  consulting  the  bank/lead-manager.  In  the  case  of 
private  security  issues, however, the creditor and the debtor negotiate the  issue conditions  (see 
5.62.i). 

'  ' 

Foreign  exchange  swaps  between  the  central  bank  and  other  monetary  financial  institutions,  that  is  a  central  bank  acquires  foreign 
exchange  from  an other  monetary financial institutions  in return  for a deposit at the central  bank and  there  is a commitment  to  reverse 
the transaction  at a later date, are not classified  in the category  loans. This is a deviation  from  the  1993 SNA (11.33). 

169 

5.81.  Category AF.4 includes: 

a) 

b) 

c) 

d) 

e) 

f) 

g) 

h) 

balances  on current  accounts,  for  example,  intra-group  balances  between  non-financial 
corporations  and  their  non-resident  subsidiaries,  but  excluding  balances  which  are 
liabilities of monetary financial  institutions classified  in the deposit sub-categories; 

balances of employees because of participation in the corporation's  profits; 

repayable  margin  payments  related  to  financial  derivatives  which  are  liabilities  of 
institutional units other than monetary financial  institutions (see 5.46.e); 

short-term repurchase agreements (repos) which are liabilities of institutional units other 
than monetary financial  institutions (see 5.46.f) and long-term repurchase agreements; 

loans  arising  from  non-monetary  gold  swaps.  These  are  arrangements  involving  the 
temporary  exchange  of  non-monetary  gold  for  deposits.  Their  economic  nature  is 
similar to that of a collateralized loan in that the purchaser of the gold is providing to the 
seller advances backed by the gold for the period of the arrangement  and is receiving a 
return from the fixed price when the gold is repurchased; 

loans which are counterparts of bankers' acceptances (see 5.58.e); 

financial  leasing and hire-purchase agreements^) ; 

loans to finance trade credits; 

i)  mortgage loans; 

j) 

k) 

1) 

consumer credit; 

revolving credits; 

instalment loans; 

m) 

loans paid as a guarantee for fulfilling  certain obligations. 

5.82.  Category AF.4 includes  further: 

a) 

b) 

Financial  claims  or  liabilities  arising  from  the  medium-term  financial  assistance  for 
Member States' balances of payments. The loans are administered by the EMI<2); 

Financial  claims  on  the  IMF  evidenced  by  loans  under  the  General  Arrangements  to 
Borrow or under special borrowing arrangements with members; 

Liabilities to the IMF evidenced  by loans under the Structural  Adjustment  Facility, the 
Enhanced Structural Adjustment  Facility, and the Trust Fund. 

5.83.  Category AF.4 does not include: 

other accounts receivable/payable (AF.7), including trade credits and advances (AF.71); 

financial  assets  or  liabilities  arising  from  the  ownership  of  immovable  assets,  such  as 
land  and  structures,  by  non-residents.  They  are  classified  in  sub-position  other  equity 
(AF.513) (see  5.95.f). 

^  ' 
'  ' 

See annex 2 on leasing and hire purchase of durable goods. 
Article  6.1  third  indent  of  the  Protocol  on  the  Statute  of  the  European  Monetary  Institute  annexed  to  the  Treaty  establishing  the 
European  Community. 

170 

5.84.  Loans may  be financial  assets or liabilities of all  sectors  and  the rest of the world.  However, 
monetary financial  institutions have normally no short-term loan liabilities in the System. 

5.85.  The sub-categories  short-term  loans and long-term  loans are not divided  into sub-positions in 
the  System.  Nevertheless,  it  may  be  useful  analytically  to  divide,  in  particular,  long-term 
loans into consumer credit^), mortgage loans<2) and other loans. 

SHARES AND OTHER EQUITY (F.5) 

5.86.  Definition:  The  category  shares and other equity  (F.5) consists  of  all transactions  in  shares 
and other equity (AF.5) that is financial assets which represent property rights on 
corporations  or  quasi-corporations.  These  financial  assets  generally  entitle  the 
holders to a share in the profits of the corporations or quasi-corporations and to a 
share in their own funds  in the event of liquidation. 

5.87.  Category F.5 is divided into two sub-categories of financial transactions: 

shares and other equity, excluding mutual funds  shares (F.51) 

mutual funds  shares (F.52). 

Shares and other equity, excluding mutual funds shares (F.51) 

5.88.  Definition:  The  sub-category  shares and other  equity  excluding  mutual  funds  shares  (F.51) 
consists  of  all  transactions  in  shares  and  other  equity  excluding  mutual  funds 
shares (AF.51) that is financial  assets except mutual fund  shares which represent 
property  rights  on  corporations  or  quasi-corporations.  These  financial  assets 
generally entitle the holders to a share in the profits  of the corporations or quasi-
corporations and to a share in their own funds  in the event of liquidation. 

5.89.  Sub-category  F.51  may  be  divided,  when  relevant,  into  three  sub-positions  of  financial 

transactions: 

quoted shares, excluding mutual funds shares (F.511) 

unquoted shares, excluding mutual funds shares (F.512) 

other equity (F.513). 

Consumer credit  are loans granted  to households, which  in the case of these transactions are acting  for purposes outside their  business 
and profession.  Mortgage  loans for financing house building or buying (amongst others bridging loans) are excluded.  It is the  intention 
that  consumer  credit  relates  exclusively  to  credits  used  for  buying  goods  and/or  services  which  are  consumed  bu  the  households 
individually. National  practices  might necessitate a somewhat different  definition. 
Mortgage  loans  are  long-term  loans secured by a mortgage on a dwelling  used  by the  borrower  for  its own accommodation.  National 
practices  might necessitate  a somewhat different  definition. 

(2) 

- 171 

Quoted  shares,  excluding  mutual  funds  shares  (F.511),  and  unquoted  shares,  excluding 
mutual  funds  shares  (F.512) 

5.90.  Definition:  The  sub-position  quoted  shares  excluding  mutual  funds  shares  (F.511)  consists 
of  all  transactions  in  quoted  shares  excluding  mutual  funds  shares  (AF.511)  and 
the  sub-position  unquoted  shares  excluding  mutual  funds  shares  (F.512)  consists 
of  all  transactions  in  unquoted  shares  excluding  mutual  funds  shares  (AF.512). 
Shares  cover  beneficial  interest  in  the  capital  of  corporations  in  the  form  of 
securities  which  in  principle  are  negotiable.  Sub-position  AF.511  covers  those 
shares  with  prices  quoted  on  a  recognized  stock  exchange  or  other  form  of 
secondary  market,  and  sub-position  AF.512  covers  those  shares  that  are  not 
quoted. 

5.91.  Sub-positions  AF.511  and AF.512 include: 

a) 

b) 

capital  shares  issued  by  limited  liability  companies:  these  are  securities  which  give  the 
holders  the  status  of joint  owners  and entitle them both to a share  in the total  distributed 
profits  and  to a share in the net assets in the event of  liquidation; 

redeemed  shares  in  limited  liability  companies: these  are  shares  whose  capital  has  been 
repaid  but  which  are  retained  by  the  holders  who  continue  to  be joint  owners  and  to  be 
entitled  to  a  share  in  the  profits  left  after  dividends  have  been  paid  on  the  remaining 
registered  capital  and also to a share  in any  surplus which may  be  left  on  liquidation,  i.e. 
the net assets  less the remaining  registered  capital; 

c) 

dividend  shares issued  by  limited  liability  companies: these are  securities: 

-  which,  according  to  country  and  the  circumstances  in which  they  are  created,  have  a 
variety  of  names  such  as  founders'  shares,  profits  shares,  dividend  shares,  etc.  and 
which are not part  of the registered  capital; 

-  which  do  not  give the holders the  status  of joint  owners  strictly  speaking  (the right  to 
a  share  in  the repayment  of the registered  capital, the right  to a return  on  this  capital, 
the right to vote at shareholders' meetings, etc.); 

-  which  entitle  the  holders  to  a  proportion  of  any  profits  remaining  after  dividends 
have  been  paid  on the registered  capital  and to a fraction  of any surplus  remaining  on 
liquidation; 

d) 

preferred  (preference)  stocks or shares which provide  for  participation  in the  distribution 
of  the  residual  value  on  dissolution  of  a corporation.  These  may  be  quoted  or  unquoted 
on a recognized  exchange. 

5.92.  Sub-positions  AF.511  and AF.512 do not  include: 

shares offered  for  sale but not taken up on  issue. They  are not  recorded  in the  System; 

debentures  and  loan  stock convertible  into shares. They  are shown  in the accounts  under 
sub-category  AF.33  up to the time when they  are converted  (see  5.62.1); 

the  equity  of  partners  with  unlimited  liability  (unlimited  partners)  in  incorporated 
partnerships.  They  are classified  in sub-position  AF.513; 

172 

government  investments  in  the  capital  of  international  organizations  which  are  legally 
in  sub-position 
constituted  as  corporations  with  share  capital.  They  are  classified 
AF.513  (see  5.95.c). 

5.93.  Sub-positions  F.511  and  F.512  do  not  include  issues  of  bonus  shares  that  is  the  remittance  of 
new  shares  to  shareholders  in  proportion  to  their  holdings.  Such  an  issue,  which  changes 
neither  the  liability  of  the  corporation  vis-à-vis  the  shareholders  nor  the  proportion  of  the 
assets  that  each  shareholder  holds  in  the  corporation,  does  not  constitute  a  financial 
transaction  and  is  not  recorded  in  the  System  (see  6.56.).  The  same  applies  for  share  split 
issues. 

Other  equity  (F.513) 

5.94.  Definition:  The  sub-position  other  equity  (F.513)  consists  of  all  transactions  in  other  equity 
(AF.513)  that  is  all  forms  of  equity  other  than  those  classified  in  sub-positions 
AF.511 and  AF.512, and in sub-category  AF.52. 

5.95.  Sub-position  AF.513  includes: 

a) 

all forms  of equity  incorporations which are not shares: 

the equity  in incorporated partnerships  subscribed  by unlimited  partners; 

the  equity  in  limited  liability  companies  whose  owners  are  partners  and  not 
shareholders; 

the  capital 
independent  legal entities; 

invested 

in  ordinary  or 

limited  partnerships 

recognized  as 

the  capital  invested  in  co-operative  societies  recognized  as  independent 
entities; 

legal 

b) 

c) 

d) 

e) 

f) 

investments  by  general  government  in the  capital  of public  enterprises,  whose  capital  is 
not  divided  into  shares,  which  by  virtue  of  special  legislation  are  recognized  as 
independent  legal  entities  (see  2.16.c).  These  investments  cover  payments  made  by 
general  govemment,  which  are  intended  to  restructure  the  balance  sheet  of  the  public 
enterprise  and  thereby  increase  the  financial  assets  of  government  on  the  public 
enterprise; 

government  investments  in the  capital  of  international  and  supranational  organizations, 
with  the  sole  exception  of  the  IMF,  even  if  these  are  legally  constituted  as  companies 
with  share capital  (e.g. the European Investment  Bank); 

the  financial  resources  of  the  EMI  provided  out  of contributions  by  the  national  central 
banks<1); 

capital  invested  in  financial  and  non-financial  quasi-corporations  (see  2.13.f).  The 
amount  of  such  investments  corresponds  to  new  investments  (in  cash  or  kind)  less  any 
capital  withdrawals  (see 4.61.); 

the  financial  assets  that  non-resident  units  have  against  notional  resident  units  (see 
2.15.) and  vice  versa. 

(i) 

Article  16 2  of  the  Protocol  on  the  Statute  of  the  European  Monetary  Institute  annexed  to  the  Treaty  establishing  the  European 
Communitv. 

-  173 

Mutual  funds  shares  (F.52) 

5.96.  Definition:  The  sub-category  mutual  funds  shares  (F.52)  consists  of  all  transactions  in 
mutual  funds  shares  (AF.52)  that  is  shares  issued  by  a  specific  type  of  financial 
corporation,  whose  exclusive  purpose  is  to  invest  the  funds  collected  on  the 
money  market,  the capital  market  and/or  in real  estate. 

5.97.  Sub-category  AF.52  includes  the  shares  issued  by  financial  corporations  called,  according  to 
country,  mutual  funds,  unit  trusts,  undertakings  for  collective  investment  in  transferable 
securities  (UCITS),  whether  they  are  open-ended,  semi-open  or  closed-end  funds.  These 
shares  may  be  quoted  or  unquoted.  When  they  are  unquoted,  they  are  usually  repayable  on 
request,  at  a value  corresponding  to  their  share  in  the  own  funds  of  the  financial  corporation. 
These  own  funds  are  revalued  regularly  on  the  basis  of  the  market  prices  of  their  various 
components. 

INSURANCE  TECHNICAL  RESERVES (F.6)<1) 

5.98.  Definition:  The  category  insurance  technical  reserves  (F.6)  consists  of  all  transactions  in 
insurance  technical  reserves  (AF.6)  that  is  the  technical  provisions  of  insurance 
corporations  and  (autonomous  and  non-autonomous)  pension  funds  against 
policy  holders  or  beneficiaries  as  laid  down  in Council  Directive  91/674/EEC  of 
19  December  1991  on  the  annual  accounts  and  consolidated  accounts  of 
insurance  undertakings^). 

5.99.  Category  AF.6  covers: 

net equity  of households  in life  insurance  reserves 

net equity  of households  in pension funds  reserves 

prepayments  of  insurance  premiums 

reserves  for  outstanding  claims. 

5.100.  Insurance  technical  reserves are  financial  assets: 

for  policy  holders  - in respect  of  net  equity  of households  in  life  insurance  reserves  and 
in pension  funds  reserves, and prepayments  of insurance  premiums; 

for  beneficiaries  - in respect of reserves for  outstanding  claims. 

5.101.  Insurance  technical  reserves  are liabilities: 

of  life  or  non-life  insurance  corporations  and  autonomous  pension  funds  included  in  the 
sub-sector  insurance  corporations  and pension funds  (S.125); 

of  non-autonomous  pension  funds  included  in  the  sectors  of  the  institutional  units  that 
set them  up. 

'  ' 
*• ' 

See annex  3 on insurance  for a description of the treatment of social  insurance and other insurance  in the System. 
Official  Journal  of the European Communities No L 374 of 31 December  1991, p.  7-31. 

174  -

Provisions  or  similar  funds  constituted  by  employers  to  provide  employees  with  pensions 
(non-autonomous  pension  funds)  are  only  included  in  category  AF.6  if  they  are  calculated 
according  to actuarial  criteria  similar  to those  used  by  insurance  corporations  and  autonomous 
pension  funds.  Otherwise, these  provisions  are covered  by  the  shares  or other  equity  issued  by 
the  institutional  unit that sets up the  provisions. 

5.102.  Category  AF.6  does  not  include  provisions  established  by  institutional  units  classified  in  the 
sub-sector  social  security  funds  (S.l314).  In  the  System,  these  provisions  are  no  liabilities  of 
the social  security  funds  sub-sector. 

5.103.  Category  F.6  is divided  into two sub-categories of financial  transactions: 

net equity  of households  in life  insurance reserves and in pension  funds  reserves  (F.61) 

prepayments  of insurance premiums  and reserves for outstanding  claims (F.62). 

Net  equity  of households  in life insurance  reserves  and  in pension  funds  reserves  (F.61) 

5.104.  Definition:  The  sub-category  net  equity  of  households  in  life  insurance  reserves  and  in 
pension  funds  reserves  (F.61)  consists  of  all  transactions  in  net  equity  of 
households  in  life  insurance  reserves  and  in pension  funds  reserves  (AF.61)  that 
is  technical  provisions  set  aside  in  the  corporations  and  quasi-corporations 
concerned  for  the purpose  of satisfying,  once  the  established  conditions  are  met, 
the claims and benefits  foreseen. 

5.105.  Sub-category  F.61  is divided  into two  sub-positions  of  financial  transactions: 

net equity  of households  in life  insurance reserves  (F.611) 

net equity  of households  in pension  funds  reserves  (F.612). 

Net  equity  of households  in life insurance  reserves  (F.611) 

5.106.  Definition:  The  sub-position  net  equity  of  households  in  life  insurance  reserves  (F.611) 
consists  of  all  transactions  in  net  equity  of households  in  life  insurance  reserves 
(AF.611)  that  is  technical  provisions  against  outstanding  risks  and  technical 
provisions  for  with-profit  insurance  that  add  to  the  value  on  maturity  of  with-
profit  endowments  or similar  policies. 

5.107.  Sub-position  AF.611  includes  life  assurance  provisions,  provisions  for  bonuses  and  rebates 
and  technical  provisions  for  life-assurance  policies  where  the  investment  risk  is  borne  by  the 
policyholders  as  defined  in  articles  27,  29  and  31  of  Council  Directive  91/674/EEC  of  19 
December  1991 on the annual  accounts and consolidated  accounts of insurance  undertakings. 

5.108.  Transactions  in  net  equity  of  households  in  life  insurance  reserves  consist  of  additions  less 
reductions,  which  are  to  be  distinguished  from  nominal  holding  gains  or  losses  on  the  funds 
invested  by  insurance  corporations  (see 6.57.): 

175 

Additions consist of: 

actual premiums earned during the current accounting period 

plus  premium  supplements  corresponding  to  the  income  from  the  investment  of the 
provisions, which is attributed to policy holding households 

less service charges for life insurance. 

Reductions consist of: 

amounts due to holders of endowment and similar insurance policies when they mature 
and amounts due to beneficiaries  from deaths of insured persons 

plus payments due on policies that are surrendered before maturity. 

5.109.  Life  insurance  reserves  are  financial  assets  of  resident  or  non-resident  households  and 

liabilities of resident or non-resident insurance corporations. 

In  the case  of a  group  insurance  taken  out, for  example,  by a  corporation  on  behalf  of its 
employees, the employees, but not the employer, are deemed to be the creditors, since they are 
considered as the real policy holders. 

Net equity of households in pension funds reserves (F.612) 

5.110.  Definition:  The  sub-position  net  equity  of  households  in  pension  funds  reserves  (F.612) 
consists of all transactions in net equity of households in pension funds  reserves 
(AF.612) that  is technical  provisions  held  by autonomous  and non-autonomous 
pension  funds  established  by  employers  and/or  employees  or  groups  of  self-
employed to provide pensions for employees or self-employed. 

5.111.  Transaction  in net equity  of households  in pension  funds  reserves  consist  of  additions  less 
reductions,  which are to be distinguished  from  nominal  holding  gains or losses  on the  funds 
invested by pension funds (see 6.57.): 

Additions consist of: 

actual  contributions  into  pension  funds  payable  by  employees,  employers,  self-
employed or other institutional units on behalf of individuals or households with claims 
on the  funds 

plus contribution supplements corresponding to the income earned from the investment 
of the provisions of the pension funds, which are attributed to participating  households 

less service charges during the period for managing the funds. 

Reductions consist of: 

social  benefits  equal  to die  amounts  payable  to retired  persons  or their  dependants  in 
the form of regular payments or other  benefits 

plus  social  benefits  which  consist  of  any  lump  sums  payable  to  persons  when  they 
retire. 

176-

5.112.  Transactions  in  net  equity  of  households  in  pension  funds  reserves  do  not  include  funds 
transferred  from  non-autonomous  pension  funds  to  autonomous  pension  funds,  classified  in 
the  sub-sector  insurance  corporations  and  pension  funds  (S.125),  as  a result  of the  conversion 
of  one  fund  into  another  This  event  is.to  be  recorded  in  the  category  changes  in  sector 
classification  and  structure  (K.12.1) of the  other  changes  in  the  volume  of assets  account  (see 
6.30.). 

5.113.  Pension  funds  reserves  are  financial  assets  of  resident  or  non-resident  households  but  not 

financial  assets  of the  institutional  units that manage  them. 

Prepayments  of insurance  premiums  and reserves  for outstanding  claims  (F.62) 

5.114.  Definition:  The  sub-category  prepayments  of 

for 
outstanding  claims  (F.62)  consists  of  all 
in  prepayments  of 
insurance premiums  and reserves for  outstanding  claims  (AF.62) that  is  technical 
provisions  established  by  insurance  corporations  and  (autonomous  and  non-
autonomous)  pension funds  for 

insurance  premiums  and  reserves 

transactions 

the  amount  representing  that part  of gross  premiums  written  which  is to  be 
allocated  to  the  following  accounting  period  (prepayments  of  insurance 
premiums); 

the  total  estimated  ultimate  cost  of  settling  all  claims  arising  from  events 
which  have  occurred  up  to  the  end  of  the  accounting  period,  whether 
reported  or  not,  less  amounts  already  paid  in  respect  of  such  claims 
(provisions  for outstanding  claims). 

5.115.  Prepayments  of  insurance  premiums  result  from  the  fact  that  insurance  premiums  are,  in 
general, due to  be paid  at the start of the period  covered  by the  insurance,  and  this period  does 
not  normally  coincide  with  the  accounting  period  itself.  Therefore,  at  the  end  of  the 
accounting  period  when  the  balance  sheet  is  drawn  up,  parts  of  the  insurance  premiums 
payable during the accounting period  are intended  to cover risks  in the  subsequent  period.  The 
prepayments  of  insurance  premiums  are determined  on the basis  of the proportion  of the  risks 
involved  in relation  to time for the period remaining  to run until the contract  expires. 

In  the  financial  account,  the  prepayments  of  insurance  premiums  recorded  between  policy 
holders  and  insurance  corporations  consist  of  the  premiums  earned  -  those  parts  of  the 
premiums  that are payable  in the current accounting  period and that are intended  to  cover  risks 
outstanding  during  the following  period. 

5.116.  The  prepayments  of  insurance  premiums  are  financial  assets  of  the  policy  holders.  If  these 
insurance,  the  policy  holders  are  resident  or  non-resident 
prepayments  relate 
households.  If they  relate to non-life  insurance, the policy  holders may  belong to any  sector  of 
the  economy  or  to  the  rest  of the  world.  The  insurance  premiums  or  social  contributions  paid 
by  the  policy  holders  may  be taken  as the criterion  to  distribute  the  prepayments  of  insurance 
premiums  among  the  sectors of the economy  and the rest of the  world. 

to  life 

5.117.  Reserves  for  outstanding  claims  are  hold  by  insurance  corporations  in  order  to  cover  the 
amounts  they  expect  to  pay  out  in  respect  of  claims  that  are  not  yet  settled,  for  example, 
because  they  are  disputed.  Valid  claims  accepted  by  insurance  corporations  are  considered 
due  for  payment  when  the  event  that  gives  rise  to  the  claim  occurs  - however  long  it  takes  to 
settle  disputed  claims. 

177-

(12) 

5.118.  Reserves  for  outstanding  claims  are  financial  assets  of  the  beneficiaries  that  may  belong  to 

any sector of the economy or to the rest of the world. 

5.119.  Sub-category  AF.62  includes  provisions  for  unearned  premiums,  other  technical  provisions, 
claims  outstanding  and  equalization  provisions  as  defined  in  articles  25,  26,  28  and  30  of 
Council  Directive 91/674/EEC of  19 December  1991 on the annual accounts and consolidated 
accounts of insurance undertakings. 

OTHER ACCOUNTS RECEIVABLE/PAYABLE (F.7) 

5.120.  Definition:  The category other accounts receivable/payable  (F.7) consists of all  transactions 
in  other  accounts  receivable/payable  (AF.7)  that  is  financial  claims  which  are 
created  as  a  counterpart  of  a  financial  or  a  non-financial  transaction  in  cases 
where there is a timing difference  between this transaction and the corresponding 
payment. 

5.121.  Category  F.7  includes  transactions  in  financial  claims  which  stem  from  the  early  or  late 
payment  for  transactions  in goods or services, distributive  transactions  or  secondary  trade  in 
financial  assets. They  consist  of the counterpart  transactions  in case payment  is due  and  not 
yet paid.  Debts arising  from  income accruing  over time  and  arrears  are also classified  under 
this category. 

5.122.  Category F.7 does not include: 

statistical discrepancies other than timing differences  between transactions in goods and 
services,  distributive  transactions  or  financial  transactions  and  the  corresponding 
payments; 

items  about  which  there  is  not  enough  information  for  them  to  be  classified.  The 
classification  should be based on whatever information  is available; 

items about whose nature nothing whatsoever is known; 

the  miscellaneous  item  of  the  balance  of  payments  described  as  net  errors  and 
omissions; 

early  or late payment  (inclusive of arrears)  in case of the creation  of financial  assets or 
the redemption of liabilities other than classified  in category F.7. They remain  classified 
in their category. 

5.123.  Category F.7 is divided into two sub-categories of financial  transactions: 

trade credits and advances (F.71) 

other accounts receivable/payable, excluding trade credits and advances (F.79). 

Trade  credits and advances (F.71) 

5.124.  Definition:  The sub-category  trade credits and advances (F.71) consists of all transactions in 
trade credits and advances (AF.71) that is financial  claims arising from the direct 
extension  of  credit  by  suppliers  and  buyers  for  goods  and  services  transactions 
and  advance  payments  for  work  that  is  in  progress  or  to  be  undertaken  and 
associated with such transactions. 

178 

5.125.  Sub-category  AF.71  includes: 

a) 

b) 

c) 

d) 

financial  claims  relating  to  the  delivery  of  goods  or  services  where  payment  has  not 
taken  place; 

trade credit accepted  by factoring  corporations  except  when  regarded  as a  loan; 

rent of buildings accruing over time; 

arrears concerning  the payment  of goods and  services, when  not evidenced  by a  loan. 

5.126.  Sub-category  AF.71  does  not  include  loans  to  finance  trade  credits.  They  are  classified  in 

category  AF.4  (see  5.81.h). 

5.127.  Trade  credits  and  advances  may  be  financial  assets  or  liabilities  of  all  sectors  and  the  rest  of 

the  world. 

Other  accounts  receivable/payable,  excluding trade credits  and  advances  (F.79) 

5.128.  Definition:  The  sub-category  other  accounts  receivable/payable  excluding  trade  credits  and 
advances  (F.79)  consists  of all  transactions  in  other  accounts  receivable/payable 
excluding trade credits and advances  (AF.79) that  is financial  claims  which  arise 
from 
financial 
transactions  on the secondary  market  and the corresponding  payment.  It  includes 
also  financial  claims due to income accruing  over time. 

timing  differences  between  distributive 

transactions  or 

5.129.  Sub-category  AF.79  includes  financial  claims  created  as  a  result  of  the  timing  difference 

between  accrued transactions  and payments made in respect of,  for  example: 

a) 

b) 

c) 

d) 

e) 

f) 

g) 

taxes; 

social  contributions; 

wages and  salaries; 

rents on  land and  subsoil assets; 

dividends; 

interest; 

transactions  in  financial  assets on the secondary  market. 

5.130.  Preferably,  the  counterpart  financial  transaction  of  interest  accruing  on  financial  assets  (see 
5.17.) should  be  recorded  as being  reinvested  in that  financial  asset.  The  recording  of  interest 
will, however,  have to follow  national  practices. If the interest accrual  is not recorded  as  being 
reinvested  in the financial  asset, it should be classified  in sub-category  F.79. 

5.131.  At  the  date  due  for  payment  of  interest,  two  financial  transactions  are  recorded  (see  5.17.): 
firstly,  in the event  of payment,  a transaction  in the  financial  asset  used  for  payment,  or,  in  the 
event  of  non-payment,  an  increase  of  interest  arrears  to  be  recorded  in  sub-category  F.79; 
secondly,  the  counterpart  financial  transaction  reducing  the  net  financial  claim  of  the  creditor 
against  the  debtor. 

-179 

MEMORANDUM  ITEM:  DIRECT  FOREIGN  INVESTMENT  (F.m) 

that 

is  investment 

5.132.  Definition:  Direct  foreign  investment  (F.m)  consists  of  all  transactions  in  direct  foreign 
investment  (AF.m) 
relationship 
reflecting  a  lasting  interest  of  a  resident  institutional  unit  in  one  economy 
("direct  investor")  in  an  institutional  unit  resident  in  an  economy  other  than  that 
of  the  investor  ("direct  investment  enterprise").  The  direct  investor's  purpose  is 
to  exert  a  significant  degree  of  influence  on  the  management  of  the  enterprise 
resident  in  the  other  economy.  Direct  investment  involves  both  the  initial 
transaction  between  the  direct  investor  and  the  direct  investment  enterprise  and 
all  subsequent  capital 
affiliated 
enterprises, both incorporated  and  unincorporated*1). 

transactions  between 

them  and  among 

involving  a 

long-term 

5.133.  Transactions  in  financial  assets  and  liabilities  that  constitute  direct  foreign  investment  are  to 
be  recorded  under  the  appropriate  categories  of  financial  transactions,  i.e.  loans  (F.4),  shares 
and  other  equity  (F.5)  and  other  accounts  receivable/payable  (F.7).  However,  the  amounts  of 
direct  foreign  investment  included  within  each  of  those  categories  should  also  be  recorded 
separately  as a memorandum  item. 

ACCOUNTING  RULES  FOR  FINANCIAL  TRANSACTIONS 

Valuation 

5.134.  Financial  transactions  are  recorded  at  the  transaction  value  that  is  the  value  in  national 
currency  at  which  the  financial  assets  and/or  liabilities  involved  are  created,  liquidated, 
exchanged  or assumed  between  institutional  units, or between  them  and  the  rest  of  the  world, 
on the basis of commercial  considerations  only. 

5.135.  Financial  transactions  and  their  financial  or  non-financial  counterpart 
recorded  at the same transaction value. Three possibilities can be  envisaged: 

transactions  are 

a) 

b) 

c) 

the  financial  transaction  is  a transaction  in  means  of  payment  in  national  currency  (see 
5.04.  and  5.23.):  The transaction  value  is equal  to the  amount  of the  means  of  payment 
exchanged; 

the  financial  transactions  is  a transaction  in  means  of payment  in  foreign  currency  (see 
5.04.  and  5.23.)  and  the  counterpart  transaction  is  not  a  transaction  in  means  of 
payment  in  national  currency:  The  transaction  value  is  equal  to  the  amount  of  the 
means  of payment  exchanged  converted  into  national  currency  applying  the  market  rate 
prevailing  when  the payment  takes place; 

neither  the  financial  transactions  nor  its  counterpart  transaction  is  a  transaction  in 
means  of  payment  (see  5.04.):  The  transaction  value  is  identified  with  the  current 
market value of the financial  assets and/or  liabilities  involved. 

'  ' 

OECD benchmark  definition  of foreign  direct  investment, 3rd edition. 

180 

5.136.  The transaction  value refers  to a specific  financial  transaction  and  its counterpart  transaction. 
In concept,  the transaction  value is to be clearly  distinguished  from  a value  based  on a price 
quoted in the market, a fair market price, or any price that is intended to express the generality 
of prices for a class of similar or even identical  financial  assets and/or  liabilities. However, in 
cases  where  the  counterpart  transaction  of  a  financial  transaction  is,  for  example,  a  transfer 
and  therefore  the  financial  transaction  is  undertaken  other  than  for  purely  commercial 
considerations,  the  transaction  value  is  identified  with  the  current  market  value  of  the 
financial  assets and/or liabilities involved. 

5.137.  The  transaction  value  does  not  include  service  charges,  fees,  commissions,  and  similar 
payments  for  services  provided  in  carrying  out the  transactions; these  are  to  be  recorded  as 
payments  for  services. Taxes on financial  transactions  are also excluded  and treated  as taxes 
on  services  within  taxes  on products.  When  a  financial  transaction  involves  a  new  issue  of 
liabilities,  the transaction  value  is equal  to  the  amount  of  the  liability  incurred  exclusive  of 
any prepaid interest. Similarly, when a liability is extinguished, the transaction  value for  both 
creditor and debtor must correspond to the reduction of the liability. 

Special valuation criteria for some sub-categories of financial transactions 

5.138.  Securities other than shares, excluding financial derivatives (F.33) 

a)  When  securities  are  marketed  by  issuers  through  underwriters  or  other  intermediaries 
and then sold at higher prices to final  investors, the financial  assets and liabilities are to 
be  recorded  at  the values paid  by the  investors.  The  differences  between  the  amounts 
paid  by  the  investors  and  those  received  by  the  issuers  should  be  treated  as  service 
payments paid by the issuers to the underwriters; 

b) 

Security  issues are recorded at the issue value. When securities are issued  at a discount 
or at a premium, the proceeds to the issuer at the time of sale, and not the face  value, is 
recorded  in  the  accounts  as  the  actual  issue  value.  The  difference  between  the  issue 
value and the redemption value is treated as interest that is accrued  over the  life  of the 
security; 

c)  Deep-discount or zero-coupon bonds should be treated as securities issued at a discount. 
The interest is accrued over the life of the bonds and treated as being reinvested  in such 
bonds (see 4.46.); 

d)  When  long-term  securities  are  issued  at  a  discount,  which  is  not  significant,  the 
difference  between the issue value and the redemption value can be imputed  at the date 
of issue; 

e) 

f) 

g) 

In case of securities where the value of the principal is linked to a price index, the price 
of a commodity  or an exchange rate index, the issue price of the security  is recorded as 
the  principal  and  the  index  payment  paid  periodically  and/or  at  maturity  is  treated  as 
interest  that  is accrued  over the  life  of the  security,  and  the  counterpart  is  recorded  as 
reinvestment in securities other than shares in the financial account; 

Investment  in securities  in circulation on the secondary  market  is recorded  at the  stock 
exchange quotation or market price; 

Securities  which  have  reached  maturity  are  recorded  at  redemption  value,  which 
includes redemption premiums but excludes payments by lottery and savings premiums, 
which are recorded as interest; 

- 181 

h) 

The conversion of bonds into shares should be treated as a sale of bonds and a purchase 
of shares (see 5.62.1). The transaction value is to be derived from the market value of the 
bonds disposed  of,  possibly  implying a holding gain or  loss on shares to be recorded in 
the revaluation account (see 6.54.). 

5.139.  Financial derivatives (F.34) 

a) 

b) 

c) 

Secondary  trade  in options  and  closing  out  options  prior  to  delivery  involve  financial 
transactions. If an option proceeds to delivery, it may be exercised  or not exercised. In 
cases where the option is exercised, there may be a payment  from  the option writer to 
the  option  holder  equal  to  the  difference  between  the  prevailing  market  price  of  the 
underlying  asset  and the strike price, or, alternatively,  there  may  be the  acquisition  or 
sale of the underlying  financial  or non-financial  asset recorded  at the prevailing market 
price and a counterpart payment between the option holder and the option writer equal 
to the strike price. The difference  between the prevailing market price of the underlying 
asset  and  the  strike price is in both  cases equal  to  the  liquidation  value  of  the  option, 
that  is  the  option  price  at  delivery.  In  cases  where  the  option  is  not  exercised,  no 
transaction takes place. However, the option writer makes a holding gain and the option 
holder makes a holding loss to be recorded in the revaluation account; 

Financial  derivatives  other  than  options  typically  involve  contracts  where  two  parties 
agree  to  exchange  specified  assets,  either  real  or  financial,  at  some  future  point  or 
points  in  time.  The  transactions  which  are  to  be  recorded  against  such  financial 
derivatives  include any trading  in the contracts  as well  as the  net  value  of  settlements 
made.  There  may  also  be  the  need  to  record  transactions  associated  with  the 
establishment  of  derivative  contracts.  However,  in  many  cases,  the  two  parties  will 
enter into a derivative contract without any payment by one party to the other; in these 
cases the value of the transaction establishing the contract is nil and no entry is actually 
required in the financial  account; 

Any  explicit  commissions  paid to or received  from  brokers  or other  intermediaries  for 
arranging  options,  futures,  swaps,  and  other  derivatives  contracts  are  treated  as 
payments  for  services  in  the  appropriate  accounts.  Streams  of  interest  payments 
resulting  from  swap  arrangements  are  to  be  recorded  as  property  income  and 
repayments  of  principal  are  to  be  recorded  in  the  financial  account.  The  parties  to  a 
swap are not considered  to be providing  a service to  each  other,  but  any  payment to a 
third party for arranging the swap should be treated as payment for a service (see 4.47.). 
While  the  premium  paid  to  the  seller  of an  option  can  conceptually  be  considered  to 
include a service charge, in practice, it is usually not possible to distinguish the service 
element. Therefore,  the full  price is to be recorded as acquisition of a financial  asset by 
the buyer and as incurrence of a liability by the seller. 

182 

5.140.  Shares and other equity, excluding  mutual  funds  shares (F.51) 

a) 

b) 

c) 

d) 

e) 

New  shares  are  recorded  at  issue  value,  which  normally  corresponds  to  nominal  value 
plus the issue  premium; 

Transactions  in  shares  in circulation  are  to  be  recorded  at  their  transaction  value.  When 
it  is  not  known,  it  may  be  approximated  by  the  stock  exchange  quotation  or  market 
price  for  quoted  shares and  by the book value  for unquoted  shares; 

Scrip dividend  shares are valued at the price implied  by the issuer's dividend  proposal; 

Issues  of  bonus  shares  are  not  recorded  in  the  System  (see  5.93.).  However,  in  cases 
where the issue  of bonus shares involves  changes  in the total  market  value  of the  shares 
of a corporation,  the changes are to be recorded  in the revaluation  account  (see  6.56.). 

The  transaction  value  of  other  equity  (F.513)  is the  amount  of  funds  transferred  by  the 
owners  to  their  corporations  or  quasi-corporations.  In  some  cases,  funds  can  be 
transferred  by assuming  liabilities of the corporation  or  quasi-corporation. 

5.141.  Mutual  funds  shares  (F.52) 

a) 

b) 

Transactions  in mutual  funds  shares include the value of net  contributions  to a  fund; 

Property  income  received  by  mutual  funds,  net  of  a  part  of  management  costs,  and 
assigned  to  shareholders,  even  though  it  is  not  distributed,  have  a  counterpart  entry  in 
the  financial  account  under  mutual  funds  shares.  The  effect  is  that  property  income  is 
reinvested. 

Time  of  recording 

5.142.  Financial  transactions  and  their  counterpart  transactions  are  to  be  recorded  at  the  same  point 

in time. 

5.143.  When  the  counterpart  of  a  financial  transaction  is  a  non-financial  transaction,  both  are 
recorded  at  the  time  the  non-financial  transaction  takes  place.  For  example,  when  sales  of 
goods  or  services  give  rise  to  a  trade  credit,  this  financial  transaction  is  to  be  recorded  when 
the entries are made  in the relevant non-financial  account. 

5.144.  When  the  counterpart  of  a  financial  transaction  is  also  a  financial 

transaction, 

three 

possibilities  can be  envisaged: 

a) 

b) 

c) 

both  financial  transactions  are  transactions  in  means  of  payment  (see  5.04.):  They  are 
recorded  at the time the first payment  is made; 

only  one  of  the  two  financial  transactions  is  a  transaction  in  means  of  payment  (see 
5.04.): They  are recorded  at the time payment  is made; 

neither  of  the  two  financial  transactions  is  a  transaction  in  means  of  payment  (see 
5.04.): They  are recorded  at the time the  first  financial  transaction  takes  place. 

183-

Compiling financial  transactions from changes  in balance sheets 

5.145.  In cases where basic statistics on financial  transactions are not available, financial transactions 
may be compiled  based  on changes in financial  balance sheets, that  is changes  in the amount 
of  financial  assets  held  and  liabilities  outstanding  between  the closing  balance  sheet  and  the 
opening  balance  sheet.  The  difference  between  the amount  of  financial  transactions  and  the 
changes in financial  balance sheets consists of entries in the revaluation account and the other 
changes in the volume of assets account. 

-184-

ANNEX 

LINK WITH MEASURES OF MONEY 

5.146.  This  annex  explains  a  method  which  allows  to  show  measures  of  money  in  the  balance 

sheets and the financial  accounts. 

5.147.  The  definitions  of  the  measures  of  money  applied  vary  among  countries  and  in  time.  In 
addition,  these definitions  are not necessarily  based  on the classification  of financial assets 
and the classification  of sectors as defined  in the System. Therefore,  measures of money are 
not defined  in the System. 

5.148.  The following  problems appear by integrating measures of money  in the balance  sheets and 
the  financial  accounts.  Firstly,  the  measures  of  money  may  be  composed  of  components 
which  do  not  correspond  with the classes, that  is to  say  the  categories,  sub-categories  and 
sub-positions, of financial assets as defined  in the System. For example, a measure of money 
may  include  only  a  sub-class  of  the  category  currency  and  deposits  (AF.2).  The  sub-class 
may  be  defined  by  a  reference  to  maturity  and/or  by  a  reference  to  the  institutional  units 
holding  or  issuing  currency  and  deposits.  Secondly,  the  measures  of  money  may  imply 
money-creating,  money-holding  and  money-neutral  sectors  which  cannot  be  composed  of 
the  sectors  and  sub-sectors  as  defined  in  the  System.  Thirdly,  the  data  sources  used  for 
compiling  monetary  aggregates  may  in  practice  differ  from  the  data  sources  used  for 
compiling  the  balance  sheets  and  the financial accounts  of  the  sectors  and  the  rest  of  the 
world. 

5.149.  In order to identify  a measure of money MX in the balance sheets or the financial  accounts, 
it may  be necessary to subdivide any class i of financial assets and  liabilities defined  in the 
System into two sub-classes: 

MXJ:  sub-class of financial  assets (liabilities) classified  in class i and included  in the 

measure of money MX; 

MX_J:  sub-class of financial  assets (liabilities) classified  in class i but not  included  in 

the measure of money MX. 

In  practice,  some  classes  of  financial  assets  (liabilities)  do  not  contribute  even  to  broad 
measures  of  money,  for  example,  monetary  gold  and  SDRs  (AF.l)  or  insurance  technical 
reserves  (AF.6).  Therefore,  MXi  and  MXg  would  be  zero, that  is  to  say  a  breakdown  of 
AF.l  in MXj  and MX.j  or of AF.6 in MX^ and MX_g is not necessary. 

5.150.  The measure of money MX is equal to the sum of all sub-classes of financial assets MXj of 
the  money-holding  sectors and MX is equal to the sum of all  sub-classes  of liabilities  MXj 
of the money-creating sectors. 

5.151.  A main advantage of this method is its flexibility.  In cases where the definition  of a measure 
of money  is changed, only the breakdowns of some classes of financial  assets and  liabilities 
into MXj an(^ MX_j have to be adapted. 

-  185-

Measures  of money in the balance sheets or the financial  accounts 

FINANCIAL  ASSETS  OF  MONEY-HOLDING  SECTORS 

LIABILITIES  OF  MONEY-CREATING  SECTORS 

Total 

Households 

Non-financial 

Monetary  financial 

Rest  of  the  world 

Total 

corporations 

institutions 

AF.1 

AF.2 

of which  MX, 
MX-2 

AF.3 

AF.33 

of which  MXr 
MX-, 

AF.34 

of which  MX»\ 
MX.» 

AF.4 

AF.41 

ofwhich 

\MX}, 

AF.42 

ofwhich  MX* 
MX^ 

AF.5 

AF.51 

ofwhich  MX, 
MX-

AF.52 

ofwhich  \MX» 
MX-n 

AF.6 

AF.7 

AF.71 

ofwhich  MXv 
MX-n 

AF.79 

Total of  financial 

assets  and  liabilities 

ofwhich 

\MX\ 

CHAPTER VI 

OTHER FLOWS 

187-

6.01. 

Other  flows  cover  consumption  of  fixed  capital  (K.l),  acquisitions  and  disposals  of  non-
financial  non-produced  assets (K.2) and  other  changes  in assets (K.3 -  K.l2). 

The  other  changes  in  assets  consist  of  different  kinds  of  changes  in  assets,  liabilities  and 
net worth  which  are not the result of transactions  being recorded  in the capital  and  financial 
accounts.  They  cover  other  changes  in  volume  (K.3  -  K.10  and  K. 12)  and  also  holding 
gains  and  losses  (K.l 1). 

Consumption  of  fixed  capital  (K.l) 

6.02. 

6.03. 

6.04. 

Definition:  Consumption  of  fixed  capital  (K.l)  represents  the  amount  of  fixed  assets  used 
up,  during  the period  under  consideration,  as  a result  of  normal  wear  and  tear 
and  foreseeable  obsolescence,  including a provision  for  losses  of  fixed  assets  as 
a result  of accidental  damage which  can be insured  against. 

Consumption  of  fixed  capital  must  be  calculated  for  all  fixed  assets,  including  both 
tangible  fixed  assets  and  intangible  fixed  assets  such  as  mineral  exploration  costs  and 
software,  major  improvements  to  non-produced  assets  and  costs  of  ownership  transfers 
associated  with non-produced  assets. 

Consumption  of  fixed  capital  (which  should  be  distinguished  from  the  depreciation 
allowed  for  tax  purposes  or  the  depreciation  shown  in  business  accounts)  should  be 
estimated  on  the  basis  of  the  stock  of  fixed  assets  and  the  probable  average  economic  life 
of  the  different  categories  of  those  goods.  For  the  calculation  of  the  stock  of  fixed  assets, 
the  perpetual  inventory  method  is recommended  whenever  direct  information  on  the  stock 
of  fixed  assets  is  missing.  The  stock  of  fixed  assets  should  be  valued  at  the  purchasers' 
prices  of the current  period. 

Losses  of  fixed  assets  occurring  as  a  result  of  accidental  damage  which  can  be  insured 
against  are  taken  into  account  in  calculating  the  average  service  life  of  the  goods  in 
question.  For  the  economy  as  a whole  the  actual  normal  accidental  damage  within  a  given 
accounting  period  may  be  expected  to  be  equal,  or  close,  to  the  average.  However,  for 
individual  units  and  groupings  of  units  actual  normal  and  average  accidental  damage  may 
differ.  In  this  case,  for  sectors,  any  difference  is  recorded  as  other  changes  in  volume  of 
fixed  assets. 

Consumption  of  fixed  capital  is  calculated  according  to  the  "straight  line"  method,  by 
which  the  value  of  a  fixed  asset  is written  off  at  a constant  rate  over  the  whole  lifetime  of 
the  good. 

However,  depending  on  the  pattern  of  decline  in  the  efficiency  of  a  fixed  asset  the 
calculation  of consumption  of  fixed  capital  according to the geometric  depreciation  method 
may  be  required. 

6.05. 

In  the  system  of  accounts  consumption  of  fixed  capital  is  recorded  below  each  balancing 
.  Recording  "gross"  means  without  deducting 
item,  which  is  shown  gross  and  net 
consumption  of  fixed  capital,  while  recording  "net"  means  after  deducting  consumption  of 
fixed  capital. 

188  -

Acquisitions  less disposais  of non-financial  non-produced  assets  (K.2) 

6.06. 

6.07. 

Definition:  Non-financial  non-produced  assets^)  consist  of  land  and  other  tangible  non-
produced  assets  that  may  be  used  in  the  production  of  goods  and  services,  and 
intangible non-produced  assets. 

Land  is defined  as the ground  itself, including  soil covering and associated  surface  waterO). 
The  associated  surface  water  includes  any  inland  waters  -  reservoirs,  lakes,  rivers,  etc.  -
over which  ownership  rights can be  exercised. 

6.08. 

The  following  items are not  included  in  land: 

a)  buildings  or other structures on the land or through  it - roads, tunnels, etc.; 

b)  vineyards, orchards, or other plantations of trees and any growing  crops, etc.; 

c) 

subsoil  assets; 

d)  non-cultivated  biological  resources; 

e)  water resources  below the  ground. 

6.09. 

6.10. 

6.11. 

6.12. 

Items a) et b) are produced  fixed  assets, items c), d) and e) belong to tangible  non-produced 
assets. 

Acquisitions  and disposals of land are valued  at current market prices prevailing  at the  time 
the  acquisitions/disposals  occur.  Transactions  with  land  are  recorded  at  the  same  value 
both  in  the  accounts  of  the  purchaser  and  in  those  of  the  seller.  This  value  excludes  the 
costs  involved  in the transfer  of ownership  of land,  which  are treated  as gross  fixed  capital 
formation. 

Acquisitions  and  disposals of other tangible  non-produced  assets  cover  subsoil  assets,  non-
cultivated  biological  resources  and  water  resources.  Subsoil  assets  include  coal,  oil  and 
natural  gas reserves, metallic mineral reserves and non-metallic  mineral  reserves^). 

Acquisitions  and  disposals  of  other  tangible  non-produced  assets  are  valued  at  current 
market  prices  prevailing  at  the  time  the  acquisitions/disposals  occur.  Acquisitions  and 
disposals  exclude  the  associated  costs  of  ownership  transfer.  The  latter  are  recorded  as 
gross  fixed  capital  formation. 

Intangible  non-financial  non-produced  assets  consist  of  patented  entities,  leases  or  other 
transferable  contracts,  purchased  goodwill  and  other  intangible  non-produced  assets.  Such 
leases  are  on  land,  subsoil  assets  and  residential  and  non-residential  buildings^).  Further 
examples  include  transferable  contracts  with  athletes  and  authors.  The  value  of  the 
acquisitions  or  disposals  of  leases  or  other  transferable  contracts  consists  of  payments 
made  to  the  original  or  subsequent  tenants  or  lessees  when  the  leases  or  concessions  are 
sold  or  transferred  to  other  institutional  units.  The  value  of  acquisitions  and  disposals  of 
intangible  non-produced  assets  excludes  the  associated  costs  of  ownership  transfer.  The 
costs of ownership  transfer  are a component  of gross  fixed  capital  formation. 

6.13. 

Acquisitions  less disposals  of non-financial  non-produced  assets  are  recorded  in the  capital 
account  of the sectors, the total economy  and the rest of the  world. 

(i) 

for  the definition  of assets see Annex  1  to chapter VII. 

Other  changes  in assets (K.3 - K.12) 

6.14.  Definition:  Other  changes  in  assets  are  flows  which  are  not  the  result  of  transactions 
recorded  in the capital  and  financial  accounts. Two kinds  of other  changes  are 
distinguished.  The first kind  consists  of  changes  in the  volume  of  assets.  The 
second  consists  of changes  in the value of assets,  liabilities  and net  worth  due 
to  changes  in  the  level  and  structure  of  prices  leading  to  holding  gains  or 
losses. 

Other changes in volume (K.3 - K.10 and K.12) 

6.15.  Other changes  in volume  are flows  with  different  functions.  One  important  function  is to 
allow  certain  assets  to  enter  and  leave  the  System  in  the  normal  course  of  events  -  e.g. 
entrances  and  exits  of  naturally  occurring  assets.  This  is  important  for  recording  the 
discovery,  depletion  and degradation  of natural  assets. A second  function  is to record  the 
effect  of exceptional, unanticipated events that affect  the economic benefits  derivable from 
assets. 

6.16. 

The other changes in volume cover nine categories: 

Economic appearance of non-produced assets (K.3) 

Economic appearance of produced assets (K.4) 

Natural growth of non-cultivated biological resources (K.5) 

Economic disappearance of non-produced assets (K.6) 

Catastrophic losses (K.7) 

Uncompensated  seizures (K.8) 

Other volume changes in non-financial  assets n.e.c. (K.9) 

Other volume changes in financial assets and liabilities n.e.c. (K.10) 

Changes in classifications and structure (K.12). 

Economic appearance of non-produced assets (K.3) 

6.17. 

Economic appearance of non-financial  non-produced assets (K.3) represents the increase in 
the volume of this kind of assets that is not the result of production. 

Included are: 

a)  gross  increases  in the  level  of exploitable  subsoil  resources: proven  reserves  of  coal, 
oil,  natural  gas,  metallic  minerals  or  non-metallic  minerals  that  are  economically 
exploitable.  This also covers the  increase  in reserves  for  which  exploitation  becomes 
economic as a result of technological progress or relative price changes. 

b) 

transfers  of other  natural  assets to  economic  activity:  naturally  occurring  entities  that 
change status to qualify  as economic assets, economic assets being entities over which 
ownership rights are enforced  by institutional units and from  which economic  benefits 
may  be  derived  by  their  owners  (e.g.  exploitation  of  virgin  forests,  transfer  of  land 
from a wild or waste state to land that can be put to economic use, land reclamation). 

- 190 

c)  quality  changes  in  non-produced  assets  due  to  changes  in  economic  uses.  Changes  in 
quality  are  treated  as  changes  in  volume.  The  quality  changes  recorded  here  occur  as 
the  counterpart  of  the  changés  in  economic  use  that  are  shown  as  changes  in 
classification  (see 6.32.)  - e.g.  from  cultivated  land  to land  underlying  buildings. 

d)  appearance  of  intangible  non-produced  assets.  Intangible  non-financial  non-produced 
assets  arise  when  entities  are patented  or transferable  contracts  are  written.  Also  when 
enterprises  are  sold  at  prices  that  exceed  their  own  funds  (see  7.05.),  the  excess  of 
purchase  price  over  own  funds  is  the  asset  "purchased  goodwill".  Goodwill  not 
evidenced  by a sale/purchase  is not considered  as an economic  asset. 

Economic  appearance  of produced  assets (K.4) 

6.18. 

Economic  appearance  of  produced  assets  (K.4)  occurs  in  the  case  of  goods  that  are  not 
already  recorded  in the Balance  Sheets. It is the recognition  of a significant  or  special  value 
that  is considered  an economic appearance to be recorded  under  other changes  in  volume. 

Economic  appearance  of produced  assets includes: 

a)  valuables,  such  as  precious  stones  and  art  objects,  when  the  high  value  or  artistic 
significance  of an object  not already recorded  in the Balance  Sheets is  first  recognized; 

b)  historic  monuments,when  the  special  archeological,  historical  or  cultural  significance 
of a structure  or site not already recorded  in the Balance  Sheets  is  first  recognized. 

Natural  growth  of non-cultivated  biological  resources  (K.5) 

6.19. 

6.20. 

Natural  growth  of  non-cultivated  biological  resources  (K.5)  is not  under  the  direct  control, 
responsibility  and  management  of  an  institutional  unit  and  thus  is  not  production.  The 
increment  in these  economic  assets such as standing  natural  timber,  or  fish  in the  estuaries, 
must then be regarded  as an economic  appearance. 

Natural  growth  should  be  recorded  as  an  addition  (K.5)  ; the  depletion  of  these  resources 
should  be  recorded  as  an  economic  disappearance  (K.61).  In  practice,  however,  natural 
growth  can  only  be  recorded  net  because  the  physical  measurements  that  are  likely  to  be 
the only  basis available  for  the recording are, in effect,  net  measurements. 

Economic  disappearance  of non-produced  assets  (K.6) 

6.21. 

Economic  disappearance  of non-financial  non-produced  assets (K.6)  includes: 

a)  depletion  of  natural  economic  assets  (K.61), which  covers  the  reduction  of  deposits  of 
subsoil  assets  and  the  depletion  of non-cultivated  biological  resources  included  in  the 
asset  boundary  (see  6.19.); 

b)  other  economic  disappearance  of non-produced  assets (K.62): 

other  reductions  in  the  level  of  exploitable  subsoil  resources  (reassessments  of 
exploitability  due to changes  in technology  or relative prices), 

quality  change  in non-produced  assets due to changes  in economic  uses, 

191 

degradation  of  non-produced  assets  due  to  economic  activity.  Covered 
degradation  of  land, water resources  and  in principle of other  natural  assets, 

is 

write-off  of  purchased  goodwill,  cancellation  of  transferable  contracts  and 
exhaustion  of patent  protection. 

Catastrophic  losses  (K.7) 

6.22. 

6.23. 

Catastrophic  losses  (K.7) recorded  as other changes  in the volume  of assets  are  the result  of 
large-scale,  discrete  and  recognizable  events  that  may  destroy  items  within  any  of  the 
categories  of economic  (non-financial  or financial)  assets. 

Such  events  include  major  earthquakes,  volcanic  eruptions,  tidal  waves,  exceptionally 
severe  hurricanes,  drought  and  other  natural  disasters  ; acts of war,  riots  and  other  political 
events  ;  and  technological  accidents  such  as  major  toxic  spills  or  release  of  radioactive 
particles  into the  air. 

Included here are  in  particular: 

a)  deterioration  in the quality  of land caused by abnormal  flooding  or wind  damage; 

b)  destruction  of  cultivated  assets by drought or outbreak of disease; 

c)  destruction  of  buildings, equipment or valuables in forest  fires  or  earthquakes; 

d)  accidental  destruction  of  currency  or  bearer  securities  as  a  result  of  natural 

catastrophes  or  political  events. 

Uncompensated  seizures  (K.8) 

6.24. 

Uncompensated  seizures  (K.8)  occur  when  governments  or  other  institutional  units  take 
possession  of  the  assets  of  other  institutional  units,  including  non-resident  units,  without 
full  compensation,  for  reasons  other  than the payment  of taxes,  fines  or  similar  levies.  The 
uncompensated  part  of  such  unilateral  seizures  is  not  a  capital  transfer  recorded  in  the 
capital  account. 

Other volume  changes  in  non-financial  assets  n.e.c.  (K.9) 

6.25. 

Under  other  volume  changes  in  non-financial  assets  (K.9)  are  recorded  the  effects  of 
unexpected  events  on the economic benefits  derivable from  assets. 

Included  are: 

a)  unforeseen  obsolescence.  Consumption  of  fixed  capital  does  not  cover  unforeseen 
obsolescence  in  fixed  assets,  and  the  amount  included  for  their  normally  expected 
obsolescence  may  fall  short  of  the  actual  obsolescence.  Entries  must,  therefore,  be 
made  for  the  decline  in the  value  of the  fixed  assets  resulting  from  the  introduction  of 
improved  technology. 

b)  differences  between  allowances  included  in  consumption  of  fixed  capital  for  normal 
damage  and  actual  losses.  Consumption  of  fixed  capital  does  not  cover  unforeseen 
damage,  and  the  amount  included  for  their  normally  expected  damage  may  fall  short 
(or exceed)  the  actual  damage. Adjustments  must therefore  be  made  for  the  unforeseen 
decline  (or  increase)  in the value of the  fixed  assets due to these  events. 

192 

c)  degradation  of fixed assets not accounted  for  in consumption  of fixed capital:  decline 
in the value of fixed assets from, for  example, the  unforeseen  effects  of acidity  in air 
and rain on building surfaces or vehicle bodies. 

d)  abandonment  of  production  facilities  before  completion  or  being  brought  into 

economic use. 

e)  exceptional  losses  in  inventories  (e.g.  from  fire  damage,  from  robberies,  from  insect 

infestation  of grain stores). 

f) 

statistical  discrepancies  concerning  non-financial  assets  between  the  closing  balance 
sheet and the corresponding opening balance sheet. 

Other volume changes in financial  assets and liabilities n.e.c. (K.10) 

6.26.  Any  changes  in  financial  assets  and  liabilities  that  are  not  due  to  financial  transactions 
recorded  in  the  financial  account,  that  are  not  attributed  to  holding  gains  and  losses 
recorded in the revaluation account, that are not changes in classifications  and structure and 
that are not due to catastrophic losses and uncompensated seizures are to be recorded here. 

6.27.  Category K.10 includes: 

a)  allocations and cancellations of SDRs (AF.12) (see 5.33.-5.35.):  For SDRs not even a 
notional  liability  exists.  Therefore,  the  mechanism  by  which  SDRs  are  created 
(referred  to  as  allocations  of  SDRs)  and  extinguished  (cancellations  of  SDRs)  is  not 
treated as one that gives rise to transactions but rather to entries in the other changes in 
the volume of assets account. Allocations of SDRs increase the financial assets of the 
monetary authorities, cancellations of SDRs decrease their financial assets. 

b)  Other  volume  changes  related  to  defined  benefit  pension  funds:  Defined  benefit 
pension  schemes  are  those  in  which  the  level  of  pension  benefits  promised  to 
participating  employees  is  guaranteed.  Benefits  are  related  by  some  formula  to 
participants' length of service and salary and are not totally dependent on the assets in 
the fund.  For defined  benefit  schemes, an entry in the other changes in the volume of 
assets account captures changes in the actuarially  determined  liability that result  from 
changes  in  benefits  structure, which are to be  distinguished  from  changes  in the  age 
and  service  composition  of  the  beneficiary  pool.  Examples  of  changes  in  benefit 
structure include changes in the formula, reductions in the pensionable age, or  funding 
for  an annual  increase  (usually defined  as constant x per cent year) in future  pensions 
or in all pensions in the course of payment. 

c)  exceptional  losses  of  currency  or  bearer  securities  because  of,  e.g.,  fire  damage  or 

theft. 

d)  writing-off  or  writing-down  of  bad  debts  by  creditors:  Unilateral  recognition  by  a 
creditor  that  a financial asset  can no  longer  be collected,  due to  bankruptcy  or  other 
factors,  and  the  consequent  removal  by  the  creditor  of  that  financial  asset  from  his 
balance  sheet should be accounted  for here, along with the removal  of the  counterpart 
liability  of  the  debtor.  However,  in  cases  where  the  debtor  institutional  unit  is 
controlled  by the creditor, the writing-off  or writing-down  of debt by the creditor,  not 
due to bankruptcy, is recorded in the accumulation accounts. 

e)  statistical  discrepancies  concerning  financial  assets and liabilities between the closing 

balance sheet and the corresponding opening balance sheet. 

193 

( 1 3) 

6.28.  Category K.10 does not include: 

cancellation  of  debt  by  mutual  agreement  between  debtor  and  creditor  (debt 
cancellation or debt forgiveness):  it is treated as a transaction between the creditor and 
the debtor and the counterpart transaction is an extinction of the financial  asset and the 
counterpart liability in the financial  account (see 5,16.). 

debt repudiation: the unilateral cancellation of a liability by a debtor is not recognized 
in the System. 

Changes in classifications  and structure (K.12) 

6.29.  Changes  in  classifications  and  structure  (K.12)  comprise  changes  in  sector  classification 
and  structure  of  institutional  units  (K.l2.1)  and  changes  in  classification  of  assets  and 
liabilities (K. 12.2). 

Changes in sector classification  and structure (K.12.1) 

6.30.  Reclassifying  an  institutional  unit  from  one  sector  to  another  transfers  its  entire  balance 
sheet,  e.g.  an  institutional  unit  classified  in  the  household  sector  becomes  a  quasi-
corporation to be reclassified  in the corporations sector. 

Changes  in  structure  of  institutional  units  cover  appearance  and  disappearance  of  certain 
financial  assets  and  liabilities  arising  from  corporate  restructuring.  When  a  corporation 
disappears  as  an  independent  legal  entity  because  it  is  absorbed  by  one  or  more 
corporations,  all  financial  assets/liabilities  including  shares  and  other  equity  that  existed 
between that corporation  and those that absorbed  it, disappear from the  System.  However, 
the  purchase  of  shares  and  other  equity  of  a  corporation  as  part  of  a  merger  is  to  be 
recorded  as  a  financial  transaction  between  the  purchasing  corporation  and  the  previous 
owner. Replacement of existing shares by shares in the takeover or new corporation  are to 
be recorded  as redemptions  of  shares  accompanied  by  the  issue  of  new  shares.  Financial 
assets/liabilities  that  existed  between  the  absorbed  corporation  and  third  parties  remain 
unchanged and pass to the absorbing corporation(s). 

Symmetrically,  when a corporation  is legally  split up into two or more institutional units, 
new  financial  assets  and  liabilities  (appearance  of  financial  assets)  are  recorded  in  this 
category (K.12.1). 

Changes in classification  of assets and liabilities (K12.2) 

6.31.  Category K. 12.2 distinguishes monetization/demonetization of gold (K. 12.21 ) and changes 
in  classification  of  assets  or  liabilities  other  than  monetization  /demonetization  of  gold 
(K.12.22). 

6.32.  Monetization/demonetization  of  gold  (K. 12.21)  is  recorded  in  the  other  changes  in  the 
volume  of  assets  account  of the monetary  authorities,  that  is to  say  in  the  sub-sector  the 
central bank (S.121) or central government (S.1311). 

194 

Monetization  of gold occurs  when the monetary  authorities  reclassify  gold  from  stocks of 
valuables  to  reserve  assets  held  by  the  monetary  authorities.  The  other  changes  in  the 
volume  of  assets  account  records  then  a  decrease  in  their  holding  of  valuables  and  an 
increase in their holding of monetary gold. 

Purchases  of  monetary  gold  directly  from  other  monetary  authorities  are  classified  as 
transactions  in  monetary  gold  (F.ll).  All  other  purchases,  including  those  from  financial 
intermediaries  or via an organized gold market must be recorded as purchases of valuables 
followed by a classification  change. 

Demonetization  of  gold  occurs  when the  monetary  authorities  transfer  gold  from  reserve 
assets to valuables.  Holdings  of monetary  gold by monetary  authorities then decrease  and 
valuables  show an increase. Sales of monetary  gold directly  to other  monetary  authorities 
are  classified  as  transactions  in monetary  gold  (F.ll).  All  other  sales,  including  those  to 
financial intermediaries  or  via  an  organized  gold  market  must  be  recorded  as  sales  of 
valuables preceded by a classification change. 

6.33.  Changes in classification  of assets or liabilities  other than monetization/demonetization  of 
gold  (K.12.22):  examples  are  changes  in  land  use  or  conversions  of  dwellings  to 
commercial use or vice versa. In the case of land both entries -a negative entry for the old 
category, a positive one for the new category- have to be made with the same value in the 
category K.12.22. The change in land value resulting from this change in use is recorded in 
economic  appearance  (see  6.17.c)  or  disappearance  of  non-produced  assets  (see  6.2l.b) 
considered as volume changes. 

K.12.22 does not include the conversion  of bonds into shares. This conversion  is recorded 
as two financial  transactions (see 5.63.1). 

6.34. 

Entries for other changes in volume (K.3-K.10 and K.12) are recorded in the other changes 
in the volume of assets accounts of the sectors, the total economy and the rest of the world. 

Nominal holding gains/losses (K.11) 

6.35.  Nominal holding gainst  are that category of other changes in the value of assets, liabilities 
and therefore  net worth which reflects  the changes in the level and structure of their prices. 
Nominal holding gains are broken down into neutral holding gains and real holding gains. 

6.36.  Definition:  The nominal  holding  gain (K.l 1) on a given quantity  of an asset  is defined  as 
the  change  in  value  for  the  owner  of  that  asset  as  a  result  of  a  change  in  its 
price. The nominal holding gain on a liability is defined  as the change in value 
of that liability as a result of a change in its price, but with the sign reversed. 

6.37.  A positive holding gain is due to an increase in the value of a given asset or to a reduction 
in the value of  a given  liability.  A negative holding gain - i.e. a holding  loss  - is due to a 
reduction in the value of a given asset or an increase in the value of a given liability. 

The te.  n "holding gain" is used to cover both holding gains and losses on the clear understanding that holding gains may be negative 
as well as positive. Similarly, the term "asset" may be used collectively to cover both assets and  liabilities. 

195 

6.38. 

The nominal holding gains recorded in the revaluation account are those accruing on assets 
or liabilities, whether realised or not.  A holding  gain is said to be realised  when the asset 
in  question  is  sold,  redeemed,  used  or  otherwise  disposed  of,  or  the  liability  repaid.  An 
unrealised gain is therefore  one accruing on an asset that is still owned or a liability that is 
still outstanding at the end of the accounting period.  A realised gain is usually  understood 
as  the  gain  realised  over  the  entire  period  over  which  the  asset  is  owned  or  liability 
outstanding  whether  this period  coincides  with the accounting  period  or not.  However,  as 
holding  gains  are  recorded  on  an  accruals  basis  in  the  System,  the  distinction  between 
realized  and  unrealized  gains, although  useful  for  some  purposes,  does  not  appear  in  the 
classifications  and accounts. 

6.39.  Holding  gains  include  gains  on  all  kinds  of  assets:  non-financial  produced  and  non-
produced  assets,  and  financial  assets.  Thus,  holding  gains  on  inventories  of  all  kinds  of 
goods held by producers, including work in progress, are also covered. 

6.40.  Nominal  holding  gains  may  accrue  on  assets  held  for  any  length  of  time  during  the 
accounting  period  and  not  merely  on  assets  that  appear  in  the  opening  and/or  closing 
balance  sheets.  The  nominal  holding  gain  accruing  to  the  owner  of  a  particular  asset,  or 
given quantity of a specific type of asset, between two points of time is defined as: 

the current value of that asset at the later point of time, 

minus 

the current value of that asset at the earlier point of time, 

assuming  that  the  asset  itself  does  not  change,  qualitatively  or  quantitatively,  in  the 
meanwhile.  The  nominal  holding  gain  G  accruing  on  a  given  quantity  q  of  some  asset 
between times o and t can be expressed as follows: 

G  = 

(PrPo)-q 

where p0  and p^ are the prices of the asset at times o and t respectively. For financial assets 
and  liabilities  with fixed current  values  for  which  both  p0  and  p^ are unity  by  definition, 
nominal holding gains are always zero . 

6.41. 

For  purposes  of  calculating  nominal  holding  gains,  acquisitions  and  disposals  of  assets 
must be valued in the same way as in the capital and financial accounts arid stocks of assets 
must  be valued  in the  same  way  as  in the  balance  sheets. In the  case  of  fixed  assets  the 
value of an acquisition  is the amount paid by the purchaser to the producer,  or seller, plus 
the  associated  costs  of  ownership  transfer  incurred  by  the  purchaser.  The  value  of  a 
disposal  of an existing fixed asset is the amount received  by the seller  from  the purchaser 
minus the costs of ownership transfer incurred by the seller. 

!96 

Four different  situations giving rise to nominal holding gains may be distinguished: 

(1)  an  asset  held  throughout  the  accounting  period:  the  nominal  holding  gain  accruing 
during  the  accounting  period  is  equal  to  the  closing  balance  sheet  value  minus  the 
opening balance sheet value. These values are the estimated values of the assets if they 
were to be acquired  at the times the balance sheets are drawn up. The nominal  gain is 
unrealized. 

(2)  an asset held at the beginning of the period that is sold during the period: the nominal 
holding  gain  accruing  is  equal  to  the  actual  or  estimated  disposal  value  minus  the 
opening balance sheet value. The nominal gain is realized. 

(3)  an asset acquired  during the period and still held at the end of the period: the nominal 
holding  gain accruing  is equal to the closing balance sheet value minus the actual, or 
estimated, acquisition value of the asset. The nominal gain is unrealized. 

(4)  an asset  acquired  and disposed  of during the accounting period: the nominal  holding 
gain accruing  is equal  to the  actual, or estimated,  disposal  value minus the  actual, or 
estimated, acquisition value. The nominal gain is realized. 

6.42. 

The  nominal  holding  gains  included  are  those  accruing  on  assets  and  liabilities,  whether 
realized  or  not.  They  are  recorded  in  the  revaluation  account  of  the  sectors,  the  total 
economy and the rest of the world. 

Neutral holding gains/losses  (K.ll.l) 

6.43.  Definition:  The  neutral  holding  gain  (K.ll.l)  on  an  asset  is  defined  as  the  value  of  the 
holding gain that would accrue if the price of the asset changed over time in the 
same proportion as the general price level. 

Neutral holding gains are identified  to facilitate  the derivation of real holding  gains which 
redistribute real purchasing power between sectors. 

6.44. 

Let  the  general  price  index  be  denoted  by  r.  The  neutral  holding  gain  NG  on  a  given 
quantity q of an asset between times o and t is then given by the following  expression: 

NG  =  P o - q ( rt/ r0- l) 

where p0  . q is the current value of the asset at time o and r^  / r0 the factor of the change in 
the general price index between times o and t. The same term r^ / r0  is applied to all assets 
and liabilities. 

6.45. 

There  is  no  ideal  general  price  index  appropriate  to  calculate  neutral  holding  gains.  By 
convention,  the  general  price  index  to  be  applied  for  the  calculation  of  neutral  holding 
gains is the price index for final national uses excluding changes in inventories. 

6.46.  Neutral  holding  gains are recorded  in the  neutral  holding  gains/losses  account,  which  is a 
sub-account of the revaluation account of the sectors, the total economy and the rest of the 
world. 

-  197 

Real holding gains/losses (K.l 1.2) 

6.47.  Definition:  The real holding gain (K.l 1.2)  on an asset is defined  as the difference  between 

the nominal and the neutral holding gain on that asset. 

The real holding gain RG on a given quantity  q of an asset between times o and t is given 
by: 

RG  =  G-NG 

or 

RG  = 

(pt  / p0  - rt / r0) • p0  • q . 

The values of the real holding gains on assets thus depend on the movements of their prices 
over the period in question, relative to movements of other prices, on average, as measured 
by the general price index. 

6.48.  Real  holding  gains  are recorded  in the real  holding  gains/losses  account,  which  is  a sub 
account  of  the  revaluation  account  of  the  sectors,  the  total  economy  and  the  rest  of  the 
world. 

Holding gains by type of financial  asset 

Currency and deposits (AF.2) 

6.49. 

6.50. 

The  current  values  of  currency  and  deposits  denominated  in  national  currency  remain 
constant over time. The "price" of such an asset is always unity while the quantity is given 
by  the  number  of  units  of  the  currency  in  which  they  are  denominated.  The  nominal 
holding  gains  on  such  assets  are  always  zero. For this reason, the  difference  between the 
values of the opening and closing  stocks of such assets is, with the exception  of the other 
changes in the volume of assets, entirely accounted for by the values of the transactions in 
the assets. This being one case in which it is normally possible to deduce the latter from the 
balance sheet figures. 

In  order  to  calculate  the  neutral  and  real  holding  gains  on  assets  of  fixed  current  value, 
however, data on the times and values of transactions are needed as well as the opening and 
closing  balance  sheet values.  Suppose, for  example, a loan  is made and repaid  within the 
accounting  period  while  the  general  price  level  is rising. The  neutral  gain  on the  loan  is 
positive and the real gain negative from the creditor's point of view, the amount depending 
upon the length of time the loan is outstanding and the rate of inflation.  It is impossible to 
record  such real  losses without data on the value of the loans made and repaid during the 
accounting  period  and the times at which they  are made and repaid.  In general, it may be 
inferred  that if the total  absolute value of the positive and negative transactions  is large in 
relation  to  the  opening  and  closing  balance  sheet  levels,  approximate  estimates  of  the 
neutral  and  real  holding  gains  on  financial  assets  and  liabilities  with fixed current  values 
derived  from  balance  sheet  data  alone  may  not  be  very  satisfactory.  Even  recording  the 
values  of  financial  transactions  on  a  gross  basis  -  i.e.  recording  loans  made  and  repaid 
separately  as  distinct  from  the  total  value  of  loans  minus  repayments  -  may  not  be 
sufficient  without information  on the timing of the loans. 

198 

Loans (AF.4) and Other accounts receivable/payable (AF.7) 

6.51. 

The  same  as  for  currency  and  deposits  applies  for 
loans  and  other  accounts 
receivable/payable, which are not traded. However, when an existing loan or trade credit is 
sold  to  another  institutional  unit  the  difference  between  the  redemption  price  and  the 
transaction  price  should  be  recorded  under  the  revaluation  account  of  the  seller  and  the 
purchaser at the time of transaction. 

Securities other than shares (AF.3) 

6.52.  When  bonds  are  issued  at  a  premium  or  discount,  including  deep  discounted  and  zero 
coupon bonds, the difference  between its issue price and its face or redemption value when 
it matures measures interest that the issuer is obliged to pay over the life of the bond.  Such 
interest is recorded as property income payable by the issuer of the bond and receivable by 
the  holder  of  the  bond  in  addition  to  any  coupon  interest  actually  paid  by  the  issuer  at 
specified  intervals  over  the  life  of  the  bond.  The  interest  accruing  is  recorded  in  the 
financial  account as being simultaneously  reinvested in the bond by the holder of the bond 
(see 5.17.). It is, therefore,  recorded  in the financial account  as the acquisition  of an asset 
which is added to the existing  assetO) . Thus the gradual  increase in the market value of a 
bond  that  is  attributable  to  the  accumulation  of  accrued,  reinvested  interest  reflects  a 
growth  in  the  principal  outstanding  -  that  is,  in  the  size  of  the  asset.  It  is  essentially  a 
quantum or volume increase and not a price increase.  It does not generate any holding gain 
for  the  holder  of  the  bond  or  holding  loss  for  the  issuer  of  the  bond.  The  situation  is 
analogous  to  that  of  a  good,  such  as  wine,  that  matures  while  it  is  being  stored.  Any 
increase in the price of the wine that is attributable to an improvement in its quality  reflects 
an  increase  in  volume  and  not  price.  Bonds  change  qualitatively  over  time  as  they 
approach maturity  and  it is essential  to recognize that  increases  in their  values  due to the 
accumulation of accrued interest are not price changes and do not generate holding gains. 

6.53. 

The prices of fixed-interest bonds also change, however, when the market rates of interest 
change, the  prices  varying  inversely  with  the  interest  rate  movements.  The  impact  of  a 
given interest rate change on the price of an individual  bond is less, the closer the bond is 
to  maturity.  Changes  in  bond  prices  that  are  attributable  to  changes  in  market  rates  of 
interest  constitute  price  and  not  quantum  changes.  They  therefore  generate  nominal 
holding  gains or  losses  for  both the issuers  and the holders  of the bonds.  An  increase  in 
interest  rates  generates  a  nominal  holding  gain  for  the  issuer  of  the  bond  and  an  equal 
nominal holding loss for the holder of the bond, and vice versa in the case of fall in interest 
rates. 

Nominal  holding  gains  or  losses  may  accrue  on  bills  in  the  same  way  as  for  bonds. 
However, as bills are short-term securities with much shorter times to maturity, the holding 
gains generated by interest rate changes are generally much smaller than on bonds with the 
same face values. 

*• ' 

The System recommends this treatment, but allows for recording of such  interest under other accounts receivable/payable  (AF.7) 
where required  to conform  to national  practices (see 5.125.). 

I 99  -

6.54. 

6.55. 

The conversion of bonds into shares is recorded as two financial transactions (see 5.63.1). It 
will  usually  take  place  at  a  price  below  the  market  price  of  the  shares  and  the  resulting 
holding gains are to be recorded as a price change under the revaluation account. 

The value of financial  derivatives (AF. 34) may change as a result of changes in the value 
of  the  underlying  instrument,  changes  in  the  volatility  of  the  price  of  the  underlying 
instrument,  or  approaching  the  date  of  execution  or  maturity.  All  such  changes  in  value 
should be regarded as price changes and recorded under K. 11. 

Shares and other equity (AF.5) 

6.56.  Bonus shares (see 5.94.) increase the number of shares and the nominal value of the shares 
issued  but do not in theory alter the market  value of the totality of shares. By  convention, 
they  do not  enter  the  accounts  at  all.  However,  these  issues  are  designed  to  improve  the 
liquidity of the shares on the market and hence the total market value of shares issued may 
rise as a result - any such change should be recorded as a revaluation  effect. 

Insurance technical reserves (AF.6) 

6.57.  Changes  in  the  net  equity  of  households  in  life  insurance  reserves  and  in  pension  funds 
reserves  (AF.61)  that  occur  between  the  beginning  and  the  end  of  the  accounting  period 
and that result from  nominal holding gains or losses on the reserves invested  by  insurance 
corporations and pension funds  are recorded  in the revaluation account, as well as changes 
in  prepayments  of  insurance  premiums  and  reserves  for  outstanding  claims  (AF.62) 
resulting from holding gains or losses. 

Financial assets in foreign  currency 

6.58. 

The value of financial  assets in foreign currency  is measured by their current market value 
in foreign currency converted into national currency at the current exchange rate.  Nominal 
holding gains may therefore  occur not only because the price of the asset in local currency 
changes but also because the exchange rate changes. The total value of the nominal holding 
gains  accruing  over  the  accounting  period  may  be  calculated  in  the  usual  way  by 
subtracting the value of transactions from the difference  between the opening  and  closing 
balance  sheet  values.  For  this  purpose,  transactions  in  the  financial  assets  in  foreign 
currency must be converted  into the national currency using the exchange rates at the time 
the  transactions  occur,  while  the  opening  and  closing  balance  sheet  values  must  be 
converted  using  the  exchange  rates  prevailing  at  the  dates  to  which  the  balance  sheets 
relate.  This  implies  that  the  total  value  of  the  transactions  -  acquisitions  less  disposals  -
expressed  in foreign  currency  is, in effect,  converted  by a weighted  average exchange rate 
in which the weights are given the values of transactions conducted on different  dates. 

2(10 

CHAPTER VII 

BALANCE SHEETS 

7.01.  Definition  :  A  balance  sheet  is  a  statement,  drawn  up  at  a  particular  point  in  time,  of  the 
values  of  assets  owned  and  of  liabilities  outstanding.  The  balancing  item  is 
called net worth (B. 90). 

The stock of the assets and  liabilities  recorded  in the balance  sheet  is valued  at 
the market prices prevailing on the date to which the balance sheet relates. 

7.02.  A balance sheet is drawn up for sectors, the total economy and the rest of the world. 

For  a  sector  the  balance  sheet  shows  the  value  of  all  assets  -produced,  non-produced  and 
financial-  and liabilities and the sector's net worth. 

For the total economy the balance sheet provides as balancing item what is often  referred  to as 
national  wealth  -the  sum  of  non-financial  assets  and  net financial assets  with  respect  to  the 
rest of the world. 

The balance sheet  for  the rest  of the world,  called  the external  assets and  liabilities  account, 
consists entirely of financial  assets and liabilities. 

7.03.  Corporations  are  seen  to  have  a  net  worth  in  addition  to  the  value  of  the  shares  and  other 
equity  issued.  In the  case  of  quasi-corporations,  net  worth  is zero, because  the  value  of  the 
owners' equity is assumed to be equal to its assets less its liabilities. Therefore,  the net worth 
of resident  direct  investment  enterprises, which  are branches  of non-resident  enterprises  and 
are therefore treated as quasi-corporations, is zero. 

7.04.  The difference  between total  financial  assets  and total  liabilities  is called  net financial assets 

(see 7.67.). 

7.05.  For  the  non-financial  and  the  financial  corporations  sectors  the  calculation  of  own  funds 

provides an analytically meaningful  indicator. 

Own funds are the sum of net worth (B. 90) and shares and other equity (AF. 5) issued. 

7.06.  The  balance  sheet  completes  the  sequence  of  accounts,  showing  the  ultimate  result  of  the 
entries  in  the  production,  distribution  and  use  of  income,  and  accumulation  accounts  (see 
chapter VIII : Sequence of accounts and balancing items). 

7.07. A balance  sheet  relates to  the value of  assets  and  liabilities  at a particular  moment  of  time. 
Balance sheets are to be compiled at the beginning  of the accounting period  (the same as the 
end of the preceding period) and at its end. 

7.08.  A basic accounting identity links the opening balance sheet and the closing balance sheet : 

(1) 

the value of the stock of a specific type of asset in the opening balance sheet; 

plus 

(2) 

transactions  :  the  total  value  of  the  assets  acquired,  less  the  total  value  of  those 
disposed of,  in transactions that take place within the accounting period  : transactions 
in  non-financial  assets  are  recorded  in  the  capital  account  and  transactions  in 
financial  assets in the financial  account; 

102 

minus 

(3) 

consumption of fixed capital; 

plus 

(4) 

plus 

(5) 

other volume changes  : the value of other positive or negative changes in the volume 
of the assets held  (for  example, as a result of the discovery  of a subsoil  asset  or the 
destruction  of  an  asset  as  a result  of  war  or  a natural  disaster)  : these  changes  are 
recorded in the other changes in volume of assets account; 

revaluations:  the  value  of  the  positive  or  negative  nominal  holding  gains  accruing 
during the period resulting from a change in the price of the asset  : these changes are 
recorded in the revaluation account; 

is identical with 

(6) 

the value of the stock of the asset in the closing balance sheet. 

The  accounting  links  between  the  opening  and  closing  balance  sheets  via  transactions  and 
other changes in assets (other changes in volume and holding gains) are shown  schematically 
in Annex 2. 

Types of assets 

7.09.  The assets recorded in the balance sheets are economic assets. 

7.10. Definition  :  Economic  assets  are  entities  functioning  as  a  store  of  value  over  which 
ownership rights are enforced  by institutional  units, individually  or  collectively, 
and  from  which  economic benefits  may  be derived  by their  owners  by  holding 
them or using them over a period of time. 

7.11.  The  economic  benefits  consist  of  primary  incomes  (operating  surplus  by  using,  property 
income  by  letting  others  use)  derived  from  the  use  of  the  asset  and  the  value,  including 
possible holding gains/losses, that could be realized by disposing of the asset or terminating it. 

7.12. An  overview  of  the  classification  and  coverage  of  economic  assets  is  given  in  the  table  on 
pages .... The detailed definition of each asset category is set out in the annex  1  to this chapter. 

Excluded from the asset boundary are : 

(1) 

(2) 

(3) 

human capital, 

natural assets that are not economic assets (eg. air, river water), 

contingent assets, which are not financial assets (see 7.22.). 

203 

7.13.  Three categories of assets are distinguished : 

(1) 

(2) 

(3) 

non-financial  produced assets, 

non-financial  non-produced assets, 

financial assets. 

Non-financial  produced assets (AN.l) 

7.14.  Definition  :  Produced assets (AN.l) are non-financial  assets that have come into existence as 

outputs from production processes. 

7.15. The classification  of produced  assets  is designed  to distinguish  among assets on the basis of 
their  role  in  production.  It  consists  of:  fixed  assets1)  which  are  used  repeatedly  or 
continuously  in  production  for  more  than  one  year  ;  inventories  which  are  used  up  in 
production  as intermediate  consumption,  sold  or  otherwise  disposed  of  ; and  valuables.  The 
latter are not used primarily  for production or consumption, but are instead acquired and held 
primarily as stores of value. 

Non-financial  non-produced assets (AN.2) 

7.16.  Definition  :  Non-produced  assets (AN.2) are economic assets that come into existence  other 
than  through  processes  of  production.  They  consist  of  tangible  assets  and 
intangible assets as defined below. 

7.17.  The  classification  is  designed  to  distinguish  assets  on  the  basis  of  the  way  they  come  into 
existence. Some of these assets occur in nature, others, which may be referred  to as constructs 
devised by society, come into existence by legal or accounting actions. 

7.18. All  tangible  non-produced  assets  are  natural  assets.  Which  natural  assets  are  included  is 
determined,  in compliance  with the general  definition  of an economic  asset,  by  whether  the 
assets  are  subject  to  effective  ownership  and  are  capable  of  bringing  economic  benefits  to 
their  owners,  given  the  existing  technology,  knowledge,  economic  opportunities,  available 
resources,  and  set  of  relative  prices.  Moreover,  natural  assets  over  which  ownership  rights 
have not, or cannot, be established, such as open seas or air, are excluded. 

7.19.  Intangible  non-produced  assets  include  patented  entities,  transferable  contracts,  purchased 
goodwill, etc. Entities not evidenced by legal or accounting actions -that is, such actions as the 
granting  of  a  patent  or  the  conveyance  of  some  economic  benefit  to  a  third  party-  are 
excluded. 

Financial assets and liabilities (AF.) 

7.20.  Definition:  Financial  assets  (AF.)  are  economic  assets,  comprising  means  of  payment, 
financial  claims  and  economic  assets  which  are  close  to  financial  claims  in 
nature. 

' 

Two kinds of durable goods used  by producers are excluded  from  gross fixed capital  formation  : small  tools and certain 
kinds of military equipment. Therefore there are no corresponding assets. 
In addition, transport  equipment  and other machinery  and  equipment  acquired  by  households  for  final  consumption  arc 
not considered  fixed  assets. They  are  included  in the memorandum  item  "consumer  durables"  in  the  balance  sheet (see 
7.63.). 

204 -

7.21.  Means of payment consist of monetary gold, special drawing rights, currency and  transferable 

deposits. 

Financial claims entitle their owners, the creditors, to receive a payment or series of payments 
without  any  counter-performance  from  other  institutional  units,  the  debtors,  who  have 
incurred the counterpart liabilities. 

Examples of economic assets which are close to financial claims in nature are shares and other 
equity  and  partly  contingent  assets.  The  institutional  unit  issuing  such  a  financial  asset  is 
considered to have incurred a counterpart liability. 

7.22.  Contingent assets are contractual arrangements  between institutional  units, and between them 
and the rest of the world, which specify  one or more conditions which must be fulfilled  before 
a  financial  transaction  takes  place.  Examples  are  guarantees  of  payment  by  third  parties, 
letters  of credit,  lines of credit, underwritten  note  issuance  facilities  (NIFs) and  many  of the 
derivative instruments. In the System, a contingent asset is a financial  asset in cases where the 
contractual arrangement itself has a market value because it is tradable or can be offset  on the 
market. Otherwise, a contingent asset is not recorded in the System. 0 

7.23.  In  the  System,  each  financial  asset  has  a  counterpart  liability,  with  the  exception  of  those 
financial assets classified  in the category monetary gold and special drawing rights (AF.l). 

7.24.  The  classification  of  financial  assets  and  liabilities  corresponds  to  the  classification  of 
financial transactions.  Therefore,  the  definitions  of  the  categories,  sub-categories  and  sub-
positions  of financial assets  and  liabilities  and  the  supplementary  explanations  are  provided 
only once in the ESA - in the financial transactions  chapter. The balance sheets chapter  does 
not repeat the definitions  and their explanations in its main text but it provides in its annex  1  a 
summary of all assets and liabilities defined  in the System. 

Insurance technical  reserves (AF.6) are unconditional  liabilities of insurance corporations and pension funds.  However, 
the counterpart financial assets of individual policy holders and beneficiaries  are contingent assets in most cases. 

205 

AN.  NON-FINANCIAL ASSETS (AN.l. + AN.2.) 

CLASSIFICATION OF ASSETS 

AN.l. 
AN.l 1 
AN. 111 
AN.l 111 
AN. 1112 
AN. 11121 
AN. 11122 
AN. 1113 
AN. 11131 
AN. 11132 
AN. 1114 
AN. 11141 
AN. 11142 
AN. 112 
AN .1121 
AN. 1122 
AN. 1123 
AN. 1129 

AN. 12 
AN. 121 
AN. 122 
AN. 1221 
AN. 1222 
AN. 123 
AN. 124 

AN. 13 
AN. 131 
AN .132 
AN. 139 

Produced assets 
Fixed assets1) 

Tangible fixed assets 
Dwellings 
Other buildings and structures 
Non-residential buildings 
Other structures 

Machinery and equipment 
Transport equipment 
Other machinery and equipment 

Cultivated assets 

Livestock for breeding, dairy, draught, etc. 
Vineyards, orchards and other plantations of trees yielding repeat products 

Intangible fixed assets 
Mineral exploration 
Computer  software 
Entertainment, literary or artistic originals 
Other intangible fixed assets 

Inventories 

Materials and supplies 
Work in progress 

Work in progress on cultivated assets 
Other work in progress 

Finished goods 
Goods for resale 

Valuables 

Precious metals and stones 
Antiques and other art obj ects 
Other valuables 

AN.2. 

Non-produced assets 

AN.21 
AN.211 
AN.2111 
AN .2112 
AN.2113 
AN.2119 
AN.212 
AN.2121 
AN.2122 
AN.2123 
AN.213 

Tangible non-produced assets 

Land 

Land underlying buildings and structures 
Land under cultivation 
Recreational land and associated surface water 
Other land and associated surface water 

Subsoil assets 

Coal, oil and natural gas reserves 
Metallic mineral reserves 
Non-metallic mineral reserves 
Non-cultivated biological resources 

Memorandum  item AN.m consumer durables. 

206 

AN.214 
AN.22 
AN.221 
AN.222 
AN.223 
AN.229 

Water resources 

Intangible non-produced assets 

Patented entities 
Leases and other transferable  contracts 
Purchased goodwill 
Other intangible non-produced assets 

AF.  FINANCIAL ASSETS  0 (AF. 1  + AF.2 + AF.3 + AF.4 + AF.5 + AF.6 + AF.7) 

Securities other than :>*..-os, excluding financial  derivatives 

Shares and other equity, excluding mutual funds  shares 

* 

Loans 

Financial derivatives 

Currency and deposits 

Short-term 
Long-term 

Securities other than shares 

Monetary gold 
Special drawing rights (SDRs) 

Currency 
Transferable  deposits 
Other deposits 

AF.l  Monetary gold and special drawing rights (SDRs) 
AF.ll 
AF. 12 
AF.2 
AF.21 
AF.22 
AF.29 
AF.3 
AF.33 
AF.331 
AF.332 
AF.34 
AF.4 
AF.41 
AF.42 
AF.5 
AF.51 
AF.511 
AF .512 
AF. 513 
AF.52 
AF.6 
AF.61 
AF.611 
AF.612 
AF.62 
AF.7 
AF.71 
AF.79 

Other accounts receivable/payable 
Trade credits and advances 
Other 

Mutual funds shares . 
Insurance technical reserves 

Quoted shares 
Unquoted shares 
Other equity 

Short-term 
Long-term 

Shares and other equity 

Net equity of households in life insurance reserves and in pension funds  reserves 

Net equity of households in life insurance reserves 
Net equity of households in pension funds reserves 

Prepayments of insurance premiums and reserves for outstanding claims 

Memorandum  item AF.m  : direct foreign  investment. 

20" 

Valuation  of entries  in the  balance  sheets 

General valuation  principles 

7.25.  A particular  item  in the balance  sheet  should  be valued  as if it were being  acquired  on the  date 
to  which  the  balance  sheet  relates, including  any  associated  costs  of ownership  transfer  in  the 
case  of  non-financial  assets.  This  implies  that  assets  and  liabilities  are  to  be  valued  using 
current market prices on the date to which the balance sheet relates. 

This means that assets should be valued  on the basis of 

( 1 ) 

(2) 

purchasers' prices if they  are  bought 

basic  prices  if  they  are  own-account  produced  and  on  the  basis  of  basic  prices  of 
similar  goods or of the sum of its cost  if no basic prices are  available. 

7.26.  Ideally, these prices  should  be prices  observable  on the market.  When  there  are no  observable 
prices  - as  may  be  the  case  if no purchases/sales  of  the  items  in  question  have  been  observed 
in the recent past - an attempt has to be made to estimate what the prices would  be  if the  assets 
were acquired  on the market on the date to which the balance sheet relates. 

7.27.  In addition to prices  observed  on markets  or estimated  from  observed  prices  or  costs  incurred, 

current prices may be approximated  for balance  sheet valuation  by 

(1) 

(2) 

revaluating  and accumulating  acquisitions  less disposals  or 

the present,  or discounted,  value of future  returns. 

7.28.  Market  prices  are  usually  available  for  many  of  the  financial  assets,  existing  real  estate 
(buildings  and  other  structures  plus  the  underlying  land), existing  transport  equipment,  crops 
and livestock  as well  as for  newly produced  fixed  assets and  inventories. 

7.29.  For  some  assets  revaluated  initial  acquisition  prices  are  written  off  over  the  asset's  expected 
life.  The  value  of  such  an  asset  at  a  given  point  in  its  life  is  given  by  its  current  acquisition 
price  less  the  accumulated  value  of  these  write-offs.  Most  fixed  assets  can  be  recorded  in 
balance  sheets  at  current  purchasers' prices written  down  for  the  accumulated  consumption  of 
fixed  capital (written-down  replacement  cost)1). 

7.30.  In  the  case  of  assets  for  which  the  returns  either  are  delayed  (as  with  timber)  or  are  spread 
over  a lengthy  period  (as with  subsoil  assets),  a rate  of discount  must  be  used  to  compute  the 
present value of the expected  future  returns. 

The  rate  of  discount  should  be  derived  from  information  based  on  transactions  in  the 
particular  type  of  assets  under  consideration  -forests,  mines  and  quarries-  rather  than  using  a 
general rate of  interest. 

7.31.  The value  of  assets  and  liabilities  denominated  in  foreign  currencies  should  be  converted  into 
the  national  currency  at  the  market  exchange  rate  prevailing  on  the  date  to  which  the  balance 
sheet  relates.  This  rate  should  be  the  midpoint  between  the  buying  and  the  selling  spot  rates 
for currency  transactions. 

) 

The sum of written-down  values of all fixed assets still  in use is described as net capital stock. Gross capital  stock 
includes the values of the accumulated  consumption  of fixed capital. 

- 208  -

7.32.  Alternatives  to  current  market  values might  be useful  for  some analytical  purposes  and  may 
be  shown  as  memorandum  items  in  the  balance  sheets.  Examples  of  alternative  valuation 
include  nominal  value  for  long-term  bonds  and  revalued  paid-in  and  equivalent  value  for 
corporate equity. 

Non-financial  assets  (AN.) 

Produced  assets  (AN.l) 

Fixed  assets (AN.ll) 

Tangible fixed assets (AN.l 11) 

7.33.  Tangible fixed assets  have to  be recorded  at market prices  if possible  (or basic prices  in the 
case of own-account production of new assets), if not then at current purchasers' prices written 
down  by  the  accumulated  consumption  of  fixed  capital.  Purchasers'  costs  of  ownership 
transfer  associated  with these assets, appropriately  written  down, are included  in the  balance 
sheet value. 

Intangible fixed  assets (AN. 112) 

7.34.  Mineral  exploration  should  be  valued  either  on  the  basis  of  the  accumulated  amounts  paid 
under contracts awarded to other institutional units for the purpose, or on the basis of the costs 
incurred  for  exploration  undertaken  on own  account.  That part  of  exploration  undertaken  in 
the past that has not yet been fully  written off  should be revaluated  at the prices and costs of 
the current period. 

7.35.  Computer software  should be valued on the basis of the purchasers' price paid on the market, 
on  the  basis  of  estimated  basic  prices  when  produced  in  house,  or  on  the  basis  of  costs  of 
production  when  such  prices  are  not  available.  Software  acquired  in previous  years  and  not 
yet fully  written down should be revaluated at current prices or costs (which may be less than 
the original price or cost). 

7.36.  Entertainment,  literary or artistic originals and other intangible fixed assets  should be valued 
at the acquisition price when these intangible assets are actually traded on markets. In the case 
of  intangible  assets  that  have  been  produced  on  own  account,  it  may  be  necessary  to  value 
them on the basis of their costs of production, appropriately revaluated at prices of the current 
period and written down. Otherwise, it may be necessary to use estimates of the present value 
of the expected future receipts to be received by owners of such assets. 

Inventories  (AN.12) 

7.37.  Inventories  should  be  valued  at  prices  prevailing  on  the  date  to  which  the  balance  sheet 

relates, and not at the prices at which the products were valued when they entered inventory. 

209 

( 1 4) 

7.38.  Inventories  of  materials  and  supplies  are  valued  at  purchasers'  prices,  and  inventories  of 
finished  goods and work in progress are valued at basic prices. Inventories of goods  intended 
for resale without further  processing by wholesalers and retailers are valued at the prices paid 
for  them,  excluding  any  transportation  costs  incurred  by  the  wholesalers  or  retailers.  For 
work-in-progress  inventories,  the  value  of  the  closing  balance  sheet  can  be  calculated  by 
applying the fraction  of the total production cost incurred by the end of the period to the basic 
price of a similar  finished  product on the date to which the balance sheet relates. If the basic 
price  of  the  finished  products  is  not  available,  it  can  be  estimated  by  the  value  of  the 
production  cost  with  a mark-up  for  expected  net  operating  surplus  or  (estimated  net)  mixed 
income. 

Growing  single-use  crops  (except  timber)  and  livestock  being  raised  for  slaughter  can  be 
valued by reference  to the prices of such products on the markets.  Standing  timber  is valued 
by discounting  the  future  proceeds of selling the timber at current prices  after  deducting  the 
expenses of bringing the timber to maturity, felling, etc. 

Valuables (AN. 13) 

7.39.  Valuables  (works  of  art,  antiques, jewellery,  precious  stones, non-monetary  gold  (see  5.30.) 
and other metals) are to be valued at current prices. To the extent that organized markets exist 
for these assets, they should be valued at the actual or estimated prices that would be paid  for 
them  were they purchased  on the market,  including  any agents' fees  or  commissions,  on the 
date  to  which  the  balance  sheet  relates.  Otherwise,  they  should  be  valued  at  revaluated 
acquisition prices, because there is no deterioration. 

Non-produced assets (AN.2) 

Tangible non-produced assets (AN.21) 

Land (AN.211) 

7.40.  In the capital  account  expenditures  on land  improvements  and cost  of ownership  transfer  on 
land  are  recorded  as  gross  fixed  capital  formation  separated  from  land  itself.  However,  the 
balance sheet value for land includes its full value incorporating these improvements. 

If land cannot be separated from buildings or other structures situated on it, the assets have to 
be classified  according to its main value. 

In the balance sheet of the purchaser land is valued at its current price paid by the new owner 
plus the cost of ownership transfer  incurred by him. 

In the balance sheet of the seller the disposal of land is valued at the current price paid by the 
purchaser  minus the  cost  of ownership transfer  incurred  by the  seller  on the  occasion  of the 
sale and minus the cost of ownership transfer  of land not already written off to zero  incurred 
by the  seller  on the  occasion  of the purchase  of  that  land. The  combined  value  of  these  not 
already  written-off  parts  of  the  transfer  cost  of  land  acquisition  (by  the  seller)  and  of  the 
transfer cost of disposal are holding losses. 

- 2 10  -

Subsoil  assets  (AN.212) 

7.41.  Proven  reserves  of  mineral  deposits  located  on  or  below  the  earth's  surface  that  are 
economically  exploitable  given  current  technology  and  relative  prices  are  valued  by  the 
present  value  of  expected  net  returns  resulting  from  the  commercial  exploitation  of  those 
assets. 

Other  natural  assets  (AN.213  and  AN.214) 

7.42.  As observed  prices  for  these assets are not likely to be available, they  have to  be valued  by  the 

present value of future  returns expected  from  them. 

Intangible  non-produced  assets  (AN.22) 

7.43.  Intangible  non-produced  assets  (patented  entities,  leases  or  other  transferable  contracts,  and 
purchased  goodwill)  should  be  valued  at  current  prices  when  they  are  actually  traded  on 
markets.  Otherwise,  estimates  of  the  present  value  of  the  expected  future  returns  to  be 
received  by the owners  of such assets will have to be made. 

Financial  assets  and  liabilities  (AF.) 

7.44.  Financial  assets  and  liabilities  should  in principle  be valued  at  current  prices.  They  should  be 
assigned  the  same  value  whether  they  appear  as  financial  assets  or  liabilities.  The  prices 
should  exclude  service  charges,  fees,  commissions  and  similar  payments  which  are  recorded 
as services provided  in carrying  out the transactions. 

Monetary  gold  and  SDRs  (AF.l) 

7.45.  Monetary  gold  (AF.l 1) is to be valued at the price established  in organized  gold  markets. 

The  value  of  SDRs  (AF.l2)  is  determined  daily  by  the  IMF  and  the  rates  against  domestic 
currencies  are obtainable  from  foreign  exchange markets. 

Currency  and  deposits  (AF.2) 

7.46.  For currency  (AF.21), the valuation  is the nominal  or face value of the  currency. 

For  deposits  (AF.22,  AF.29), the  values  to  be  recorded  in the  balance  sheets  are  the  amounts 
of principal  that  the  debtors  are contractually  obliged  to repay  the creditors  under the terms  of 
the deposits when  the  deposits would  be liquidated  on the date the balance  sheet  is set up.  The 
values may  include  accrued  interest (see  5.124.). 

Securities  other than  shares  (AF.3) 

7.47.  For consistency  with the treatment of accrued  interest (see  5.124.),  securities  other  than  shares 
excluding  financial  derivatives  (AF.33)  should  be  valued  at  current  market  prices  after 
deduction  of  the  impact  of  accrued  interest,  whereas  their  volume  equals  market  volume  (i.e. 
the  number  of  securities  in  circulation  plus  the  supplementary  volume  resulting  from  accrued 
interest).  However,  despite  this  decomposition  into  price  and  volume,  global  value  of 
securities  other than  shares  equals global current market value (see  6.52.). 

7.48.  Short-term  securities  other  than  shares  excluding  financial  derivatives  (AF.331)  are  to  be 

valued at their current market values. 

If current market values are not available: 

short-term securities issued at par should be valued at face value plus accrued interest 
not due for payment or not paid; 

discounted securities should be valued at the issue price plus accrued interest. 

These  approximations  should  be  restricted  to  securities  whose  original  maturity  does  not 
exceed three months. 

7.49.  Long-term securities other than shares excluding financial derivatives  (AF.332) are always to 
be  valued  at  their  current  market  values,  whether  they  are  bonds  on  which  interest  is  paid 
regularly or deep-discounted or zero-coupon bonds on which little or no interest is paid. 

7.50.  Financial derivatives (AF.34) should be included in the balance sheets at their current market 
prices. In the case that no quoted market price exists (eg. OTC options), a financial  derivative 
should  be  valued  at  either  the  amount  required  to  buy  out  or  to  offset  the  contract  or  the 
amount of premium paid. 

By convention, the issuer of a financial derivative is considered to have incurred a counterpart 
liability. 

Loans (AF.4) 

7.51.  The values to be recorded in the balance sheets of both creditors and debtors are the amounts 
of  principal  that  the  debtors  are  contractually  obliged  to  repay  the  creditors,  even  in  cases 
where the loan was traded with a discount or premium. 

Shares and other equity (AF.5) 

7.52.  Shares  and  other  equity  are  to  be  valued  at  their  current  prices.  The  same  current  price  is 
adopted for both the asset side and the liability  side, although shares and other equity are not, 
legally,  a  liability  of  the  issuer,  but  an  ownership  right  on  the  liquidation  value  of  the 
corporation, whose amount is not known in advance. 

7.53.  Quoted shares (AF.511) are to be valued at a representative mid-market price observed on the 

stock exchange or other organized financial markets. 

7.54.  The values of unquoted shares (AF.512), which are not regularly traded on organized markets, 
should  be estimated  with reference  to the values  of quoted  shares. However,  these  estimates 
should take into account  differences  between the two types of shares, notably  their  liquidity, 
and  they  should  consider  the  reserves  accumulated  over  the  life  of  the  corporation  and  its 
branch of business. 

- 2 12 

7.55.  The  estimation  method  applied  depends  very  much  on  the  basic  statistics  available.  It  may 
take  into  account,  for  example,  data  on  merger  activities  involving  unquoted  shares. 
Furthermore, in cases where the reserves of corporations, which issue unquoted  shares,  differ 
on average, and in proportion to their nominal  capital, from that of corporations, which  issue 
quoted  shares,  it  would  be  appropriate  to  calculate  the  current  price  of  unquoted  shares  in 
proportion  to  figures  including  reserves,  such  as net worth  given by  the  corporation  balance 
sheet, or as own funds compiled according to ESA principles: 

current price of 

current price of 

own funds (unquoted corporations) 

unquoted shares 

quoted shares 

own funds (quoted  corporations) 

The ratio of current price to own funds  may vary with the branch of business. Therefore,  it is 
preferable  to calculate  the  current  price of unquoted  shares branch  by branch.  There  may  be 
other differences  between quoted and unquoted corporations, which may have an effect  on the 
estimation method. 

7.56.  Other  equity  (AF.513)  is  very  often  a  liability  of  specific  institutional  units  (quasi-
corporations, corporations owned by the state, international organisations, notional units, etc.). 
In  general,  they  have  to  be  valued  according  to  specific  methods,  such  as  own  funds  or 
nominal  value.  The  own  funds  method  is  notably  to  be  used  systematically  for  quasi-
corporations, since their net worth is by convention equal to zero. 

7.57.  Mutual funds  shares (AF.52) are to be valued at their current stock exchange price, if they are 

quoted, or at their current redemption value, if they are redeemable by the fund  itself. 

Insurance technical reserves (AF.6) 

7.58. In the case of net  equity  of households  in life  insurance reserves  (AF.611), the present  value 
of the individuals'  actuarially  determined  claims  to the payment  of capital  or  income  can be 
ascertained. This value includes the liability of life insurance corporations for reserves against 
outstanding  risks  and  reserves  for  with-profit  insurance that  add to the value  on  maturity  of 
with-profit  endowments  or similar policies. In the case of with-profit  insurance,  the  reserves 
include holding gains. 

7.59.  In the case of net equity  of households on pension  funds  reserves (AF.612), the nature of the 
liability  of the  funds  -and  financial  asset of the households- depends  on the kind  of  pension 
scheme. 

Defined  benefit  pension schemes are those in which the level of pension benefits  promised to 
participating  employees  is  guaranteed.  The  liability  of  a  defined  benefit  pension  scheme  is 
equal to the present value of the promised benefits.  As the scheme may be temporarily  over-
or underfunded,  a defined  benefit pension scheme may have a positive or negative net worth. 

Money purchase  pension  schemes  are those for  which  benefits  are directly  dependent  on the 
assets  of  the  fund.  The  liability  of  a money  purchase  pension  scheme  is  the  current  market 
value of the funds'  assets. The funds' net worth is always zero. 

-  213  -

7.60.  The value of the prepayments  of insurance premiums, which are part of AF.62, is determined 
on the basis of the proportion  of the risks involved  in relation to time for the time  remaining 
on  the  contract.  The  value  of  the  reserves  for  outstanding  claims,  which  are  also  part  of 
AF.62,  is the  present  value  of the  amounts  expected  to  be paid  out  in  settlement  of  claims, 
including disputed claims. 

Other accounts receivable/payable (AF.7) 

7.61.  Trade  credits  and  advances  (AF.71)  or  other  items  receivable/payable  (AF.79)  are  to  be 
valued  for  both  creditors  and  debtors  at the  amount  the debtors  are contractually  obliged  to 
pay the creditors when the obligation is extinguished. 

Memorandum items 

7.62.  In  order  to  show  items  of  more  specialized  analytic  interest  for  particular  sectors,  two 

memorandum items are to be included in the balance sheets : 

(1) 

(2) 

consumer durables (AN.m) 

direct foreign  investment (AF.m). 

Consumer durables (AN.m) 

7.63.  Consumer durables are durable  goods used by households repeatedly  over periods of time of 
more  than  one  year  for  final  consumption.  They  are  included  in  the  balance  sheets  only  as 
memorandum  items.  Their  inclusion  as  a  component  of  the  balance  sheet  would  be 
appropriate  if  the  system  postulated  that  the  durables  were gradually  used  up  in  production 
processes  whose  outputs  consist  of  services.  But  consumer  durables  are  not  treated  in  this 
way. 

7.64.  The  stocks  of  consumer  durables  held  by  households  -transport  equipment  and  other 
machinery  and  equipment-  are  to  be  valued  at  current  prices,  both  gross  and  net  of 
accumulated  charges  equivalent  to  consumption  of  fixed  capital.  The  figures  shown  as 
memorandum items in the balance sheet should be net of these accumulated charges. 

7.65. Durable  goods  owned  by  owners  of  unincorporated  enterprises  may  be  used  partly  by  the 
enterprise for production  and partly by members of the household for final consumption. The 
values  shown  in the balance  sheet  for  the  enterprise  should  reflect  the proportion  of the use 
that is attributable to the enterprise. 

Direct foreign investment (AF.m) 

7.66.  Direct  investment  consists  of  financial  assets,  not  physical  capital,  because  the  direct 
investment  enterprise  is  a  corporation  or  quasi-corporation  resident  in  another  country. 
Financial assets and liabilities that constitute direct investment are to be recorded according to 
the  nature  of  the  financial  assets  in  the  categories  shares  and  other  equity,  loans,  and  other 
accounts receivable/payable.  The amounts of direct investment  included within each of those 
categories should be recorded separately as a memorandum item. 

214 

Financial Balance Sheets 

7.67.  The financial balance sheet (of a sector or the rest of the world) shows on its left  side financial 
assets and on its right side liabilities. The balancing  item of the financial  balance  sheet  is net 
financial assets (BF.90). 

7.68. The  financial  balance  sheet  of  a  sector  may  be  consolidated  or  non-consolidated.  The  non-
consolidated  financial  balance  sheet  shows  the  financial  assets  and  liabilities  of  the 
institutional units classified  in the sector. Compared to the non-consolidated financial balance 
sheet,  those  financial  assets  and  liabilities  are  eliminated  from  the  consolidated  financial 
balance  sheet,  the  counterparts  of  which  are  liabilities  respectively  financial  assets  of 
institutional units classified  in the same sector. The external assets and liabilities account, that 
is the financial balance sheet of the rest of the world (see 8.77.), is consolidated by  definition. 

7.69.  The  financial  balance  sheet  by  debtor/creditor  (of  a  sector  or  the  rest  of  the  world)  is  an 
extension  of the financial balance sheet, showing  in addition a breakdown  of financial assets 
by  debtor  sector  and  a  breakdown  of  liabilities  by  creditor  sector.  Therefore,  it  provides 
informations  on debtor/creditor relationships and it is consistent with the financial account by 
debtor/creditor (see 5.13.). 

215 

Annex 1 

Classification  of  Assets 

Definitions 

Non-financial  assets  (AN.) 

Produced assets  (AN.l) 

Fixed assets  (AN.ll) 

Tangible fixed assets  (AN.l 11) 

Dwellings  (AN.l111) 

Entities, over which  ownership rights are enforced  by 
institutional  units,  individually  or  collectively,  and 
from  which economic benefits may be derived by their 
owners by holding them,  or using them  over  a  period 
of time, that consist  of tangible  assets, both  produced 
and  non-produced,  and  most  intangible  assets  for 
which no corresponding liabilities are recorded. 

Non-financial  assets that  have  come  into  existence  as 
outputs  from  production  processes.  Produced  assets 
consist  of  fixed  assets,  inventories  and  valuables,  as 
defined  below. 

repeatedly  or 
that  are  used 
Produced  assets 
continuously  in  production  processes  for  more  than 
one  year. 
Fixed  assets  consist  of  tangible  and 
intangible fixed assets, as defined  below. 

Fixed  assets that  consist  of  dwellings; other  buildings 
and  structures;  machinery  and  equipment  and 
cultivated assets, as defined  below. 

Buildings  that  are  used  entirely  or  primarily  as 
residences,  including  any  associated  structures,  such 
as  garages,  and  all  permanent  fixtures  customarily 
installed  in  residences.  Houseboats,  barges,  mobile 
homes  and  caravans  used  as  principal  residences  of 
households  are  also 
included,  as  are  historic 
monuments identified  primarily as dwellings.  Costs of 
site clearance and preparation are also included. 

Examples  include  residential  buildings,  such  as  one-
and  two-dwelling  buildings  and  other  residential 
buildings intended for non-transient  occupancy. 

Uncompleted  dwellings are included to the extent that 
the ultimate  user  is deemed  to  have  taken  ownership, 
either  because  the  construction  is  on  own  account  or 
as  evidenced  by  the  existence  of  a  contract  of 
for  military 
Dwellings  acquired 
sale/purchase. 
personnel  are  included  because  they  are  used,  as  are 
dwellings  acquired  by  civilian  units, 
the 
production of housing services. 

for 

216 

Other buildings and structures  (AN.l 112) 

Non-residential  buildings  and  other  structures,  as 
defined  below. 

Uncompleted  buildings  and  structures  are  included  to 
the  extent  that  the  ultimate  user  is  deemed  to  have 
taken ownership, either because the construction  is for 
own use or as evidenced by the existence of a contract 
of  sale/purchase.  Buildings  and  structures  acquired 
for  military  purposes  are  included  to  the  extent  that 
they resemble civilian buildings acquired  for  purposes 
of production and are used in the same way. 

Buildings  other  than  dwellings,  including  fixtures, 
facilities  and  equipment  that  are  integral  parts  of  the 
structures  and costs  of site  clearance  and  preparation. 
as 
Historic  monuments 
non-residential buildings are also included. 

identified 

primarily 

Examples  include warehouse  and  industrial  buildings, 
commercial  buildings,  buildings  for  public  enter 
tainment,  hotels,  restaurants,  edu'cational  buildings, 
health buildings, etc. 

Structures  other  than  buildings,  including  the  cost  of 
the  streets, sewers  and  site  clearance  and  preparation 
other than for residential or non- residential buildings. 
Also  included  are  historic  monuments  for  which 
identification  as dwellings or non-residential  buildings 
is not possible and shafts,  tunnels and other  structures 
associated  with  mining  subsoil  assets. 
(Major 
improvements  to  land,  such  as  dams  and  dikes  for 
flood control, are included in the value of land.) 

Examples  include  highways,  streets,  roads,  railways 
and  airfield  runways;  bridges,  elevated  highways, 
tunnels  and  subways; waterways,  harbours,  dams  and 
other  waterworks;  long-distance  pipelines,  communi 
cation  and  power  lines;  local  pipelines  and  cables, 
for  mining  and 
ancillary  works;  constructions 
manufacture;  and  constructions 
sport  and 
recreation. 

for 

Transport  equipment  and  other  machinery  and 
equipment,  as  defined  below  other  than  that  acquired 
by  households  for  final  consumption.  Tools  that  are 
relatively  inexpensive  and  purchased  at  a  relatively 
steady  rate,  such  as  hand  tools,  may  be  excluded. 
Also excluded  is machinery  and equipment  integral to 
and 
included 
that 
buildings 
non-residential buildings. 

in  dwellings 

is 

Non-residential  buildings  (AN.l 1121) 

Other structures  (AN.11122) 

Machinery and equipment  (AN. 1113) 

217 

Transport equipment  (AN.11131) 

Other  machinery 
(AN. 11132) 

and 

equipment 

Uncompleted  machinery  and  equipment  is  excluded, 
unless  produced  for  own  use,  because  the  ultimate 
user  is deemed  to take  ownership  only  on  delivery  of 
the  asset.  Machinery  and  equipment  acquired  for 
military  purposes  is  included  to  the  extent  that  it 
for 
resembles  goods  acquired  by  civilian  units 
purposes  of  production  and  that  the  military  uses  in 
the same way. 

Machinery and equipment  acquired  by households  for 
final  consumption  is  not  treated  as  an  asset. 
It  is 
instead  included  in the memorandum  item  "consumer 
durables" 
the  balance  sheet  for  households. 
Houseboats, barges, mobile  homes  and  caravans  used 
by  households  as principal  residences  are  included  in 
dwellings. 

in 

Equipment  for  moving people and  objects.  Examples 
include  products  other  than  parts  included  in  CPA1) 
subsection  DM,  transport  equipment,  such  as  motor 
vehicles,  trailers  and  semitrailers;'ships;  railway  and 
tramway  locomotives  and  rolling  stock;  aircraft  and 
spacecraft;  and motorcycles, bicycles, etc. 

include  products  other 

Machinery  and  equipment  not  elsewhere  classified. 
Examples 
than  parts, 
installation,  repair  and  maintenance  services  included 
in CPA groups 29.1, machinery for the production and 
use of mechanical  power,  except  aircraft,  vehicle  and 
cycle engines; 29.2, other general purpose  machinery; 
29.3,  agricultural  and  forestry  machinery;  29.4, 
machine-tools; 29.5  other  special  purpose  machinery; 
in CPA divisions 30, office  machinery  and computers; 
31, electrical machinery and apparatus n.e.c; 32, radio, 
television 
and 
communication 
apparatus;  and  33,  medical,  precision  and  optical 
instruments,  watches  and  clocks.  Other  examples  are 
products  other  than  parts  included  in  CPA  category 
23.30.2,  fuel  elements  (cartridges),  non-irradiated,  for 
nuclear reactors; in CPA groups  36.1, furniture;  36.3, 
musical  instruments;  36.4,  sport  goods;  and  28.3, 
steam  generators,  except  central  heating  hot  water 
boilers. 

equipment 

and 

Cultivated assets  (AN.l 114) 

Livestock  for  breeding,  dairy,  draught,  etc.  and 
vineyards,  orchards  and  other  plantations  of  trees 
yielding  repeat  products  that  are  under  the  direct 
control, responsibility and management of  institutional 
units, as defined below. 

Immature  cultivated  assets  are  excluded  unless 
produced  for own use. 

0 Statistical Classification  of Products by Activity (CPA), 1993 

' I X-

Livestock  for  breeding,  dairy,  draught, 
etc.  (AN. 11141) 

They 

Livestock  that  are  kept  for  the  products  they  provide 
include  breeding  stocks 
year  after  year. 
(including  fish  and  poultry),  dairy  cattle,  draught 
animals,  sheep  or  other  animals  used  for  wool 
production and animals used for transportation,  racing 
or entertainment. 

Vineyards, 
plantations  of 
products  (AN.l 1142) 

orchards 

and 
trees  yielding 

other 
repeat 

Trees  (including  vines  and  shrubs)  cultivated  for 
products  they  yield  year  after  year,  including  those 
cultivated  for  fruits  and nuts, for  sap and resin  and  for 
bark and leaf products. 

Intangible fixed  assets  (AN.112) 

Mineral exploration  (AN.1121) 

Computer  software  (AN.1122) 

Entertainment,  literary  or  artistic  originals 
(AN.l 123) 

Other  intangible fixed assets  (AN.l 129) 

Inventories  (AN.12) 

Fixed  assets  that  consist  of  mineral  exploration, 
computer  software,  entertainment,  literary  or  artistic 
originals  and other  intangible  fixed  assets,  as  defined 
below, intended to be used for more than one year. 

The  value  of  expenditures  on  exploration 
for 
petroleum  and  natural  gas  and  for  non-petroleum 
deposits.  These expenditures  include prelicence costs, 
licence  and  acquisition  costs,  appraisal  costs  and  the 
costs of actual test  drilling  and  boring,  as  well  as  the 
costs of aerial and  other  surveys, transportation  costs, 
etc., incurred to make it possible to carry out the tests. 

Computer  programs,  program  descriptions  and 
supporting materials for both systems and  applications 
Included  are  purchased  software  and 
software. 
software  developed on own account, if the expenditure 
is 
Large  expenditures  on  the  purchase, 
development  or extension  of  computer  databases  that 
are  expected  to  be  used  for  more  than  one  year, 
whether marketed or not, are also included. 

large. 

programmes,  musical 

Original  films,  sound  recordings,  manuscripts,  tapes, 
models, etc., on which drama performances,  radio and 
television 
performances, 
sporting  events,  literary  and  artistic  output,  etc.,  are 
recorded  or embodied.  Included  are  works  produced 
on  own  account.  In  some  cases,  such  as  films,  there 
may be multiple originals. 

New  information,  specialized  knowledge,  etc.,  not 
elsewhere  classified,  whose  use  in  production  is 
restricted to the units that  have  established  ownership 
rights over them or to other units licensed by the latter. 

Produced assets that consist of goods and services that 
came  into  existence  in  the  current  period  or  in  an 
earlier  period held  for  sale, use  in production  or other 
use  at  a  later  date.  They  consist  of  materials  and 
supplies,  work-in-progress,  finished  goods  and  goods 
for resale, as defined  below. 

Included  are  all  inventories  held  by  government, 
including,  but  not  limited  to,  inventories  of  strategic 
materials,  grains  and  other  commodities  of  special 
importance to the nation. 

219 

Materials and supplies  (AN.121) 

Work-in-progress  (AN.122) 

Work-in-progress 
(AN.1221) 

on 

cultivated 

assets 

Other work-in-progress  (AN.1222) 

Finished goods  (AN.123) 

Goods for resale  (AN.124) 

Valuables  (AN. 13) 

Precious metals and stones  (AN.131) 

Goods that their owners  intend  to  use  as  intermediate 
inputs in their own production processes, not to resell. 

Goods  and  services  that  are  partially  completed  but 
that are not usually turned  over to other units  without 
further  processing  or  that  are  not  mature  and  whose 
production  process will  be  continued  in  a  subsequent 
period  by  the  same  producer.  Excluded  are  partially 
completed  structures  for  which  the  ultimate  owner  is 
deemed  to  have  taken  ownership,  either  because  the 
production  is  for  own  use  or  as  evidenced  by  the 
existence of a contract of sale/purchase.  They  consist 
of  work-in-progress  on  cultivated  assets  and  other 
work-in-progress, as defined  below. 

Livestock  raised  for  products  yielded  only  on 
slaughter,  such  as  fowl  and  fish  raised  commercially, 
trees and other vegetation  yielding once-only  products 
on destruction  and immature cultivated assets yielding 
repeat products. 

Goods  other  than  cultivated  assets  and  services  that 
have been partially processed,  fabricated  or assembled 
by the producer  but that  are not  usually  sold,  shipped 
or turned over to others without further  processing. 

Goods  that  are  ready  for  sale  or  shipment  by  the 
producer. 

Goods  acquired  by  enterprises,  such  as  wholesalers 
and retailers, for the purpose of reselling them without 
further  processing (that  is, not transformed  other  than 
by  presenting  them  in  ways  that  are  attractive  to  the 
customer). 

Produced  assets  that  are  not  used  primarily  for 
production  or  consumption,  that  are  expected  to 
appreciate  or at  least not to decline  in real  value, that 
do  not  deteriorate  over  time  under  normal  conditions 
and  that  are  acquired  and  held  primarily  as  stores  of 
value.  Valuables  consist  of  precious  metals  and 
stones,  antiques  and  other  art  objects  and  other 
valuables, as defined  below. 

Precious  metals  and  stones  that  are  not  held  by 
enterprises  for  use  as 
into  processes  of 
production. 

inputs 

Antiques and other art objects  (AN.132) 

Paintings,  sculptures,  etc.,  recognized  as  works  of  art 
and antiques. 

Other valuables  (AN.139) 

Valuables not elsewhere classified,  such  as collections 
and  jewellery  of  significant  value  fashioned  out  of 
precious stones and metals. 

220 

Non-produced  assets  (AN.2) 

Tangible non-produced assets  (AN.21) 

Land  (AN.211) 

Land  underlying  buildings  and  structures 
(AN.2111) 

Land under cultivation  (AN.2112) 

Recreational  land  and  associated  surface 
water  (AN.2113) 

Other  land  and  associated  surface  water 
(AN.2119) 

Non-financial  assets  that  come  into  existence  other 
than  through  processes  of production.  Non-produced 
assets  consist  of tangible  assets  and  intangible  assets, 
as  defined  below.  Also 
included  are  costs  of 
ownership  transfer  on  and  major  improvements  to 
these assets. 

Non-produced  assets  that  occur  in  nature  and  over 
which  ownership  may  be  enforced  and  transferred. 
Environmental  assets  over  which  ownership  rights 
have not, or cannot, be enforced,  such as open seas or 
air,  are  excluded.  Tangible  non-produced  assets 
consist  of 
subsoil  assets,  non-cultivated 
biological  resources  and  water  resources,  as  defined 
below. 

land, 

The  ground,  including  the  soil  covering  and  any 
associated  surface  waters,  over  which  ownership 
included  are  major 
Also 
rights  are  enforced. 
improvements  that  cannot  be  physically  separated 
from  the  land  itself.  Excluded  are  any  buildings  or 
other  structures  situated  on  it  or  running  through  it; 
cultivated  crops,  trees  and  animals;  subsoil  assets; 
non-cultivated  biological 
and  water 
resources  below  the  ground.  Land  consists  of  land 
underlying  buildings  and  structures, 
land  under 
cultivation,  recreational  land  and  associated  surface 
water  and  other  land  and  associated  surface  water,  as 
defined  below. 

resources 

Land  on  which  dwellings,  non-residential  buildings 
and  structures  are  constructed  or  into  which  their 
foundations  are  dug,  including  yards  and  gardens 
deemed  an  integral  part  of  farm  and  non-farm 
dwellings and access roads to farms. 

Land on which agricultural or horticultural  production 
is carried  on  for  commercial  or  subsistence  purposes, 
including, 
plantations, 
orchards and vineyards. 

in  principle, 

land  under 

Land  that  is  used  as  privately  owned  amenity  land, 
parklands  and  pleasure  grounds  and  publicly  owned 
parks  and  recreational  areas,  together  with  associated 
surface water. 

Land  not  elsewhere  classified, 
including  private 
gardens  and  plots  not  cultivated  for  subsistence  or 
commercial  purposes,  communal  grazing  land,  land 
surrounding  dwellings  in  excess  of  those  yards  and 
gardens deemed an integral part of farm  and  non-farm 
dwellings and associated surface  water. 

Subsoil assets  (AN.212) 

Proven  reserves  of  mineral  deposits  located  on  or 
below  the  earth's  surface 
that  are  economically 
exploitable,  given  current  technology  and  relative 
prices.  Ownership  rights  to  the  subsoil  assets  are 
usually separable from  those to the land itself.  Subsoil 
assets  consist  of  coal,  oil  and  natural  gas  reserves, 
metallic  mineral  reserves  and  non-metallic  mineral 
reserves, as defined  below. 

Coal,  oil 
(AN.2121) 

and 

natural  gas 

reserves  Anthracite,  bituminous  and  brown  coal  deposits; 
petroleum and natural gas reserves and fields. 

Metallic mineral  reserves  (AN.2122) 

Ferrous, non-ferrous  and precious metal ore deposits. 

Non-metallic  mineral  reserves (AN.2123) 

Non-cultivated  biological resources (AN.213) 

Water  resources  (AN.214) 

Intangible non-produced  assets  (AN.22) 

Patented  entities  (AN.221) 

Stone  quarries  and  clay  and  sand  pits;  chemical  and 
fertilizer  mineral  deposits;  salt  deposits;  deposits  of 
quartz,  gypsum,  natural  gem  stones,  asphalt  and 
bitumen,  peat  and  other  non-metallic  minerals  other 
than coal and petroleum. 

is  not  under 

Animals  and  plants  that  yield  both  once-only  and 
repeat  products  over  which  ownership  rights  are 
enforced  but  for  which  natural  growth  and/or 
regeneration 
the  direct  control, 
responsibility  and  management  of  institutional  units. 
Examples  are  virgin  forests  and  fisheries  within  the 
territory of the country.  Only those resources that are 
currently,  or  are  likely  soon  to  be,  exploitable  for 
economic purposes should be included. 

Aquifers  and  other  groundwater  resources  to  the 
extent  that  their  scarcity  leads  to  the  enforcement  of 
ownership  and/or  use  rights,  market  valuation  and 
some measure of economic control. 

Non-produced  assets  that  are  constructs  of  society. 
They  are  evidenced  by  legal  or  accounting  actions, 
such  as the granting  of  a patent  or the  conveyance  of 
some economic benefit  to a third party.  Some entitle 
their owners to engage in certain specific activities and 
to  exclude  other  institutional  units  from  doing  so 
except  with  the  permission  of  the  owner.  Intangible 
non-produced assets consist of patented entities, leases 
and  other  transferable  contracts,  purchased  goodwill 
and other intangible non-produced assets. 

Inventions  in  categories  of  technical  novelty  that,  by 
law  or  by  judicial  decision,  can  be  afforded  patent 
protection.  Examples  include  constitutions  of  matter, 
processes,  mechanisms,  electrical  and  electronic 
circuits  and  devices, pharmaceutical  formulations  and 
new varieties of living things produced by artifice. 

- 222 

Leases  and 
(AN.222) 

other 

transferable 

Purchased  goodwill  (AN.223) 

contracts  Leases  or  contracts  where  the  lessee  has  the  right  to 
convey  the  lease to a third  party  independently  of the 
lessor.  Examples  include  leases of land and  buildings 
and other structures, concessions or exclusive rights to 
exploit  mineral  deposits  or 
fishing  grounds, 
transferable  contracts  with  athletes  and  authors  and 
options  to  buy  tangible  assets  not  yet  produced. 
Leases  on  the  rental  of  machinery  are  excluded  from 
non-financial  intangible assets. 

The  difference  between 
the  value  paid  for  an 
enterprise as a going concern  and the sum of its assets 
less  the  sum  of  its  liabilities,  each  item  of  which  has 
been  separately  identified  and  valued.  The  value  of 
goodwill,  therefore,  includes  anything  of  long-term 
benefit  to  the  business  that  has  not  been  separately 
identified  as an  asset,  as  well  as the  value  of the  fact 
that  the  group  of  assets  is  used  jointly  and  is  not 
simply a collection of separable assets. 

Other 
(AN.229) 

intangible 

non-produced 

assets 

Intangible  non-produced 
classified. 

assets'  not 

elsewhere 

Financial assets and liabilities (AF.) 

Monetary  gold and  SDRs  (AF.l) 

Monetary  gold  (AF.ll) 

Special drawing  rights (SDRs) (AF.12) 

Financial  assets  are  economic  assets  comprising 
means  of  payment,  financial  claims  and  economic 
assets which are close to financial  claims in nature. 

Means  of  payment  consist  of  monetary  gold,  special 
drawing rights, currency and transferable  deposits. 

Financial claims entitle their owners, the creditors, to 
receive  a payment  or series  of payments  without  any 
counter-performance  from  other  institutional  units, 
the  debtors,  who  have 
incurred  the  counterpart 
liabilities. 

Examples  of  economic  assets  which  are  close  to 
financial  claims  in  nature  are  financial  derivatives 
and shares and other equity. 

The financial  assets classified  in this category  are the 
there  are  no 
for  which 
only 
counterpart  liabilities in the System. 

financial  assets 

Gold  held  as  a  component  of  foreign  reserves  by 
monetary  authorities  or  by  others  who  are  subject  to 
the effective  control of the authorities. 

reserve 

International 
the 
International  Monetary  Fund  (IMF)  and  allocated  to 
its members to supplement existing reserve assets. 

created 

assets 

by 

Currency  and  deposits (AF.2) 

Currency  (AF.21) 

Currency  in  circulation  and  all  types  of  deposits  in 
national and in foreign  currency. 

Notes  and  coins  in  circulation  that  are  commonly 
used to make payments. 

2?3 

Transferable deposits (AF.22) 

Other deposits (AF.29) 

Securities other than shares (AF.3) 

Securities other than shares, 
excluding financial  derivatives (AF.33) 

Short-term securities other than shares, 
excluding financial  derivatives (AF.331) 

Long-term securities other than shares, 
excluding financial derivatives (AF.332) 

Financial derivatives (AF.34) 

Loans (AF.4) 

Short-term loans (AF.41) 

Long-term loans (AF.42) 

Shares and other equity (AF.5) 

Deposits  (in  national  or  in  foreign  currency)  which 
are  immediately  convertible  into  currency  or  which 
are transferable  by cheque, banker's order, debit entry 
or  the  like,  both  without  any  kind  of  significant 
restriction or penalty. 

Deposits  (in  national  or  in  foreign  currency)  other 
than  transferable  deposits.  Other  deposits  cannot  be 
used  to  make  payments  at  any  moment  and  they  are 
not convertible  into currency  or transferable  deposits 
without any kind of significant  restriction or penalty. 

Financial  assets  which  are  bearer  instruments,  are 
usually  negotiable  and  traded  on  secondary  markets 
or  can  be  offset  on the  market,  and  do  not  grant  the 
holder  any  ownership  rights  in  the  institutional  unit 
issuing them. 

Securities other than  shares which give the holder the 
unconditional  right 
to  a  fixed  or  contractually 
determined  variable  money  incorrie  in  the  form  of 
coupon  payments  (interest) and/or a stated fixed sum 
on  a  specified  date  or  dates  or  starting  from  a  date 
fixed  at the time of issue. 

Securities  other  than  shares,  whose  original  maturity 
is normally  one year  or  less and  in  exceptional  cases 
two  years  at 
financial 
derivatives. 

the  maximum,  except 

Securities  other  than  shares,  whose  original  maturity 
is  normally  more  than  one  year,  and  in  exceptional 
cases  more  than  two  years  at  the  minimum,  except 
financial  derivatives. 

Financial  assets based  on  or derived  from  a  different 
underlying  instrument.  The  underlying  instrument  is 
usually  another  financial  asset,  but  may  also  be  a 
commodity or an index. 

Financial  assets  created  when  creditors  lend  funds  to 
debtors, either directly  or through  brokers, which  are 
either evidenced  by non-negotiable  documents or not 
evidenced by documents. 

Loans  whose  original  maturity  is  normally  one  year 
or  less,  and  in  exceptional  cases  two  years  at  the 
maximum, and loans repayable on demand. 

Loans whose original maturity  is normally  more than 
one  year,  and  in  exceptional  cases  more  than  two 
years at the minimum. 

Financial  assets  which  represent  property  rights  on 
corporations  or  quasi-corporations.  These  financial 
assets  generally  entitle  the  holders  to  a  share  in  the 
profits  of the  corporations  or  quasi-corporations  and 
to  a  share  in  their  own  funds 
in  the  event  of 
liquidation. 

224 -

Shares and  other  equity, 
excluding  mutual funds  shares (AF.51) 

Quoted  shares, 
excluding  mutual  funds  shares (AF.511) 

Unquoted  shares, 
excluding  mutual  funds  shares (AF.512) 

Other  equity (AF.513) 

Mutual funds  shares (AF.52) 

Insurance technical reserves (AF.6) 

Net  equity  of  households  in  life  insurance  reserves 
and  in pension  funds  reserves (AF.61) 

Net equity of households in life  insurance 
reserves (AF.611) 

Net equity of households in pensions  funds 
reserves (AF.612) 

Financial  assets  except  mutual  fund  shares  which 
represent  property  rights  on  corporations  or  quasi-
corporations.  These  financial  assets  generally  entitle 
the  holders 
the 
corporations  or  quasi-corporations  and  to  a  share  in 
their own funds  in the event of liquidation. 

the  profits  of 

to  a  share 

in 

Shares  cover  beneficial  interest  in  the  capital  of 
corporations  in  the  form  of  securities  which  in 
principle  are  negotiable.  Quoted  shares  cover  those 
shares  with  prices  quoted  on  a  recognized  stock 
exchange  or  other  form  of  secondary  market. 
Unquoted  shares  cover  those  shares  that  are  not 
quoted. 

All forms of equity other than those classified  in sub-
positions  AF.511  and  AF.512,  and  in  sub-category 
AF.52. 

issued  by  a  specific 

Shares 
type  of  financial 
corporation,  whose exclusive  purpose is to invest the 
funds  collected  on  the  money  market,  the  capital 
market and/or in real estate. 

Technical  provisions  of  insurance  corporation  _.d 
(autonomous  and  non-autonomous)  pension  funds 
against policy holders or beneficiaries  as laid down in 
Council Directive 91/674/EEC of  19 December  1991 
on the annual  accounts  and  consolidated  accounts  of 
insurance undertakings. 

Technical provisions set aside in the corporations and 
quasi-corporations  concerned  for  the  purpose  of 
satisfying,  once  the  established  conditions  are  met, 
the claims and benefits  foreseen. 

Technical  provisions  against  outstanding  risks  and 
technical provisions for with-profit  insurance that add 
to the  value  on maturity  of with-profit  endowments 
or similar policies. 

Technical  provisions  held  by  autonomous  and  non-
autonomous  pension  funds  established  by  employers 
and/or  employees  or  groups  of  self-employed  to 
provide pensions for employees or  self-employed. 

225 

(15) 

Prepayments of insurance premiums and 
reserves for outstanding claims (AF.62) 

insurance 
Technical  provisions  established  by 
corporations  and  (autonomous  and  non-autonomous) 
pension funds  for 

-  the  amount 

representing 

that  part  of  gross 
premiums  written  which  is  to  be  allocated  to  the 
following  accounting  period 
(prepayments  of 
insurance premiums); 

-  the  total  estimated  ultimate  cost  of  settling  all 
claims arising from events which  have occurred up 
to  the  end  of  the  accounting  period,  whether 
reported  or  not,  less  amounts  already  paid  in 
respect  of  such  claims  (provisions  for  outstanding 
claims). 

Financial claims which are created as a counterpart of 
a  financial  or  a  non-financial  transaction  in  cases 
where  there  is  a  timing  difference  between  this 
transaction and the corresponding  payment. 

Financial  claims  arising  from  the  direct  extension  of 
credit by suppliers and buyers  for  goods and services 
transactions and advance payments for work that is in 
progress or to be undertaken and associated with such 
transactions. 

Financial claims which  arise from timing  differences 
financial 
between  distributive 
transactions  on 
the 
corresponding  payment.  It  includes  also  financial 
claims due to income accruing over time. 

transactions  or 
the  secondary  market  and 

The  System  calls  for  several  memorandum  items  to 
show  assets  not  separately  identified  in  the  central 
framework  that  are  of  more  specialized  analytic 
interest. 

Durable  goods  acquired  by  households  for  final 
that  are  not  used  by 
consumption  (i.e. 
households  as  stores  of  value  or  by  unincorporated 
enterprises  owned  by  households  for  purposes  of 
production). 

those 

investment 

involves  a 

Direct  foreign 
long-term 
relationship  reflecting  a  lasting  interest  of  a  resident 
institutional  unit  in  one  economy  ("direct  investor") 
in  an  institutional  unit  resident  in  an  economy  other 
than 
investment 
investor 
enterprise"). The direct investor's purpose is to exert a 
significant  degree of influence  on the management of 
the enterprise resident in the other economy. 

that  of 

("direct 

the 

Other accounts receivable/payable (AF.7) 

Trade credits and advances (AF.71) 

Other accounts receivable/payable, 
excluding trade credits and advances (AF.79) 

Memorandum  items 

Consumer durables (AN.m) 

Direct foreign investment (AF.m) 

- 2 26 

Annex  2 

A  MAP  OF  ENTRIES  FROM  OPENING  BALANCE  SHEET  TO  CLOSING  BALANCE  SHEET 

IV.3 
Closing  Ba 
lance  Sheet 

III.  3.2 

Holding  gains 

III.32.1 
Neutral 
Holding 
Gains  and 
Losses 

III.3.2.2 
Real 
Holding 
Gains  and 
Losses 

K . l l .l 

K.11.2 

A N. 

K . l l .l 

K.11.2 

AN.1 

K.l  1.1 

K.11.2 

A N . 11 

K.11.1 

K.11.2 

A N . 1 11 

K . l l .l 

K.11.2 

A N . 1 1 11 

K.11.1 

K.11.2 

A N . 1 1 12 

K.11.1 

K.11.2 

A N . 1 1 13 

K.11.1 

K.11.2 

A N . 1 1 14 

K.11.1 

K.11.2 

A N . 1 12 

K.11.1 

K.11.2 

A N . 12 

K.11.1 

K.11.2 

A N . 13 

K.11.1 

K.11.2 

A N .2 

Classification  of  Assets, 
Liabilities,  and  Net  Worth 

IV.1 
Opening 

111.1 
Transactions 

Balance  Sheet 

III.3.1 
Other  changes 
in  volume 

Non-financial  assets 

A N. 

P.5,  K.1,  K.2 

Produced  assets 

AN.1 

P.5,  K.1 

Fixed  assets  1/ 

AN.11 

P.51,  K.1 

Tangible  fixed  assets 

A N . 1 11 

P.511,  K.1 

Dwellings 

A N . 1 1 11 

P.511,  K.1 

Other  buildings  and 
structures 

A N . 1 1 12 

P.511,  K.1 

Machinery  and 
equipment 

A N . 1 1 13 

P.511,  K.1 

Cultivated  assets 

A N . 1 1 14 

P.511,  K.1 

Intangible  fixed  assets 

A N . 1 12 

P.512,  K.1 

Inventories 

A N . 12 

P.52 

Valuables 

A N .13 

P.53 

Non-produced  assets 

AN.2 

K.2,  P.513, 
K.1 

1/  Memorandum  item  :  A N .m  Consumer  durables. 

K.3,  K.4,  K.5, 
K.6,  K.7,  K.8, 
K.9,  K.12.1, 
K.12.22 

K.4,  K.7,  K.8, 
K.9,  K . 1 2 . 1, 
K.12.22 

K.4,  K.7,  K.8, 
K.9,  K . 1 2 . 1, 
K.12.22 

K.4,  K.7,  K.8, 
K.9,  K . 1 2 . 1, 
K.12.22 

K.4,  K.7,  K.8, 
K.9,  K . 1 2 . 1, 
K.12.22 

K.4,  K.7,  K.8, 
K.9,  K . 1 2 . 1, 
K.12.22 

K.7,  K.8,  K.9, 
K . 1 2 . 1,  K.12.22 

K.7,  K.8,  K.9, 
K . 1 2 . 1,  K.12.22 

K.7,  K.8,  K.9, 
K . 1 2 . 1,  K.12.22 

K.7,  K.8,  K.9, 
K . 1 2 . 1,  K.12.22 

K.4,  K.7,  K.8, 
K.9,  K . 1 2 . 1, 
K.12.22 

K.3,  K.5,  K . 6 1, 
K.62,  K.7,  K.8, 
K.9,  K . 1 2 . 1, 
K.12.22 

227-

A  MAP OF ENTRIES FROM OPENING BALANCE SHEET TO  CLOSING  BALANCE SHEET 

Classification  of  Assets, 
Liabilities,  and  Net  W o r th 

IV.1 
Opening 

111.1 
Transactions 

Balance  Sheet 

111.3.1 
Other  changes 
in  volume 

Tangible  non-produced 
assets 

A N . 21 

K . 2 1,  P.513, 
K.1 

K.3,  K.5,  K . 6 1, 
K.62,  K.7,  K.8, 
K.9,  K . 1 2 . 1, 
K.12.22 

IV.3 
Closing  Ba 
lance  Sheet 

III.  3.2 

Holding  gains 

III.3.2.1 
Neutral 
Holding 
Gains  and 
Losses 

Hl.3.2.2 

Real 
Holding 
Gains  and 
Losses 

K.11.1 

K.11.2 

A N . 21 

Land 

A N . 2 11 

K . 2 1,  P.513, 
K.1 

K.3,  K.62,  K.7, 
K.8,  K.9, 
K . 1 2 . 1,  K.12.22 

K.11.1 

K.11.2 

A N . 2 11 

Subsoil  assets 

A N . 2 12 

K . 2 1,  P.513, 

Non-cultivated  biological 
resources 

A N . 2 13 

K . 2 1,  P.513, 

Water  resources 

A N . 2 14 

K . 2 1,  P.513, 

Intangible  non-produced 
assets 

A N . 22 

K.22,  P.513, 

Financial 
assets/liabilities  1/ 

AF. 

F. 

Monetary  gold  and  SDRs 
(assets  only) 

AF.1 

F.1 

Currency  and  deposits 

AF.2 

Securities  other  t h an  shares 

AF.3 

F.2 

F.3 

K.3,  K . 6 1,  K.62, 
K.7,  K.8,  K.9, 
K . 1 2 . 1,  K.12.22 

K.3,  K.5,  K . 6 1, 
K.62,  K.7,  K.8, 
K.9,  K . 1 2 . 1, 
K.12.22 

K.3,  K . 6 1,  K.62, 
K.7,  K.8,  K.9, 
K . 1 2 . 1,  K.12.22 

K.3,  K.62,  K.7, 
K.8,  K.9, 
K . 1 2 . 1,  K.12.22 

K.7,  K.8,  K.10, 
K . 1 2 . 1,  K . 1 2 . 2 1, 
K.12.22 

K.7,  K.8,  K.10, 
K . 1 2 . 1,  K . 1 2 . 2 1, 
K.12.22 

K.7,  K.8,  K.10, 
K . 1 2 . 1,  K.12.22 

K.7,  K.8,  K.10, 
K . 1 2 . 1,  K.12.22 

K.11.1 

K.11.2 

A N . 2 12 

K.11.1 

K.11.2 

A N . 2 13 

K.11.1 

K.11.2 

A N . 2 14 

K.11.1 

K.11.2 

A N . 22 

K.11.1 

K.11.2 

AF. 

K.11.1 

K.11.2 

AF.1 

K.11.1 

K.11.2 

AF.2 

K.11.1 

K.11.2 

AF.3 

1/  Memorandum  item  : AF.m  Direct  foreign  investment. 

-228 

A  MAP  OF  ENTRIES  FROM  OPENING  BALANCE  SHEET  TO  CLOSING  BALANCE  SHEET 

Classification  of  Assets, 
Liabilities,  and  Net  W o r th 

IV. 1 
Opening 

111.1 
Transactions 

Balance  Sheet 

111.3.1 
Other  changes 
in  volume 

Loans 

A F .4 

Shares  and  other  equity 

AF.5 

Insurance  technical 
reserves 

Other  accounts 
receivable/payable 

AF.6 

AF.7 

F.4 

F.5 

F.6 

F.7 

K.7,  K.8,  K.10, 
K . 1 2 . 1,  K.12.22 

K.7,  K.8,  K.10, 
K . 1 2 . 1,  K.12.22 

K.7,  K.8.  K.10, 
K . 1 2 . 1,  K.12.22 

K.7,  K.8,  K.10, 
K . 1 2 . 1,  K.12.22 

IV.3 
Closing  Ba 
lance  Sheet 

III,  3.2 

Holding  gains 

III.32.1 
Neutral 
Holding 
Gains  and 
Losses 

III.3.2.2 
Real 
Holding 
Gains  and 
Losses 

K.11.1 

K.11.2 

AF.4 

K.11.1 

K.11.2 

AF.5 

K.11.1 

K.11.2 

AF.6 

K.11.1 

K.11.2 

AF.7 

Net  w o r th 

B.90 

B.10.1 

B.10.2 

B.10.31 

B.10.32 

B.90 

AN-.  ...,  A F.  ...  are  from  Classification  of  assets. 

Balancing items 

Other  accumulation  entries 

B.10.1 

Changes  in  net  w o r th  due  to  saving  and 

capital  transfers 

B.10.2 

Changes  in  net  w o r th  due  to  other  changes 

in  volume  of  assets 

B.10.31  Changes  in  net  w o r th  due  to  neutral  holding 

gains/losses 

B.10.32  Changes  in  net  w o r th  due  to  real  holding 

gains/losses 

B.90 

Net  w o r th 

Transactions  in  financial  assets  and  liabilities 

F. 
F.1 
F.2 
F.3 
F.4 
F.5 
F.6 
F.7 

Transactions  in  financial  assets  and  liabilities 
Monetary  gold  and  SDRs 
Currency  and  deposits 
Securities  other  than  shares 
Loans 
Shares  and  other  equity 
Insurance  technical  reserves 
Other  accounts  receivable/payable 

Transactions  in  goods  and  services 

P.5 
P.51 
P.511 
P.512 

Gross  capital  formation 
Gross  fixed  capital  formation 
Acquisitions  less  disposals  of  tangible  fixed  assets 
Acquisitions  less  disposals  of  intangible  fixed 

assets 

P.513 

Additions  to  the  value  of  non-produced 

P.52 
P.53 

non-financial  assets 
Changes  in  inventories 
Acquisitions  less  disposals  of  valuables 

K.1 
K.2 

K.21 

K.22 

K.3 

K.4 
K.5 
K.61 
K.62 
K.7 
K.8 
K.9 
K.10 

K.11 
K.l 1. 
K.11. 
K.12 
K.12. 
K.12. 
K.12. 

Consumption  of  fixed  capital 
Acquisitions  less  disposals  of  non-financial 
non-produced  assets 
Acquisitions  less  disposals  of  land  and  other 

tangible  non-produced  assets 
Acquisitions  less  disposals  of  intangible  non-produced 
assets 
Economic  appearance  of  non-produced  assets 
Economic  appearance  of  produced  assets 
Natural  g r o w th  of  non-cultivated  biological  resources 
Depletion  of  natural  assets 

Other  economic  disappearance  of  non-produced  assets 
Catastrophic  losses 
Uncompensated  seizures 
Other  volume  changes  in  non-financial  assets  n.e.c. 
Other  volume  changes  in  financial  assets  and 
liabilities  n.e.c. 
Nominal  holding  gains/losses 
1  Neutral  holding  gains/losses 
2  Real  holding  gains/losses 

Changes  in  classifications  and  structure 

1  Changes  in  sector  classification  and  structure 
21  Monetization/demonetization  of  gold 
22  Changes  other  than  monetization/demonetization  of  gold 

in  classifications  of  assets  or  liabilities 

-229 

CHAPTER VIII 

SEQUENCE OF ACCOUNTS AND BALANCING ITEMS 

- 

* 3o  -23 1  -

INTRODUCTION 

8.01. 

8.02. 

8.03. 

The ESA records flows  and stocks in an ordered  set of accounts  describing  the economic 
cycle from  the generation of income, through its distribution and redistribution and  finally 
to its accumulation in the form of assets. 

Each  of  the  accounts  shows  transactions  which  balance  out,  either  because  of  the 
definitions used or because a significant balance is carried forward to the next account. 

The  structured  recording  of  transactions  according  to  a  logical  analysis  of  economic  life 
provides the aggregates required for the study of an industry, an institutional sector or sub-
sector,  or  the  total  economy.  The breakdown  of  the  accounts  was  designed  to  reveal  the 
most significant  economic  information. 

8.04. 

The accounts are grouped in three categories: 

-  current accounts 
-  accumulation accounts 
-  balance sheets. 

. 

Current accounts  concern the generation,  distribution  and redistribution  of  income and its 
use in the form  of final  consumption. Finally, they permit the calculation of saving, which 
is an essential factor in accumulation. 

Accumulation  accounts  analyse  the  various  components  of  changes  in  the  assets  and 
liabilities  of  the  various  units  and  enable  changes  in  net  worth  (the  difference  between 
assets and liabilities) to be recorded. 

Balance sheets show the total assets and liabilities of the various units at the beginning and 
the  end  of  the  accounting  period, together  with their  net worth. The  flows  for  each asset 
and  liability  item recorded  in the accumulation  accounts  are seen again  in the changes in 
balance sheets account. 

8.05. 

8.06. 

The  sequence  of  accounts  applies,  wholly  or  partly,  to  institutional  units,  institutional 
sectors and sub-sectors, industries and the total economy. 

The balancing items are established both gross and net. They are gross if calculated  before 
deduction  of  consumption  of  fixed  capital  and  net  if  calculated  after  this  deduction.  It  is 
more significant to express income balancing items in net terms. 

8.07. 

The accounts are presented in various ways: 

- 

- 

in  the  form  of  integrated  economic  accounts,  showing  the  accounts  for  all  the 
institutional sectors, the total economy and the rest of the world in a single table; 

in  the  form  of  a  sequence  of  accounts,  giving  more  detailed  information.  The  tables 
showing the presentation of each account are given in the section of this chapter entitled 
"Sequence of accounts"; 

- 

in the form of matrices, in which each account is represented by a row/column pair. 

8.08. 

Synoptic presentation of the accounts, balancing items and main aggregates: 

232 

Synoptic presentation of the accounts, balancing items and main aggregates 

Current 
accounts 

Full sequence of accounts for institutional sectors 

Production 
account 

Distribution and 
use of income 
accounts 

Production 
account 

Primary 
distribution of 
income accounts 

n i l. 

II.1.2. 

Generation of 
income account 
Allocation of 
primary  income 
account 

II. 1.2.1.  Entrepreneurial 
income account 

II. 1.2.2.  Allocation of 
other primary 
income account 

Accumulation 
accounts 

Accumulation 
accounts 

no 

H.4.  -
II.4.1. 

Secondary distribution 
of income account 
Redistribution of income 
in kind account 
Use of income account 
Use of disposable 
income account 
Use of adjusted disposable 
income account 

Capital account 

III.2. 
III.3. 

Financial account 
Other changes in 
assets accounts 

III. 1.2. 

III.3.1. 

Change in net worth due to 
saving and capital 
transfers account 
Acquisition of non financial  assets account 

Other changes in 
volume of assets 
account 
Revaluation 
accounts 

III.3.2.I.  Neutral holding 

gains/losses 

Balancing items 

Main aggregates 

B.l 

B.2 
B.3 

B.6 

B.7 

B.8 

Domestic product 
(GDP/NDP) 

Operating surplus 
Mixed income 

Entrepreneurial  income 

Balance of primary incomes 

National  income (GNI.NNI) 

Disposable income 

National disposable income 

Adjusted disposable income 

Saving 

National  saving 

B.10.1 

B.9 
B.9 
B. 10.2 

Changes in net worth, due 
to saving and  capital 
transfers 
Net lending/Net borrowing 
Net lending/Net borrowing 
Changes in net worth, due to 
other changes in volume of assets 
Changes in net worth, due to 
nominal holding gains/losses 
B.10.31  Changes in net worth, due to 

B.10.3 

Balance 
sheets 

0. Goods and 
services account 

Current 
accounts 

Accumulation 
accounts 

Balance sheets 

IV. 1. 
IV.2. 
IV.3. 

Opening balance sheet 
Changes in balance sheet 
Closing balance sheet 

Transaction accounts 

Goods and services 
account 

Rest of the world account (external transactions account) 

Rest of the world 
account 

V.I. 

VII. 

External account of 
goods and services 
External account of 
primary income and 
current transfers 

v.m. 

External 
accumulation 

Balance sheets 

V.IV. 

External assets and 
liabilities account 

V. Ill. 1.  Capital account 

V.III.2. 

Financial account 

V.III.3. 

Other changes in 
assets account 

V.IV. I. 

V.IV.2. 

V.IV.3. 

Opening balance 
sheet 
Changes in 
balance sheet 
Closing balance 
sheet 

IH.3.2.2.  Real holding gains/ 
losses 

neutral holding gains/losses 

B.10.32  Changes in net worth, due to 

real holding gains/losses 

B.90 
B.10 
B.90 

Net worth 
Changes in net worth, total 
Net worth 

National  worth 
Changes in national worth 
National worth 

National expenditure 

B.l 1 

B. 12 

B.10.1 

B.9 

B.9 

B. 10.2 

V.III.1.1.  Changes in net worth 
to saving and capital 
transfers account 

V.III. 1.2.  Acquisition of non fin 

cial assets account 

V.III.3.1.  Other changes in 
volume of assets 

V.HI.3.2.  Revaluation 

accounts 

B.10.3 

External balance of goods 
and services 
Current external balance 

External balance of goods 
and services 
Current external balance 

Changes in net worth due 
to current external balance 
and capital tranfers 
Net lending/Net borrowing 

Net lending/Net borrowing 

Net lending/Net borrowing 

Changes in net worth, due 
to other changes in volume 
of assets 
Changes in net worth, due 
to nominal  holding gains/losses 
neutral holding gains/losses 
real holding gains/losses 

B.90 

Net worth 

Net external financial  position 

B.10 
B.90 

Changes in net worth 
Net worth 

Net external financial  position 

SEQUENCE  OF ACCOUNTS 

8.09. 

The sequence of accounts is composed of three main categories of accounts: 

Current accounts 

-  production account (I) 

-  distribution and use of income accounts (II) 

Accumulation accounts (III) 

Balance sheets (IV) 

Current  accounts 

Production  account (I) 0) 

8.10. 

8.11. 

The  production  account  (I)  shows  the  transactions  relating  to  the  production  process 
proper.  It  is  drawn  up  for  institutional  sectors  and  for  industries.  Its  resources  include 
output and its uses include intermediate consumption. 

The production account can be used to obtain one of the most important balancing items in 
the  system  -  value  added,  or  the  value  generated  by  any  unit  engaged  in  a  production 
activity  -  and  a  vital  aggregate:  gross  domestic  product.  Value  added  is  economically 
significant  for both the institutional sectors and the industries. 

8.12.  As with the balancing items of the following  accounts, value added (the balancing items of 
the  account)  may  be calculated  before  or  after  consumption  of  fixed  capital,  i.e. gross or 
net. Given that output is valued at basic prices and intermediate consumption at purchaser's 
prices, value added does not include taxes less subsidies on products. 

8.13. 

The production account at the level of the total economy includes in resources, in adddition 
to the output of goods and services, taxes less subsidies on proe acts. It thus enables gross 
domestic product (at market prices) to be obtained as a balancing item. 

8.14.  As financial  intermediation  services indirectly  measured  (FISIM) are not allocated  to user 
sectors,  the  whole  of  the  value  of  the  output  of  FISIM  is  treated  as  the  intermediate 
consumption  of a nominal  sector with zero output and negative value added  equal in size 
but opposite in sign to intermediate consumption. In this way, the value added of all sectors 
and  industries  together  is reduced  in total  by  this  amount.  To  lighten  the  presentation  of 
accounts,  it  is  possible  not  to  insert  a  supplementary  column  for  the  nominal  sector,  but 
instead to take into account the corresponding figure in the column total economy. 

C' 

See  chapter III "Transactions in products". 

234-

Account I:  Production account 

S.l 

S.15 

S.14  S.13 

S.12 

S.ll 

Resources 

S.ll 

S.12 

S.13 

S.14 

S.15 

S.l 

Corres-port^ing 
entries of the 

Of the  Total 

Goods  Rest 
and 
services world  eco-
account account nomy  NPISHs  holds  ment 

General  cial 

cial 
House- govern-  corpo-  corpo-  Transactions  and 
rations  rations  balancing items 

Non-
Finan- finan-

Non-
finan-  Finan 
cial 
corpo-  corpo-  govern-  House- 
rations  ment 
rations 

General 

cial 

Total 
eco-

holds  NPISHs  nomy 

Cort^pottdtng 
entries of U» 
Rest' '""(^'o'ods"1 
oithe  mi 
wûritf  services 
account account Total 

Uses 

Total 

3,595  3,595 
3,048  3,048 

171 
376 

133 

171 
376 
1,904 
133 

1,824 

222 

1,602 

P.l 
P.ll 
P. 12 
P. 13 

Output 
Market output / FISIM 
Output for own final use 
Other non-market output 

102 

102 

I 753 
1722 
31 

1269 
1 129 
140 

434 

74 

360 

37 
21 
0 

16 

3,595 
3,048 
171 
376 

1,904 

1,824 

222 

1,602 

694 

246 

29 

881  P.2 

Intermediate consumption / FISIM 

D.21-D.31  Taxes less subsidies on products 

31 

28 

575 
42 

533 

73 
10 
63 

872  B.lg/B.l*g  Value added, gross/gross domestic product 
137  K.1 
735  B.ln/B.l*n  Valueadded.net/netdomesticproduct 

Consumption of fixed capital 

30 

158 

133; 

3,595 
3,048 
171 

376 
1,904 
133 

P.l 1  Financial corporations : 102 including 48 for FISIM (P.l 19) 
P.2 Total economy  : 1904 corresponding to  the sum of institutional sectors  (1856) and to FISIM ( 48) 
B ig Total economy : 1824 corresponding to the sum of institutional sectors (1739),plus taxes less subsidies on products (133) less FISIM (48) 

Distribution and  use of income accounts (11)0) 

8.15.  Distribution  and use of income is analysed  in four  stages: primary  distribution,  secondary 

distribution, redistribution in kind and use of income. 

The  first  stage  concerns  the  generation  of  income  resulting  directly  from  the  production 
process  and  its  distribution  between  the  production  factors  (labour,  capital)  and  general 
government  (via taxes on production  and  imports, and subsidies). It enables the  operating 
surplus (or mixed income in the case of households) and primary income to be determined. 

The second stage traces redistribution of income via transfers  other than social transfers  in 
kind. This yields the disposable income. 

The  third  stage  describes  redistribution  via  social  transfers  in kind,  yielding  the  adjusted 
diposable income. 

The fourth stage describes how the income is consumed and saved, yielding the saving. 

Primary distribution of income accounts (II. 1) 

Generation of income account (II.1.1.) 

The layout of the generation of income account by institutional sector is as shown in the table: 

8.16. 

8.17. 

8.18. 

8.19. 

The  generation  of  income  account  is  also  presented  by  industries,  in  the  columns  of  the 
supply and uses tables. 

The generation of income account presents the sectors, sub-sectors and industries which are 
the source, rather than the destination, of primary income. 

It analyses the extent to which value added can cover compensation of employees and taxes 
less  subsidies  on production.  It  measures  the  operating  surplus,  which  is  the  surplus  (or 
deficit)  on  production  activities  before  account  has  been  taken  of  the  interest,  rents  or 
charges which the production unit: 

-  must pay  on financial  assets or on tangible non-produced  assets which  it has borrowed 

or rented; 

-  must  receive  on  financial  assets  or on tangible  non-produced  assets  of  which  it  is  the 

owner. 

The operating surplus corresponds to the income which the units obtain from their own use 
of their production  facilities.  It is the last balancing item which can be calculated  for  both 
the industries and the institutional sectors and sub-sectors. 

In the case of unincorporated enterprises in the households sector, the balancing item of the 
generation  of 
to 
remuneration  for work carried out by the owner or members of his family  which cannot be 
distinguished from his profits as entrepreneur. This is referred to as "mixed income". 

implicitly  contains  an  element  corresponding 

income  account 

8.20. 

In  the  case  of  own  account  production  of  accommodation  services  by  owner-occupier 
households, the balancing- item of the generation of income account is an operating surplus. 

'  ' 

Sec chapter  IV "Distributive  transactions" 

2 3 6-

Account  11.1.1:  Generation of income account 

r^rrwporKjIrtg 
entries <tf tria 
i 
Good»'  ::':Hea 

•mmm 
fiâctsàit 

:3èctiùrtt:j: 

Total 
eco 
nomy 

General 
govem 
ment 

Finan 
cial 
corpo 
rations 

House 
holds 

S.11 

Non-
finan 
cial 
corpo 
rations 

Transactions  and 
balancing  Items 

B.1g/B.1*g  Value added, gross/ gross domestic  product 
B.1n/B.1*n  Value added, net/net  domestic product 

D.1 
D.11 
D.12 
D.121 
D.122 
D.2 
D.21 
D.211 
D.212 

D.2121 
D.2122 

D.214 

D.29 
D.3 
D.31 
D.311 

D.319 
D.39 

B.2g 
B.3g 
B.2n 
B.3n 

Compensation of employees 
Wages and salaries 
Employers' social contributions 

Employers' actual social contributions 
Employers' imputed social contributions 

Taxes on production and imports 

Taxes on products 

Value added type taxes (VAT) 
Taxes and duties on imports excluding 
VAT 

Import duties 
Taxes on imports excluding VAT 
and duties 

Taxes on products except VAT 
and import taxes 
Other taxes on production 

Subsidies 

Subsidies on products 
Import subsidies 

Other subsidies on products 

Other subsidies on production 

Operating surplus, gross 
Mixed income, gross 
Operating surplus, net 
Mixed income, net 

432 

432 

432 

Resources 

S.11 

Non-
flnan-
clal 
corpo 
rations 

872 

Wïimml^Mi 

ifiécQ^'gSilaûtouftt 

•:-Mïiïrnïrn 

1824 
"Ï6ÔF 

fit 

Allocation of primary income account (II.1.2) 

8.21.  Unlike  the  generation  account,  the  allocation  of  primary  income  account  concerns  the 
resident  units  and  institutional  sectors  as  recipients  rather  than  producers  of  primary 
income. 

8.22. 

8.23. 

"Primary  income"  is  the  income  which  resident  units  receive  by  virtue  of  their  direct 
participation  in  the  production  process,  and  the  income  receivable  by  the  owner  of  a 
financial  asset or a tangible non-produced  asset in return for providing  funds  to, or putting 
the tangible non-produced asset at the disposal of,  another institutional unit. 

The  allocation  of  primary  income  account  (II. 1.2)  can  be  calculated  only  for  the 
institutional  sectors  and  sub-sectors  because,  in  the  case of  industries,  it  is  impossible  to 
break  down  certain  flows  connected  with  financing  (capital  leans  and  borrowings)  and 
assets. 

8.24.  As financial intermediation  sendees indirectly  measured  (FISIM) are not allocated  to user 
sectors, the entries  shown  for  interest  are those  for  actual  interest payable and  receivable. 
An adjustment  is made to resources  in the column  financial  corporations  (with a negative 
sign) and in the column nominal sector (with a positive sign). To lighten the presentation of 
accounts,  it  is possible  not  to  insert  a  supplementary  column  for  the  nominal  sector,  but 
instead to present the corresponding figure in the column total economy. 

8.25. 

The allocation  of primary  income account  is broken  down into an entrepreneurial  income 
account (II. 1.2.1) and an allocation of other primary income account (II. 1.2.2). 

238 -

Account 11.1.2:  Allocation of primary income account 

iEOr^jp^n^gS:;:;:*: 

IX' > • • • J I I I X v l i il  " I" 

'" 

Total 
eco 
nomy 

General 
govern 
ment 

Finan 
cial 
corpo 
rations 

House 
holds 

Resources 

S.11 

T . 12 

Non-
finan 
cial 
corpo 
rations 

Finan 
cial 
corpo 
rations 

Corfftspo^ifrsJ 
•aniftM-çf th* 

General 
govern- 
ment 

House-
holds 

Total 
eco-
nomy 

NPISHs 

accourt. 

*ctoWnt 

Transactions  and 
balancing  Items 

B.2g  Operating surplus, gross 

Mixed income, gross 

B.2n  Operating surplus,  net 
B.3n  Mixed income,  net 

Compensation of employees 
Wages and salaries 
Employers' social contributions 

Employers' actual social contributions 
Employers' imputed social contributions 

Taxes on production and imports 

Taxes on products 

Value added type taxes (VAT) 
Taxes and duties on imports excluding VAT 

Import duties 
Taxes on imports excluding VAT 
and duties 

Taxes on products except VAT and Import 
taxes 

Other taxes on production 

Subsidies 

Subsidies on products 
Import subsidies 
Other subsidies on products 

Other subsidies on production 

Property income 

Interest 
Adjustment FISIM 
Distributed income of corporations 

Dividends 
Withdrawals from income of quasi-corporations 

Reinvested earnings on direct foreign investment 
Property income attributed to insurance policy holders 
Rent 

1  633 

1 633 

1 348 

191 

19 

72 

B.5n/B.5*  Balance of primary incomes,  net/National Income,  net 

The adjustment FISIM for Total economy (0) is the sum of Financial corporations sector (-48) 
and of the nominal sector (+48) 

alance of primary incomes, gross/National income, 

TRa 

gross 

Entrepreneurial income account (II.1.2.1) 

8.26. 

8.27. 

8.28. 

The  purpose  of  the  entrepreneurial  income  account  is  to  determine  a  balancing  item 
corresponding  to  the  concept  of  current  profit  before  distribution  and  income  tax,  as 
normally used in business accounting. 

In  the  case  of  general  government  and  non-profit  institutions  serving  households,  this 
account concerns only their market activities. 

Entrepreneurial  income  corresponds  to  the  operating  surplus  or  mixed  income  (on  the 
resources side): 

-  plus property  income receivable in connection with financial and other assets belonging 

to the enterprise (on the resources side); 

-  minus  interest  on  debts  payable  by the  enterprise  and  rents  payable  on  land  and  other 

non-produced tangible assets rented by the enterprise (on the uses side). 

Property  income payable  in the form  of dividends or reinvested  earnings on direct  foreign 
investment is not deducted from entrepreneurial income. 

Allocation of other primary income account (II.1.2.2) 

8.29. 

The purpose of the allocation of other primary income account is to return from the concept 
of  entrepreneurial  income  to  the  concept  of  primar>  income.  It  therefore  contains  the 
elements of primary income not included in the entrepreneurial income account: 

- 

in  the  case  of  corporations,  distributed  dividends  and  reinvested  earnings  on  direct 
foreign  investment (on the uses side); 

- 

in the case of households: 

.  property  income payable, excluding rents and interest payable  in connection with 

the entrepreneurial activity (on the uses side); 

.  compensation of employees (on the resources side); 

.  property  income  receivable,  excluding  that  receivable  in  connection  with  the 

activity of the enterprise (on the resources side). 

- 

in the case of general government: 

.  property  income payable, excluding  that  payable  in connnection  with  the  market 

activities (on the uses side); 

. 

taxes on production and imports less subsidies (on the resources side); 

.  property  income  receivable,  excluding  that  receivable  in  connection  with  the 

market activities (on the resources side). 

240-

Accounts  11.1.2.1 Entrepreneurial  income and 11.1.2.2 Allocation of other primary  income 

Resources 

S.1 

S.15 

S.14 

S.13 

S.12 

S.11 

S.11 

S.12 

S.13 

S.14 

S.15 

S.1 

•Corrtspondlnfl 

•Goods 

.Rest 

Total 
eco-

* » b ¥» 

»Mômft  nomy 

NPISHs 

Accounts 

11.1.2.1. 
Entrepre 
neurial 
income 

244 
160 
0 

m 

217 
147 
0 

11.1.2.2. 
Allocation 
of other 
primary 
income 

6 

m 
mi m 
m 
mi m 
Wi 
II 
m m 

W\ 
iii 
m 
IM 
mm 
mm 
mm 

163 
59 
84 
60 
24 
0 

1855 
1633 

0 
0 
0 
0 
0_ 

202 
62 
120 
60 
60 
0 

20 
1855 
1633 

Oeneral 
govern- 
ment 

Flnan- 
dal 
corpo- 
rations 

House-
holds 

Non-
flnan-
cial 
corpo-
rations 

Transactions  and 
balancing Items 

Non-
flnan-
dal 

Finan 
cial 

rations 

rations 

General 
govem 
ment 

House 
holds 

102 
77 

97 

257 
120 

37 
37 

20 
1390 
1348 

221 
191 

36 

36 
36 
0 
0 

29 
19 

48 

48 
24 
24 
0 

209 
72 

interest 
Adjustment  FISIM 
Distributed Income of corporations 

Operating surplus, gross 

Operating surplus,  net 

Property  income 

Mlxedlncome.net 

B.2g 
B.3g  Mixed income, gross 
B.2n 
B.3n 
D.4 
D.41 
P.119 
D.42 
D.421 
D.422 
D.43 
D.44 
D.45 
B.4g 
B.4n 

Entrepreneurial income, gross 
Entrepreneurial  Income,  net 

Dividends 
Withdrawals from income of quasi-corporations 

Reinvested earnings on direct foreign  Investment 
Property Income attributed to insurance  policyholders 
Rent 

B.4g 
B.4n 
D.1 
D.11 
D.12 
D.121 
D.122 
D.2 
D.21 
D.211 
D.212 
D.2121 
D.2122 
D.214 

Entrepreneurial Income, gross 
Entrepreneurial  Income, net 
Compensation of employees 

Wages and salaries 
Employers'social  contributions 

Employers'actual social  contributions 
Employers' Imputed social  contributions 

Taxes on production and Imports 

Taxes on products 

Value added type taxes  (VAT) 
Taxes and duties on imports excluding VAT 

Import duties 
Taxes on Imports excluding VAT and duties 

Taxes on products except VAT, and Import 
taxes 

Subsidies 

Other taxes on production 

Other subsidies on  production 

Subsidies on products 
Import  subsidies 
Other subsidies on products 

D.29 
D.3 
D.31 
D.311 
D.319 
D.39 
D.4 
D.41 
D.42 
D.421 
D.422 
D.43 
D.44 
D.45 
B.5g/B.  Balance of primary incomes, gross/National  income, gross 
B.5n/B.  Balance  of primary  Incomes,  net/National Income, net 

Reinvested earnings on direct foreign  investment 
Property income attributed to insurance  policyholders 
Rent 

Property  income 
Interest 
Distributed income of corporations 

Dividends 
Withdrawals from income of quasi-corporations 

276 

139 

~W 
25 

3 
3 
0 
4 
5 
41 

IT 

45 

^ 6 0" 
125 
-48 
25 
25 
0 
7 
0 
3 

257 
120 

65 
55 

92~ 

442 
60 
432_ 
5 
0 

5 
5 
0 

46~ 

16 

T 
0 

4 
4 
0 
0 
0 
0 

532 
490 
"756"" 
573 
193 
174 
19 

235 
141 
121 
17 
17 
0 
3 

94 
-44 

26 
12 
14 
1 
13 

129 
33 
52 
8 
44 
3 
20 
21 

NPISHs 

8" 

5 

Total 
eco-
nomy 

429* 
442 
217 
432 
247 
150 
0 
37 
37 
0 
11 
5 
44 

901 
679 
~7W 
573 
193 
174 
19 
235 
141 
121 
17 
17 
0 
3 

94 
«T 
-8 
0 
-8 
-36 
160 
50 
66 
9 
57 
3 
20 
21 

;iji^tti;||!«iiii^;i  Total 

Accounts 

21 

4 
S 
0 

T 
Z 
û 
0 
D 
T 
0 o 

D 
6 
0 
0 

JL 
0 
0 
0 
0 
JL 
& 
« 
3 

Entrepre-
neurial 
income 

429  '  11.1.2.1. 
442 
217 
432 
"26T 
166 
0 
42 
42 
0 
11 
5 
44 

11.1.2.2. 
Allocation 
of other 
primary 
income 

901 
679 
768 
575 
193 
174 
19 
"235" 
141 
121 
17 
17 
0 
3 

94 
*T 
-8 
0 
-8 
-36 
778" 
56 
78 
18 
60 
3 
20 
21 

Secondary  distribution of income account (II.2) 

8.30. 

8.31. 

8.32. 

The  secondary  distribution  of  income  account  shows  how  the  balance  of  the  primary 
income  of  an  institutional  sector  is  allocated  by  redistribution:  current  taxes  on  income, 
wealth etc., social contributions  and benefits  (excluding  social transfers  in kind) and other 
current transfers. 

The balancing item of the account is disposable income, which reflects current transactions 
and  explicitly  excludes  capital  transfers,  real  holding  gal is  and  losses  and  the 
consequences of events such as natural disasters. 

Social contributions are recorded^) on the uses side of the secondary distribution of income 
account  of  households  and  on the resources  side of the  secondary  distribution  of  income 
account of the institutional  sectors responsible  for  management  of social  insurance. When 
payable  by  employers  for  their  employees, they  are first  included  under  compensation  of 
employees,  on  the  uses  side  of  the  employers'  generation  of  income  account,  since  they 
form  part  of  wage  costs;  they  are  also  recorded,  as  compensation  of  employees,  on  the 
resources  side  of  the  households'  allocation  of  primary  income  account,  since  they 
correspond to benefits to households 

Redistribution of income in kind account (II.3) 

8.33. 

The redistribution of income in kind account gives a broader picture of households' income 
by  including  the  flows  corresponding  to  the  use  of  individual  goods  and  services  which 
these  households  receive  free  of  charge,  i.e.  social  benefits  in  kind  and  transfers  of 
individual  non-market  goods  and  services,  these  two  categories  of  flows  being  grouped 
together  under  the  concept  of  social  transfers  in  kind.  This  facilitates  comparisons  over 
time  when  there  are  differences  or  changes  in  economic  and  social  conditions,  and 
supplements the analysis of the role of general government in the redistribution of income. 

8.34. 

Social transfers in kind are recorded on the resources side of the redistribution of income in 
kind  account  in  the  case  of  households,  and  on  the  uses  side  in  the  case  of  general 
government and non-profit  institutions serving households. 

8.35. 

The balancing  item  in the redistribution  of  income  in kind  account  is adjusted  disposable 
income. 

' ' ' 

The social contributions shown  on the uses side of the secondary  distribution of income account of households are net of the service 
charges of the pension  funds  arid other insurance companies, all or part of whose resources are made up of actual social  contributions. 

2 4 2-

( 1 6) 

Account 11.2:  Secondary distribution of income account 

S.1 

S.15 

S.14 

S.13 

S.12 

S.11 

Cort-0^MJftdtnu 

l u» 

I I I I T I I I U J I I I I I I I I II 

and 
$ftfvfe$ 
««aw»  Bccottft 

«| <h* 
IH«WW 

Total 
eco 
nomy 

Total 

rv) 

Finan-

Genera  cial 

NPISH 

House-  govern-  corpo-
rations 
ment 
holds 

Non-
finan 
cial 
corpo 
rations 

Transactions and 
balancing items 

B.5g/ 
B.5*g 
B.5n/ 
B.5*n 

Balance of primary incomes, gross/National 
income, gross 
Balance of primary incomes,  net/National 
income,  net 

^rrêTt^xeToTnncômë^ê^uîrelc™"™ 

Taxes on income 
Other current taxes 

Social contributions 
Actual social contributions 

Employers, actual social contributions 
Compulsory employers, actual social 
contnbutions 
Voluntary employers, actual social 
contributions 

Employees, social contributions 

Compulsory employees, social contributions 
Voluntary employees, social contributions 

Social contributions by self- and 
non-employed persons 

Compulsary social contributions by self-
and non-employed persons 
Voluntary social contributions by self-
and non-employed persons 

mputed social contributions 

Social benefits other than social transfers in kind 
Social security benefits in cash 
Private funded social benefits 
Unfunded employee social benefits 
Social assistance benefits in cash 

Other current transfers 

Net non-life insurance premiums 
Non-life insurance claims 
Current transfers within general government 
Current international cooperation 
Miscellaneous current transfers 

Disposable income, gross 
Disposable income,  net 

Resources 
S.11 

S.12 

Non-
finan- 
cial 
corpo- 
rations 

Finan 
cial 
corpo 
rations 

S.13 

S.14 

S.15 

S.1 

QofflMfpwding 

Genera 
govern-  House-
ment 

holds 

Total 
eco 
nomy 

of (he 

BM 

aûcoUtt  ôCCôurt 

20 
15 

76 
69 
7 
32 

97 
85 
12 
32 

iiinmii!M:-:-:mnt 

97 
85 
12 
32 

Account 11.3:  Redistribution of income in kind account 

S.1 

S.15 

S.14 

S.13 

S.12 

S.11 

S.11 

S.12 

S.13 

S.14 

S.15 

S.1 

Resources 

ÛotfeSjMrKfcno; 
«rwteïofth» 
Sotxi* 
«fid 
services: 
aécourit 

R«st 
Oftr* 
wortd 
fcctourrt 

Total 
eco-
nomy 

Finan- 

General 

cial 

Non-

flnan-

cial 

House- 

govern- 

corpo- 

corpo-

NPISHs 

holds 

ment 

rations 

rations 

Cof«ïporidi^J:; 

Uses 

Total 

4> 

Use of income account (II.4) 

8.36. 

8.37. 

For the institutional  sectors with final  consumption, the use of income account  shows how 
disposable  income  (or  adjusted  disposable  income)  is divided  between  final  consumption 
expenditure (or actual final consumption) and saving. 

In  the  system,  only  government,  NPISHs  and  households  have  final  consumption.  In 
addition,  the  use  of  income  account  includes,  for  households  and  for  pension  funds,  an 
adjustment  item (D8 Adjustment  for the change in the net equity of households on pension 
funds) which relates to the way that transactions between households and pension funds are 
recorded^1) 

Use of disposable income account (II.4.1) 

8.38. 

The  use  of  disposable  income  account  includes  the  concept  of  final  consumption 
expenditure  financed  by  the  various  sectors  concerned:  households,  general  government 
and non-profit  institutions serving households. 

8.39. 

The balancing item in the use of disposable income account is saving. 

Use of adjusted disposable income account (II.4.2) 

8.40. 

The  use  of  adjusted  disposable  income  account  includes  the  concept  of  actual  final 
consumption,  which  corresponds  to  the  value  of  the  goods  and  services  actually  at  the 
disposal  of  households  for  final  consumption,  even  if  their  acquisition  is  financed  by 
general government or non-profit  institutions serving households. 

Consequently,  the  actual  final  consumption  of  general  government  corresponds  only  to 
collective  final  consumption. 
Since  final  consumption  expenditure  by  non-profit 
institutions  serving  households  is  regarded  as  entirely  individual,  their  actual  final 
consumption is zero. 

8.41.  At  the  level  of  the  total  economy,  final  consumption  expenditure  and  actual  final 
consumption  are  equal;  it  is  only  the  distribution  over  the  institutional  sectors  which 
differs. The same is true of disposable income and adjusted  disposable income. 

8.42. 

8.43. 

Saving  is the balancing  item  in both  versions  of the use of  income  account.  Its  value  is 
identical  for  all  sectors,  regardless  of  whether  it  is  obtained  by  subtracting  final 
consumption  expenditure  from  disposable 
income  or  by  subtracting  actual  final 
consumption from adjusted  disposable income. 

Saving  is  the  (positive  or  negative)  amount  resulting  from  current  transactions  which 
establishes the link with accumulation.  If saving is positive,  non-spent income is used  for 
the acquisition of assets or for paying off liabilities.  If saving is negative, certain assets are 
liquidated or certain liabilities increase. 

'  ' 

See chapter IV "Distributive  transactions 

- 2 45 

Account  11.4.1 :  Use of disposable  income  account 

ÇoKMponâmg 
•artriM-^rth^ 

•JSood* 
and 
jçfviqéï 
sçcouftt 

8 wt 
ofihe 
*K*ffl 
account 

Total 
eco-
nomy 

House- 

General 
govern- 

Flnan-
cial 
corpc-

Non-
flnan-
dal 
corpo 

Transactions  and 

NPISHs 

holds 

ment 

rations 

rations 

balancing Kama 

income,  net 

B.6g  Disposable  Income,  gross 
B.6n  Disposable 
P.3 
P.31 
P.32 

Individual  consumption  expenditure 
Collective  consumption  expenditure 

Final  consumption  expenditure 

D.8 

Adjustment  for the change  in net  equity 
of  households  on pension  funds 

B.8g  Saving,  gross 
B.8n  Saving,  net 
B. 12  Current  external 

balance 

Resources 

Non-
finan 
cial 
corpo 
rations 

" l 85 

48 

Finan 
cial 
corpo 
rations 

~32 
22 

General 

govem 

ment 

1 82 
352 

House 
holds 
T787 
1  145 

NPISHs 
40 
37 

Total 

eco 

nomy 
T826 
1  604 

11 

11 

$atretportdinq 
«ntnèa <tt  to» 

fast 

<ïooa$ 

Vtfrltf 

1371 
1215 

Mltllllllllll 

Total 
TJ26 
1 604 
1  371 
1  215 
156 

11 

O 

Account  II.4.2:  Use of adjusted  disposable  income  account 

::Çi^$^ndi^:;SS:¥SJ: 

l^ilPlSïiiilll  To,al 

; W r ^ 9 « S ; : i i ; ; ; i i r ^ l i i: 

eco-

House- 

NPISHs 

holds 

General 
govern- 

ment 

Flnan-
cial 
corpc-
rations 

Non-
finan 
cial 
corpo 
rations 

Transactions  and 
balancing  Items 

Resources 

S.11 

Non-
finan-
cla! 
corpo 
rations 

Finan 
cial 
corpo 
rations 

General 
govem 
ment 

House 
holds 

Total 
eco 
nomy 

: ^ ^ i » ; B ^ i | ^ : : ; : g : : : : : ; :g 

B.7g  Adjusted  disposable  income,  gross 
B.7n  Adjusted  disposable 
P.4 
P.41 
P.42 

Actual  individual  consumption 
Actual  collective  consumption 

Actual  finai  consumption 

income,  net 

D.8 

Adjustment  for the change  in net  equity 
of  households  in pension  funds 

mmm. 
• BB 
lilt? 

1  243 
156 

Accumulation  accounts  (111)0) 

8.44. 

8.45. 

The  accumulation  accounts  are  flow  accounts.  They  record  the  various  causes  of  changes 
in the assets and  liabilities of units and the change  in their net  worth. 

Changes  in  assets  are  recorded  on  the  left-hand  side  of  the  accounts  (plus  or  minus), 
changes in liabilities and net worth on the right-hand  side (plus or minus). 

Capital  account  (III.l) 

8.46. 

8.47. 

The  capital  account  records  acquisitions  less  disposals  of  non-financial  assets  by  resident 
units  and  measures  the  change  in  net  worth  due  to  saving  (final  balancing  item  in  the 
current accounts)  and capital  transfers. 

The  capital  account  makes  it  possible  to  determine  the  extent  to  which  acquisitions  less 
disposals  of non-financial  assets  have been  financed  out  of  saving  and  by  capital  transfers. 
It  shows  a  net  lending  corresponding  to  the  amount  available  to  a  unit  or  sector  for 
financing,  directly  of indirectly,  other units  or  sectors, or a net  borrowing  corresponding  to 
the amount  which a unit or sector  is obliged to borrow  from  other units or sectors. 

Change  in net worth  due  to saving  and  capital  transfers  account  (III.l.1) 

8.48. 

This  account  makes  it  possible  to  determine  the  change  in  net  worth  due  to  saving  and 
capital  transfers,  which  corresponds  to  net  saving  plus  capital  transfers  receivable,  minus 
capital transfers  payable. 

Acquisitions  of non-financial  assets  account  (III. 1.2) 

8.49. 

This  account  records  acquisitions  less  disposals  of  non-financial  assets  in  order  to  return 
from  the  concept  of  change  in  net  worth  due  to  saving  and  capital  transfers  to  net  lending 
or  borrowing. 

Financial  account  (III.2) 

8.50. 

8.51. 

The  financial  account  records, by  type  of financial  instrument,  the  changes  in the  financial 
assets and  liabilities that compose net lending or borrowing. 

The  classification  of  assets  and  liabilities  used  in  the  financial  account  is  identical  to  that 
used  in the balance  sheets. 

O 

See chapter V "Financial  transactions" and  chapter VI "Other flows" 

247 

Account  111.1.1 : Change  in net worth due to saving and capital transfers  account 

Changes in assets 

Corresponding 
enlrtes of the 

S.1 

S.15 

S.14 

S.13 

S.12 

S.11 

Oocyte 
and 

Total 

atcourrf 

of the 
wôfW 
account 

Total 
eco 
nomy 

NPISH 

House 
holds 

Genera 
govern 
ment 

Finan 
cial 
corpo 
rations 

Non-
finan 
cial 
corpo 
rations 

r\j 

00 

Transactions  and 
balancing  Items 

B.8n 
THT 

D.9 

"DIT" 
T X 9T 

D.9 
TJST" 
"D~9T 
D.99 

Saving,  net 
Current external  balance 

Capital transfers,  receivable 

Capital  taxes 
Investment grants 
Other capital transfers" 

Capital transfers,  payable 
Capital taxes,  payable 
Investment grants,  payable 
Other capital transfers,  payable 

B. 10.1  Cnangestnnet  worth  duetosaving 

and capital transfers 

Changes in liabilities and net worth 

S.11 

S.12 

S.13 

S.14 

S.15 

S.1 

Cûrfaapondîng 
srtfrtea-ofttie 

Account  III.1.2 : Acquisition  of non financial assets  account 

Changes in assets 

<ÎOff$$pôndlng 
entries ofttm, 

S.1 

S.15 

S.14 

S.13 

S.12 

S.11 

Goods 
Rest 
Of ma 
arid 
Service  w0CW 
aecoufl. 

accourt 

Total 
eco-
nomy 

Total 

NPISH 

House- 
holds 

Genera 
govern 
ment 

Finan- 
cial 
corpo- 
rations 

Non-
finan-
cial 
corpo-
rations 

Transactions  and 
balancing  Items 

17 

222 

28 
10 

17 
-222 
28 
10 

-3 

-42 

-30 

- 10 

B. 10.1  Changes  In net  worth  due  to  saving 

TT5T 
"FTBTf 
P.5H1 

P.5H3 
P.512 
-P3T7T 
P.5122 
P.5123 
P.513 

P.5131 

P.5132 

and  capital  transfers 
Gross^e^ôâpnano'rmation'' 
Acquisitions  less disposals of tangible fixed  assets 

Acquisitions of new tangible fixed  assets 
Acquisitions  of existing tangible fixed  assets 
Disposals of existing tangible fixed assets" 

Acquisitions  less disposals of Intangible fixed assets ' 

Acquisitions  of new  intangible fixed  assets 
Acquisitions  of existing  intangible fixed  assets 
Disposals of existing  intangible fixed  assets 

Additions to the value of  non-produced 
non-financial assets 

Major  improvements  to non-produced 
non-financial  assets 
Costs of ownership transfer  on  non-produced 
non-financial  assets 

* 

K.1 

Consumption  of fixed  capital 

P.52 
P.53 
K.2 

"RTT 

"OF 

Changes  in Inventories 
Acquisitions  less disposals  of  valuables 

Acquisitions  less disposals  of  non-produced 
non-financial assets 

Acquisitions  less disposals  of land and  other 
tangible  non-produced  assets 
Acquisitions  less disposals  of  intangible 
non-produced assets 

"5^9" 

Net  lending  (+) net  borrowing  (-f 

17 
- 1 37 
26 
2_ 

-_7_ 

• 6 

Changes in liabilities and net worth 

S.11 

S.12 

S.13 

s". 14 

S.15 

S.1 

Non-
flnan- 
cial 
corpo- 
rations 

65 

Finan 
cial 
corpo- 
rations  ment 

Genera 
govern 

House-
holds 

NPISH 

Total 
eco 
nomy 

-38 

178 

230 

enWwoffhs 

Rest 
OKU*  Wt 

Ôootfs 

accptffl  accourt 

Total 

192 

376 
303 
305 
TT~ 

—HT 
5T 
— 5T 

'  "'"&$' 
235-

sr 

•H+++W  W M U H M it 

n 

22 

Account  ltl.2:  Financial account 

tt«M 
afib* 
w Md 
»çç8kirl)  ;  nomy 

:.  eco-

Total 

House 
holds 

General 
govem 
ment 

Finan- 
cial 
corpo- 
rations 

Non-
finan 
dal 
corpo 
ration* 

Changes  in  assets 

<&>t>d> 
*nd 
* « w i t *i 
*&8utti| 

Total 

1 

ro 

O 

I 

46 

warn 

43 

29 

Transaction» and 

balancing hams 

B.9 

Net lending (+)/net borrowing (-) 

F 

F 

F.1 

F.2 
F.21 
F.22 
F.29 

F.3 
F.4 
F.41 
F.42 

F.5 

F.6 
F.61 

Net acquisition of financial assets/ 

Net incurrence of liabilities 

Monetary gold and SDRs 

Currency and deposits 

Currency 
Transferable deposits 
Other deposits 

Securities other than shares 

Loans 

Short-term 
Long-term 

Shares and other equity 

Insurance technical reserves 

Net equity of households on life insurance 
reserves and In pension funds 

"rTSTT" 

F.612 

Net equity of households 
in life Insurance  reserves 
Net equity of households 
In pension funds 

F.62 

F.7 
F.71 
F.79 

Prepayment of premiums and reserves against 
outstanding claims 

^ 

Other accounts  receivable/payable 

Trade credits and advances 
Other accounts  receivable/payable 
except trade credits and advances 

Changes  in  liabilities  and  net  worth 

S.12 

S.13 

Non-
finan 
cial 
corpo 
rations 

"^69 

Finan 
cial 
corpo 
rations 

General 
govem 
ment 

House 
holds 

-50 

"l48 

ùfth* 
Iwftd; 

Total 
eco 
nomy 

38 

NPISHs 

T 

and 
ketvfctt 
« WW 

j,i.ti,i,i,i.'.i.na 

»Atoe*-of-th* 

140 

232 

170 

33 

28 

603 

130 
35 
63 
32 
53 

13 
36 

33 

22 

64 
94 
32 
62 

10 

71 
16 
55 
26 

37 

29 

Ht 

IIIIIMIHtll 
+2 

x3 

•a? 
10 
27 

28 

17 

24 
17 

132 
35 
65 
32 
123 
217 
76 

43 

36 

33 

22 

52 
18 

34 

ma 
'$m 
am 

691 

130 
37 

29 
143 
254 
86 
168 

33 

22 

82 
36 

46 

Other changes in assets account (III.3) 

8.52. 

The other changes in assets account records  changes in assets and liabilities of units, other 
than  in connection  with saving  and  voluntary  transfers  of wealth,  these being  recorded  in 
the capital  and financial accounts.  It is divided  into two: the other  changes  in volume of 
assets account (III.3.1) and the revaluation account (III.3.2). 

Other changes in volume of assets account (III.3.1) 

8.53. 

The movements  recorded  in the  other  changes  in volume  of  assets  account  affect  the  net 
worth  of the balance  sheets  of the  units, sectors  and  sub-sectors  concerned.  This  change, 
called change in net worth due to other volume changes of assets,  is the balancing  item in 
the account. 

Revaluation account (III.3.2) 

8.54. 

The  revaluation  account  records  changes  in  the  value  of  assets  and  liabilities  due  to 
changes in their prices. 

For a given asset or liability, this change is measured as: 

-  either the difference  between its value at the end of the accounting  period and its value 
at  the  start  of  the  accounting  period  or  the  date  on  which  it  was  first  entered  in  the 
balance sheet, 

-  or the difference  between its value at the date on which' it was  vvritten out of the balance 
sheet and its value at the start of the accounting pericd or the date on which it was first 
entered in the balance sheet. 

This difference  is called "nominal holding gain (or loss)". 

A nominal holding gain corresponds to the positive revaluation of an asset or the negative 
revaluation of a (financial)  liability. 

A nominal holding loss corresponds to the negative revaluation  of an asset or the positive 
revaluation of a (financial)  liability. 

8.55. 

The flows recorded in the revaluation account change the net worth of the balance sheets of 
the units concerned. This change, called "change in net worth due to. nominal holding gains 
and losses", is the balancing item in the account. It is recorded on the changes in liabilities 
and net worth side. 

8.56. 

The revaluation  account  is broken down  into two sub-accounts:  the  neutral  holding  gains 
and losses account (III.3.2.1) and the real holding gains and losses account (III.3.2.2). 

251  -

Account  III.3.1 :  Other  changes  in  volume  of  assets  account 

S.1 

S . 15 

S.14 

S . 13 

S.12 

S.11 

Changes  in  assets 

Corresponding 

entries-t>rM 

Goods 
«rtd 
*e<v>aM 
account 

Rest 
MM 
<WMd 
account 

Transactions  and 
balancing  Items 

AN 
AN.1 

K.4 
K.7 
K.8 
K.9 
K. 12 
K. 12.1 
K.12.2 
K.12.21 
K.12.22 

Non-financial assets 

Produced assets 

Economic appearance  of produced assets 
Catastrophic losses 
Uncompensated  seizures 
Other volume changes in non-financial assets n.e.c. 
Changes in classifications and structure 

Changes In sector classification and structure 
Changes  In classification of assets and liabilities 

Monetization/demonetization  of gold 
Changes in classification of assets or liabilities 
other than monetization/demonetization  of gold 

ofwhich: 
AN.11  Fixed assets 
AN.12 
AN.13  Valuables 

Inventories 

AN.2 

Non-produced  assets 

K.3 
K.5 
K.6 
K.61 
K.62 
K.7 
K.8 
K.9 
K.12 
K.12.1 
K. 12.2 
K.12.22 

Economic appearance of non-produced assets 
Natural growth of non-cultivated biological resorrces 
Economic disappearance of non-produced  assets 
Depletion of natural assets 
Other economic disappearance of non-produced  assets 
Catastrophic losses 
Uncompensated  seizures 
Other volume changes in non-financial assets n.e.c. 
Changes in classifications and structure 

Changes in sector classification and structure 
Changes in classification of assets and liabilities 
Changes in classification of assets or liabilities 
other than monetization/demonetization  of gold 

of which: 
AN.21  Tangible  non-produced  assets 
AN.22 

Intangible non-produced assets 

AF 
K.7 
K.8 
K. 10 

K.12 
K. 12.1 
K. 12.2 
K.12.21 
K.12.22 

Financial assets/liabilities 

Catastrophic  losses 
Uncompensated  seizures 
Other volume changes in financial assets and 
liabilities n.e.c. 
Changes  in classifications and structure 

Changes In sector classification and structure 
Changes in classification of assets and  liabilities 
Monetization/demonetization  of gold 
Changes in classification of assets or liabilities 
other than monetization/demonetization  of gold 

ofwhich: 
AF.1  Monetary gold and  SDRs 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical reserves 
Other accounts  receivable/payable 

B.10.2  Changes in net worth due to other 

changes In volume of assets 

Changes  in  liabilities  and  net  worth 
sTî 

S.12 

S.13 

S.14 

Non-

rinan- 
cial 
corpo- 
rations 

Finan 
cial 
corpo 
rations 

S . 15 

S.1 

Corrwppndfns 

R «d 

GH»<j* 

General -
govern 
ment 

House 
holds 

Total 
eco-
nomy 

NPISHs 

recount 

account 

Total 

17 

17 

Neutral holding gains and losses account (III.3.2.1) 

8.57. 

The  neutral  holding  gains  and  losses  account  records  changes  in  the  value  of  assets  and 
liabilities  in proportion  to changes  in the general  price level.  Such  changes  correspond  to 
the revaluation necessary to maintain the general purchasing power of assets and liabilities. 
The  general  index  price  to  be  applied  for  this  calculation  is  the  price  index  for  final 
national uses, excluding changes in inventories. 

Real holding gains and losses account (HI.3.2.2) 

8.58.  Real holding  gains  and  losses measure the difference  between  nominal  holding  gains and 

losses and neutral holding gains and losses. 

8.59. 

If the nominal holding gains net of the nominal holding losses on a given asset exceed the 
neutral holding  gains net of the neutral holding  losses,  there is a real holding  gain on the 
asset for the unit holding it. This gain reflects the fact that the actual price of the asset has, 
on average, risen faster than the general price level. Conversely, a drop in the relative price 
of the asset produces a real holding loss for the unit holding it. 

By the same token, a rise in the relative price of a liability produces a real holding  loss on 
liabilities, while  a drop in the relative price of a liability  generates  a real  holding  gain on 
liabilities. 

- 253 -

Account  111.3.2:  Revaluation  account 

Changes  in  assets 

S.1 

S.15 

S.14 

S.13 

S.12 

S.11 

Corre»pondOT9 

«nttei-jBfftfr 

sand 

stsrvKtt 

<rfHw 

worid 

Total 

eco-

«bCOUM 

*dçtf<4ft 

nomy 

Finan- 

Gerteral 

cial 

govern- 

ment 

corpo- 

rations 

House 

holds 

Accounts 

lil.3.2. 

Revaluation 

"550" 

"581T 

account 

111.3.2.1. 

Neutral 
holding 
gains 
account 

III.3.2.2. 
Real 
holding 
gains 
account 

126 
111 
7 
8 
154 
152 
2 
91 
12 

44 

34 

198 
121 
111 
5 
5 
78 
76 
1 

147 
15 
32 
28 
29 
28 
8 
7 

81 
5 

3 
2 
77 
76 
1 
-57 
-3 
- 32 
17 
- 29 
6 
-8 
-7 

126 
111 
7 
8 
154 
152 
2 
84 
12 

40 

31 

198 
121 
111 
5 
5 
78 
76 
1 

136 
15 
30 
25 
28 
26 
7 
5 

81 
5 

3 
2 
77 
76 
1 
- 52 
-3 
-30 
15 
-28 
5 
-7 
-5 

it 

•  2 

2 

3-

im 
i i i; 
Hi 
til 
Wii 

"4T 

20 
18 
1 
1 
23 
23 

32 
20 
18 
1 
1 
12 
12 

12 

12 
12 

35 
28 
2 
5 
45 
45 

6 

10 

56 
34 
28 
2 
4 
22 
22 

36 

17 
4 

8 
6 
1 

1 
22 
22 

-2 

-2 

"^20 

-"6 

-3 

-2 

-17 
2 

2 
-6 
-1 

-  254 

-

Nort-

finan-

cial 

corpo-

rations 

"TO" 
63 
58 
4 
1 
81 
80 
1 

30 

16 

70 
14 

19 
24 
13 
1 

1 
1 

"Ï3 
-3 

11 
24 
3 
-1 

101 
60 
58 
2 
1 
41 
40 
1 

43 
3 

40 
40 

^ÏÔ 

-8 
1 
-1 
1 
-1 
-3 

Other flows  and 

balancing  items 

K. 11  Nominal holding  gains /  losses 

AN 

Non-financial  assets 

AN.1 
AN.11 
AN.12 
AN. 13 
AN-.2 
AN.21 
AN.22 
AF 
AF.1 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

Produced  assets 
Fixed  assets 
Inventories 
Valuables 

Non-produced  assets 

Tangible  non-produced  assets 
Intangible  non-produced  assets 

Financial  assets/liabilities 

Monetary  gold and  SDRs 
Currency  and  deposits 
Securities other than  shares 
Loans 
Shares  and ofher  equity 
Insurance technical  reserves 
Other accounts  receivable/payable 

B.10.3  Changes  in net  worth  due  to 
nominal  holding  gains/losses 

K.11.1  Neutral holding  gains /  losses 

AN 
AN.1 
AN.11 
AN. 12 
AN.13 
AN.2 
AN.21 
AN.22 

AF 
AF.1 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

Non-financial  assets 
Produced  assets 
Fixed  assets 
Inventories 
Valuables 

Non-produced  assets 

Tangible  non-produced assets 
Intangible  non-produced  assets 

Financial  assets/liabilities 

Monetary  gold and  SDRs 
Currency  and  deposits 
Securities other than  shares 
Loans 
Shares  and other  equity 
Insurance technical  reserves 
Other accounts  receivable/payable 

B.10.3  Changes in net  worth  due  to 
neutral  holding  gains/losses 

Non-produced  assets 

Tangible  non-produced  assets 
Intangible non-produced  assets 

K.11.2  Real holding  gains /  losses 
Non-financial  assets 
AN 
Produced  assets 
AN.1 
Fixed  assets 
AN.11 
Inventories 
AN. 12 
Valuables 
AN.13 
AN.2 
AN.21 
AN.22 
AF 
AF.1 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 
B.10.3  Changes  in net  worth  due  to 

Monetary  gold and  SDRs 
Currency  and  deposits 
Securities  other than  shares 
Loans 
Shares  and other  equity 
Insurance technical  reserves 
Other accounts  receivable/payable 

Financial  assets/liabilities 

, 

real  holding  gains/losses 

Changes in liabilities and net worth 

S.11 

S.12 

S.13 

S.14 

S.15 

S.1 

Non-

finan 

cial 

corpo 

rations 

Finan 
cial 
corpo 
rations 

General 

govern 

ment 

House 
holds 

CorrBspondwg 
«rttfiei j&f ihe 

Total 

eco 

nomy 

fe& 
«Tttie 
world 
«fcC#Wrt 

Oopds 
a«t 
ssfvices 
$d$bu(>t 

51 

34 

17 

1 

16 

76 

42 

34 

134 

10 

38 

96 

10 

288 

68 

26 
21 

36 

1 
1 
18 
14 

3 

~82~ 

26 

87 

- 17 

- 26 
13 

3 
-7 

-1 
1 
•18 
3 

-3 

-3 

-2 
3 
-7 

12 

126 

29 
26 
29 
28 
7 
6 

208 

50 

29 
16 
29 
6 
-7 
-6 
80 

Accounts 

Hl.3.2. 

Revaluation 

account 

111.3.2.1. 

Neutral 
holding 
gains 
account 

III.3.2.2. 
Real 
holding 
gains 
account 

78 

44 

34 

292 

132 

32 
28 
29 
28 
8 
7 

214 

- 54 

- 32 
17 
- 29 
6 
-8 
-7 

78 

-  2 55  -

Balance sheets (IV^1) 

8.60. 

The aim of the balance sheets is to give a picture of the assets, liabilities and net worth of 
units at the start and end of the accounting period and of changes between balance sheets. 
The sequence is as follows: 

-  opening balance sheet (IV. 1) 

-  changes in balance sheet (IV.2) 

-  closing balance sheet (IV.3). 

Opening balance sheet (IV. 1) 

8.61. 

The  opening  balance  sheet  records  the  value  of  assets  and  liabilities  held  by  units  at  the 
start of the accounting period. 

These items are categorized on the basis of the classification  of assets and liabilities. 

They are valued at prices current at the start of the accounting period. 

The difference  between assets and liabilities - the balancing item in the account - is the net 
worth at the start of the accounting period. 

Changes in balance sheet (IV.2) 

8.62. 

The changes in balance sheet account records changes in the value of assets and  liabilities 
in the course of the accounting period and aggregates the amounts recorded in the various 
accumulation accounts, i.e. change in net worth due to saving and capital transfers,  change 
in net worth due to other volume changes in assets and change in net worth due to nominal 
holding gains and losses. 

Closing balance sheet (IV.3) 

8.63. 

The closing balance sheet records the value of assets and liabilities held by units at the end 
of  the  accounting  period.  These  items  are  categorized  on  the  basis  of  the  same 
classification  used in the opening balance sheet and are valued at prices current at the end 
of the period. 

The difference  between  assets and  liabilities  is the net worth at the end of the  accounting 
period. 

8.64. 

The  value  of  an  asset  or  liability  in the  closing  balance  sheets  is  equal  to  the  sum  of  its 
value  in  the  opening  balance  sheets  and  the  amount  recorded  for  the  said  item  in  the 
changes in balance sheet account. 

O 

See chapter VII "Balance sheets". 

-  2_SY  - 257 -

Account  IV:  Balance  sheets 

S.1 

S.15 

S.14 

S.13 

S.12 

S.11 

Corresponding 
entries, of {hé 

:Rest 
Goods 
and 
tft&t* 
service,  world: 
accourt 

accotât 

Total 
eco 
nomy 

Accounts  Total 

IV. 1. 
Opening 
balance 
sheet 

IV.Z 
Changes 
in 
balance 
sheet 

IV.3. 
Closing 
balance 
sheet 

9  922 
6  047 
5  544 
231 
272 
3 875 
3 809 
66 
7  365 
770 
1  587 
1  388 
1  454 
1  409 
396 
361 

482 
289 
239 
34 
16 
193 
191 
2 
~ÏW 
19 
.130 
187 
250 
80 
38 
82 

10  404 
6  336 
5  783 
265 
288 
4  068 
4  000 
68 
8  152 
788 
1  717 
1  575 
1  704 
1 4 89 
434 
443 

9  922 
6  047 
5  544 
231 
272 
3  875 
3  809 
66 
6  792 
770 
1  482 
1  263 
1  384 
1  296 
370 
227 

482 
289 
239 
34 
16 
193 
191 
2 
TScT 
18 
119 
178 
240 
75 
38 
61 

10  404 
6  336 
5 783 
265 
288 
4  068 
4  000 
68 
7  522 
788 
1  601 
1 4 41 
1  624 
1  371 
408 
288 

wm 
WÊÈ 
&Ï25S 
mm 
im$ii 
mm 

mm 
in 
mm mm 
WE 

mm mm 
Wm wm 
mm 
mm 
mm 

Non-
finan 
cial 
corpo 
rations 
5 041 
3 001 
2 878 
85 
38 
2 040 
1 989 
51 

Transactions, other flows, stocks 
and balancing items 

AN 
AN.1 
AN.11 
AN. 12 
AN.13 
AN.2 
AN.21 
AN.22 

Non-financial  assets 
Produced  assets 
Fixed  assets 
Inventories 
Valuables 

Non-produced  assets 

Tangible  non-produced assets 
Intangible  non-produced assets 

897~ 

"ÂF 

Financial  assets/liabilities 

AF.1 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

B.90 

AN 
AN.1 
AN.11 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

Monetary  gold and  SDRs 
Currency and  deposits 
Securities other than  shares 
Loans 
Shares and other  equity 
Insurance technical  reserves 
Other accounts  receivable/payable 

Net  worth 

Total changes in assets/liabilities: 

Non-financial  assets 
Produced  assets 
Fixed  assets 
Inventories 
Valuables 

Non-produced  assets 

Tangible  non-produced assets 
Intangible non-produced assets 

"ÂF 

Financial assets/liabilities 

AF.1 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

B.10 

Monetary  gold and  SDRs 
Currency and  deposits 
Securities other than  shares 
Loans 
Shares and other equity 
Insurance  technical  reserves 
Other accounts  receivable/payable 

Changes  in net  worth, total 
due to: 

B.10.1 
B.10.2 
B.10.3 
B.10.31 
B.10.32 

Saving  and  capital  transfers 
Other  changes  in volume  of assets 
Nominal  holding gains/losses 
Neutral holding  gains/losses 
Real  holding  gains/losses 

AN 
AN.1 
AN.11 
AN. 12 
AN.13 
AN.2 
AN.21 
AN.22 

AF 
AF.1 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

B.90 

Non-financial  assets 
Produced  assets 
Fixed  assets 
Inventories 
Valuables 

Non-produced  assets 

Tangible  non-produced assets 
Intangible non-produced assets 

Financial  assets/liabilities 

Monetary  gold and  SDRs 
Currency  and  deposits 
Securities other than  shares 
Loans 
Shares and other equity 
Insurance technical  reserves 
Other  accounts  receivable/payable 

Net  worth 

Genera 
govem 
ment 

Finan 
cial 
corpo 
rations 

1 591 
1 001 
913 
47 
41 
590 
578 
12 

396"" 
80 
150 

115 
12 
20 
19 

Î44~ 
104 
99 

5 
40 
37 
3 

3 508 
690 

950 
1 187 
651 
30 

56 
25 
20 
1 
4 
30 
30 

123 
1 
7 
29 
45 
34 

294 
17 
15 
80 
163 
19 

NPISH 
324 
243 
231 
2 
10 
81 
81 

172 

110 
25 
8 
22 
4 
3 

25 
21 
21 

House 
holds 

2  822 
1  698 
1  423 
97 
178 
1  124 
1  124 

1819 

840 
198 
24 
411 
291 
55 

110 
61 
47 
4 
10 
49 
48 
1 

33 

~Î99~ 

68 
35 
5 
13 
38 
40 

382 
90 
50 
200 
25 
150 

290 
182 
150 
29 
3 
108 
108 

81 

17 
21 
27 
9 

349 
264 
252 
2 
10 
85 
85 

205 

122 
38 
8 
23 
4 
11 

2  932 
1 7 59 
1  470 
101 
188 
1  173 
1  172 
1 
2  018 

908 
233 
29 
424 
329 
95 

1 647 
1 026 
933 
48 
45 
620 
608 
12 

519 
81 
157 
29 
160 
46 
20 
25 

145 
103 
100 

3 
42 
38 
3 

3 802 
707 
15 
1030 
1 350 
670 
30 

5 331 
3 183 
3 028 
114 
41 
2 148 
2 097 
51 

978 

399 
111 
77 
209 
25 
157 

258 

Liabilities and net worth 

S.11 

S.12 

S.13 

S.14 

S.15 

S.1 

Non-
finan- 
cial 
corpo- 
rations 

Finan 
cial 
corpo 
rations 

Genera 
govern-  House-
ment 

holds 

NPISH 

Total 
eco 
nomy 

Rest 
ofHw 
Tiyprld 
accourt 

Goods 

*ervice 
aasom 

Total 

Accounts 

Cwrespoodeig 
entries of f ié 

121 

6  298 

237 

1817 

3  384 

40 
44 
897 
687 
12 
137 

4  121 

1  281 
1  053 

715 
335 

268 

687 

102 
212 
328 
4 
19 
22 

289 

10 
2 
169 

108 

1 300 

4  352 

38 

43 

5 
35 
"371 

1471 
1 3 11 
1437 
1406 
371 
302 

10  416 

37fe 

10 692 

IV. 1. 
Opening 
balance 
sheet 

6  595 

1  587 
1  388 
1 4 54 
1  409 
396 
361 

155 

285 

176 

33 

28 

7 
68 
42 

37 

216 

65 
17 
134 
82 
51 

130 
87 

30 
38 

10 

2 
71 
93 

10 

~~2~ 

-38 
2 
38 
26 
12 

28 

276 

178 
2 
96 
87 
9 

24 
4 

31 

21 

10 
8 
2 

677 

132 
165 
213 
77 
38 
52 

535 

230 
17 
288 
208 
80 

M 
~% 

3? 
3 

~-34 

4 

-1 

IV.2. 
Changes 
in 
balance 
sheet 

767 

130 
187 
250 
80 
38 
82 

501 

192 
17 
292 
214 
78 

1 972 

3 669 

863 

40 
51 
965 
729 
12 
174 

1 411 
1 140 

745 
373 

104 
283 
421 
4 
19 
32 

4 337 

278 

1 302 

322 

10 
2 
197 

113 
4 628 

149 

6 975 

7 362  IV.3. 

144 
S£r 
£4 

38 

67 
4 
5 
35 

1 603 
1476 
1 650 
1483 
409 
354 

406 

10 951 

Closing 
balance 
sheet 

1717 
1575 
1704 
1489 
434 
443 

11  193 

-  259  -

( 1 7) 

REST OF THE WORLD ACCOUNTS (V) 

8.65. 

The rest of the world accounts record transactions between resident and non-resident units. 
The rest of the world does not constitute an institutional sector as such, but in the structure 
of the system it plays a similar role. 

8.66. 

The  sequence  of  rest  of  the  world  accounts  follows  the  same  general  pattern  as  the 
institutional sector accounts, i.e.: 

-  current accounts 

-  accumulation accounts 

-  balance sheets. 

8.67. 

These accounts are drawn up from  the point of view of the rest of the world. Thus, what is 
a  resource  for  the  rest  of the world  is a use  for  the total  economy  and  vice  versa.  By  the 
same  token,  a  financial  asset  held  by  the  rest  of  the  world  is  a  liability  for  the  total 
economy and vice versa (except monetary gold and special drawing rights). 

Current accounts 

External account of goods and services (V.l) 

8.68. 

Imports of goods and services are recorded on the resources side of the account and exports 
of  goods  and  services  on the uses  side. The difference  between  resources  and  uses  is the 
balancing  item  in  the  account,  called  " external  balance  of  goods  and  services".  If  it  is 
positive, there is a surplus for the rest of the world and a deficit  for the total  economy  and 
vice versa if it is negative. 

8.69. 

In order to be consistent with measures of the output of resident units, imports are valued at 
an equivalent of the basic price, i.e. net of import taxes but including import subsidies. 

Imports of goods recorded in the external account of goods and services are valued fob, i.e. 
at the border of the country of export. Exports of goods are also valued fob. 

When transport  and  insurance  services  included  in the fob  value of  imports  of  goods (i.e. 
between the factory  and the border of the country of export) are provided  by resident units, 
they  must  be  included  in  the  value  of  exports  of  services  by the  economy  importing  the 
goods.  Conversely,  when  transport  and  insurance  services  included  in  the  fob  value  of 
exports of goods are provided by non-resident  units they must be included  in the  value of 
imports of services by the economy exporting the goods. 

External account of primary incomes and current transfers (V.2) 

8.70. 

The  purpose  of  the  external  account  of  primary  incomes  and  current  transfers  is  lo 
determine the current external balance, which, in the structure of the system, corresponds to 
saving by the institutional  sectors. This account is a condensed version of the sequence, for 
an institutional  sector, extending from  the allocation of primary income account to the use 
of income account. 

8.71.  On the resources side, the external account of primary incomes and current transfers  shows 
the external balance of goods and sendees.  It also records, on the resources or uses side, all 
distributive  transactions  which  may  involve  the  rest  of  the  world,  apart  from  capital 
transfers. 

- 2 6 0-

External accumulation  accounts (V.3) 

Capital account (V.3.1) 

8.72. 

8.73. 

The rest  of  the  world  capital  account  records  acquisitions  less disposals  of  non-produced 
non-financial  assets  by  non-resident  units  and  measures  the  changes  in  net  worth  due  to 
saving and capital transfers. 

The balancing  item of the capital account is the net lending or borrowing of the rest of the 
world.  It is equal, but has the opposite sign, to the sum of the net lending or borrowing of 
the resident institutional sectors. 

Financial account  (V.3.2) 

8.74. 

The layout of the rest of the world financial account is identical to that of the  institutional 
sectors' financial account. 

Other changes in assets account (V.3.3) 

8.75.  As for the institutional sectors, the changes in net worth due to other changes in volume of 
assets  and  due  to  nominal  holding  gains  and  losses  are determined  successively,  holding 
gains  and  losses  themselves  being  broken  down  into  neutral  and  real  holding  gains  and 
losses. 

8.76. 

The absence of produced assets in the accumulation accounts and balance sheets of the rest 
of the world  is due to the convention  whereby  a notional  institutional  unit  is  created,  the 
rest of the world being deemed to  have acquired a financial asset - and vice versa for assets 
held in other economies by resident units. 

Balance sheets (V.4) 

8.77. 

The balance  sheets of the rest of the world  contain financial assets and liabilities.  On the 
assets  side,  they  record  the  total  acquisitions  less  disposals  between  non-resident  and 
resident units of monetary gold and SDRs. 

261 

497 
392 
105 

-39 

Full sequence  of accounts  for  rest  of the world  (external transactions  account) 

V.l:  External  account  of goods  and  services 

Uses 

P.6 
P.61 
P.62 

Exports of goods and services 

Exports of goods 
Exports of services 

B. 11  External balance of goods and services 

Resources 

Imports of goods and services 

Imports of goods 
Imports of services 

P.7 
P.71 
P.72 

536 
462 
74 

-39 

V.ll:  External account  of  primary  incomes  and current  transfers 

Uses 

D. 1  Compensation of employees 
D. 11  Wages and salaries 

Taxes on products 

D.2  Taxes on production and imports 
D.21 
D.211 
D.212 
D.2121 
D.2122 

Value added type taxes (VAT) 
Taxes and duties on imports excluding VAT 

Import duties 
Taxes on imports excluding VAT and duties 

D.214 
D.29 

D.3 
D.31 
D.311 

Taxes on products except VAT and  import taxes 

Other taxes on production 

0 

Subsidies 

Subsidies on products 
Import subsidies 

D.319 
D.39 

Other subsidies on products 
Other subsidies on production 

D.4  Property income 
D.41 
D.42 
D.421 
D.422 
D.43 

Interest 
Distributed income of corporations 

Dividends 
Withdrawals from income of  quasi-corporations 

Reinvested earnings on direct foreign  investment 

D.5  Current taxes on income, wealth, etc. 
D. 51 
D.59 

Taxes on income 
Other current taxes 

_66_ 
16 
36 
0 
36 
14 

0 

Resources 
B.I1 

External balance of goods and services 

D. 1 
D ll 
D.12 
D.121 
D.122 

D.2 
D.21 
D.211 
D.212 
D.2121 
D.2122 

D.214 

Compensation of employees 

Wages and salaries 
Employers, social contributions 

Employers, actual social contributions 
Employers, imputed social contributions 

Taxes on production and imports 

Taxes on products 

Value added type taxes (VAT) 
Taxes and duties on imports excluding VAT 

Import duties 
Taxes on imports excluding VAT and duties 

Taxes on products except VAT and import 
taxes 

D.29 

Other taxes on production 

D.3 
D.31 
D.311 

Subsidies 

Subsidies on products 
Import subsidies 

D.319 
D.39 

Other subsidies on products 
Other subsidies on production 

D.4 
D.41 
D.42 
D.421 
D.422 
D.43 
D.44 

Property income 

Interest 
Distributed income of corporations 

Dividends 
Withdrawals from income of quasi-corporations 

Reinvested earnings on direct foreign  investment 
Property income attributed to insurance policyholders 

39 
22 
17 
14 
3 
0 
0 

D.61 
D.611 
D.6111 
D.61 111 
D.61112 
D.6112 
D.61121 
D.61122 
D.612 

Social contributions 

Actual social  contributions 

Employers, actual social  contributions 

D.5 

Current taxes on income, wealth, etc. 

Compulsory employers, actual social contributions 
Voluntary employers, actual social contributions 

Employees, social contributions 

Compulsory employees, social contributions 
Voluntary employees, social  contributions 

Imputed social contributions 

D.62 
D.622 
D.623 

Social benefits other than social transfers  in land 

Private funded  social  benefits 
Unfunded  employee social  benefits 

0_  D.51 
0 
D.59 
0 
D.61 
0 
0 
D.611 
0  D.6111 

D.61 111 
_0_  D.61112 
0  D.6112 
D.61121 

Taxes on income 
Other current taxes 

Social contributions 

Actual social contributions 

Employers, actual social contributions 

Compulsory employers, actual social contributions 
Voluntary employers, actual social contributions 

0 
0_ 

Employees, social contributions 

Compulsory employees, social contributions 

-  262 

Full sequence  of accounts  for  rest  of the world  (external transactions  account)  [cont.] 

V.ll:  Extemal  account  of  primary  incomes  and  current  transfers  [cont/ 

Uses 

D.7  Other current  transfers 
D.7I 
D.73 
D.74 
D.75  Miscellaneous current  transfers 

Net non-life  insurance premiums 
Current transfers within general government 
Current international  cooperation 

D.8  Adjustment  for the change in net equity 
of households on pension funds 

Resources 

D.61122 
D.612 

Voluntary employees, social contributions 

Imputed social contributions 

D.62 
D.621 
D.622 
D.624 

D.7 
D.72 
D.73 
D.74 
D.75 

D.8 

Social benefits other than social transfers  in kind 

Social security benefits  in cash 
Private funded  social  benefits 
Social assistance benefits in cash 

Other current transfers 

Non-life insurance claims 
Current transfers within general  govemment 
Current international  cooperation 
Miscellaneous current transfers 

Adjustment  for the change in net equity 
of households on pension funds 

B. 12 

Current external balance 

-41 

V.lli.  Accumulation  accounts 

V.lll. 1.1:  Change  in  net  worth  due  to saving  and  capital  transfers  account 

Uses 

B. 10.  Changes in net worth due to saving 

and capital transfers 

Resources 
B. 12 

Current external balance 

-38 

D.9 

Capital transfers, receivable 

D.91 

Capital taxes 

D.92 
D.99 

D.9 
D.91 
D.92 
D.99 

Investment grants 
Other capital  transfers 

Capital transfers, payable 

Capital taxes 
Investment grants 
Other capital  transfers 

39 
3 
4 
31 
1 

-41 

T 

V.lll. 1.2:  Acquisition  of  non-financial  assets  account 

Changes in assets 

Changes in liabilities and net worth 

K.2  Acquisitions less disposals of non-produced 

B. 10.1  Changes in net worth due to saving 

-38 

non-financial  assets 

K.21 

K.22 

Acquisitions less disposals of land and other 
tangible non-produced assets 
Acquisitions less disposals of intangible 
non-produced assets 

B.9  Net lending (+)/net  borrowing (-) 

0 

0_ 

0 
-38 

and capital transfers 

263 

20 

37 
10 
27 

30 
18 

12 

-38 

Full sequence  of accounts  for  rest of the world  (external transactions  account)  [cont.] 

V.l 11.2: Financial  account 

Changes in assets 

Net acquisition of financial  assets 

F.l  Monetary gold and SDRs 

F.2  Currency and deposits 
Currency 
F.21 
Transferable  deposits 
F.22 
Other deposits 
F.29 

F.3 

Securities other than shares 

F.4 
F.41 
F.42 

Loans 

Short-term 
Long-term 

F.5 

Shares and other equity 

F.6 
F.61 

F.611 
F.62 

Insurance technical reserves 

Net equity of households on life insurance reserves 
and on pension funds 

Net equity of households on life insurance reserves 

Prepayment of premiums and reserves against 
outstanding claims 

F.7  Other accounts receivable 
F.71 

Trade credits and advances 

F.79 

Other accounts receivable, except trade credits and 
advances 

Changes in liabilities and net worth 

50 

Net incurrence of liabilities 

F.2 
F.21 
F.22 
F.29 

Currency and deposits 

Currency 
Transferable  deposits 
Other deposits 

F.3 

Securities other than shares 

F.4 
F.41 
F.42 

Loans 

Short-term 
Long-term 

F.5 

Shares and other equity 

3 
2 
6 

10 

7 

2 

0 

F.6 
F.61 

0 

F.612 

F.7 
F.71 
F.79 

21 
18 

Insurance technical reserves 

Net equity of households on life insurance reserves 
and on pension funds 
Net equity of households on pension  funds 

Other accounts payable 

Trade credits and advances 
Other accounts payable' except trade credits and 
advances 

B.9 

Net lending(+)/net borrowing(-) 

-  264  -

Full sequence of accounts for rest of the world (external transactions account) [cont.] 

V.lll.3:  Other changes in assets accounts 

V.III.3.1: Other changes in volume of assets account 

Changes in assets 
AN  Non-financial  assets 
AN.2  Non-produced assets 
K.8 
K.12 

Uncompensated  seizures 
Changes in classifications  and structure 

K.12.2 
K.12.22 

ofwhich: 
AN.21 

Changes in classification  of assets and liabilities 
Changes in classification  of assets or liabilities 
other than monetization/demonetization  of gold 

Tangible non-produced  assets 

AN.22 

Intangible non-produced  assets 

AF 
K.7 
K.8 
K.10 

K. 12 
K. 12.2 
K.12.22 

Financial assets 

Catastrophic losses 
Uncompensated  seizures 
Other volume changes in financial  assets and 
liabilities n.e.c. 
Changes in classifications  and structure 

Changes in classification  of assets and liabilities 
Changes in classification  of assets or liabilities 
other than monetization/demonetization  of gold 

ofwhich: 
AF. 1  Monetary gold and SDRs 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical reserves 
Other accounts receivable 

Liabilities 

Changes in liabilities and net worth 
AF 
K.7 
K.8 
K.10 

Catastrophic losses 
Uncompensated seizures 
Other volume changes in financial  assets and 
liabilities n.e.c. 
Changes in classifications  and structure 

K.12 
K.12.1 

K.12.2 
K. 12.22 

ofwhich: 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 

Changes in sector classification  and structure 

Changes in classification  of assets and liabilities 

Changes in classification  of assets or liabilities 
other than monetization/demonetization  of gold 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical reserves 

AF.7 

Other accounts payable 

B. 10.2  Changes in net worth due to other 
changes in volume of assets 

265  -

Full sequence of accounts for rest of the world (external transactions account) [cont.] 

V.lll.3.2:  Revaluation account 

Changes in assets 

Changes in liabilities and net worth 

K.11 

Nominal holding gains(+)/losses(-) : 

K.11 

Nominal holding gains(-)/losses(+) 

AN.2  Non-produced assets 
AN.21 
AN.22 

Tangible non-produced assets 
Intangible non-produced assets 

Financial assets 

AF 
AF. 1  Monetary gold and SDRs 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical reserves 
Other accounts receivable 

0  AF 
0  AF.2 
AF.3 
0 
AF.4 
7  AF.5 
AF.6 
0  AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical reserves 
Other accounts payable 

B. 10.3  Changes in net worth due to nominal holding gains/losses 

266  -

Full sequence  of accounts  for  rest  of the world  (extemal transactions  account)  [cont.] 

V.lll.3.2.1:  Neutral  holding  gains/losses  account 

Changes in assets 

Changes in liabilities and net worth 

K.ll.l 

Neutral holding gains (+)/losses (-) : 

K.ll.l 

Neutral holding gains (-/losses (+) : 

AN.2  Non-produced  assets 
AN.21 
AN.22 

Tangible non-produced  assets 
Intangible non-produced assets 

Financial assets 

AF 
AF. 1  Monetary gold and SDRs 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical  reserves 
Other accounts receivable 

0 
0 
0 

0 
2 

AF 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical reserves 
Other accounts payable 

B.10.31  Changes in net worth due to neutral holding gains/losses 

V.lll.3.2.2:  Real holding  gains/losses  account 

Changes in assets 

Changes in liabilities and net worth 

K.11.2 

Real holding gains(-t-)/losses(-) : 

K.11.2 

Real holding gains(-)/losses(+) : 

AN.2  Non-produced assets 
AN.21 
AN.22 

Tangible non-produced  assets 
Intangible non-produced  assets 

Financial assets 

AF 
AF. 1  Monetary gold and SDRs 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical  reserves 
Other accounts receivable 

0 
0 

AF 
AF.2 
AF.3 
AF.4 
-5  AF.5 
0 
AF.6 
-2  AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical reserves 
Other accounts payable 

B. 10.32  Changes in net worth due to real holding gains/losses 

267 

Full sequence  of  accounts  for  rest  of the world  (external  transactions  account)  [cont. 

V.IV:  External  assets  and  liabilities  account 

V.IV.1:  Opening  balance  sheet 

Assets 

AN  Non-financial  assets 
AN.2  Non-produced  assets 
AN.21 
AN.22 

Tangible non-produced  assets 
Intangible non-produced  assets 

Financial  assets 

AF 
AF.l  Monetary gold and SDRs 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical reserves 
Other accounts receivable 

V.IV.2:  Changes  in balance  sheet 

Assets 

Total changes in assets 

AN  Non-financial  assets 
AN.2  Non-produced assets 
AN.21 
AN.22 

Tangible non-produced  assets 
Intangible non-produced  assets 

Financial assets 

AF 
AF. I  Monetary gold and SDRs 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical reserves 
Other accounts receivable 

Liabilities 
and net worth 

AF 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical reserves 
Other accounts payable 

B.90 

Net worth 

Liabilities 
and net worth 

Total changes in liabilities 

AF 
AF.2 
AF.3 
AF.4 
AF.S 
AF.6 
AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical reserves 
Other accounts payable 

573 
0_ 
IPS 
125 
70 
113 
26 
134 

57 
1 
11 
9 
10 
5 
0 
21 

B.10 

Changes in net worth' total 
due to: 

B.10.1 
B.10.2 
B.10.3 
B.10.31 
B.10.32 

Saving and capital transfers 
Other changes in volume of assets 
Nominal holding gains/losses 
Neutral holding gains/losses 
Real holding gains/losses 

297 
116 
77 
17 
3_ 
25 
59 

276 

91 
-2 
22 
37 
3 
0 
30 

-34 

~  2( 

Full sequence of accounts for rest of the worid (extemal transactions account) [cont.] 

V.IV.3.  Closing balance sheet 

Assets 

AN-  Non-financial  assets 
AN.2  Non-produced assets 
AN.21 
AN.22 

Tangible non-produced assets 
Intangible non-produced  assets 

Financial assets 

AF 
AF. 1  Monetary gold and SDRs 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical reserves 
Other accounts receivable 

Liabilities 
and net worth 

AF 

Liabilities 

0  AF.2 
AF.3 
AF.4 
AF.5 
630  AF.6 
0  AF.7 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical  reserves 
Other accounts payable 

116 
134 
80 
118 
26 
155 

B.90 

Net worth 

388 
114 
99 
54 

25 
89 

242 

269  -

GOODS AND SERVICES ACCOUNT (0) 

8.78. 

8.79. 

The purpose  of  the  goods  and  services  account  is to  show,  by product  group  and  for  the 
total economy, how the products available are used. 

It therefore  shows, by product group and for  the total economy, the resources  (output and 
imports) and the uses of goods and services (intermediate consumption, final consumption, 
gross  fixed  capital  formation,  changes  in  inventories,  acquisitions  less  disposals  of 
valuables, exports). 

8.80.  Given the way in which output is valued at basic prices and uses at purchaser's prices, taxes 

less subsidies on products must be included in the resources section. 

8.81.  Uses are recorded  on the right-hand side of the goods and  services account  and  resources 
on  the  left,  i.e.  on  the  opposite  side  from  that  used  in  the  current  accounts  for  the 
institutional sectors, since the product flows are the counterparts of the monetary  flows. 

8.82. 

The goods and  services account is by definition  in balance and therefore  has no balancing 
items. 

- 2 70 

Account 0:  Goods and services account 

Resources 

P.l 

Output 

Uses 

3  595 

P.2 

Intermediate  consumption 

P. 11 

Market output 

P. 12 

Output for own  use 

3 048 

171 

P.3/P.4  Final  consumption  expenditure/Actual 

final  consumption 

P. 13 

Other non-market output 

376 

P.31/P.41 

Individual  consumption  expenditure/Actual 
individual  consumption 

D.21' 

Taxes on products 

141 

P.32/P.42  Collective  consumption expenditure/Actual 

collective  consumption 

D.31 

Subsidies on  products 

P.51 

Gross  fixed  capital  formation 

P.7 

Imports of goods  and services 

497 

P.5U 

Acquisitions  less disposals of tangible  fixed  assets 

P.71 

Imports of  goods 

392 

P.5111 

Acquisitions  of new tangible  fixed  assets 

P.72 

Imports of  services 

105 

P.5112 

Acquisitions  of existing tangible  fixed  assets 

Disposals  of existing tangible  fixed  assets 

P.512 

Acquisitions  less disposals  of intangible  fixed  assets 

P.5121 

Acquisitions of new  intangible  fixed  assets 

P.5122 

Acquisitions of existing  intangible  fixed  assets 

P.5123 

Disposals of existing  intangible  fixed  assets 

P.513 

P.5131 

P.5132 

Additions to the value of  non-produced 
non-financial  assets 

Major improvements to  non-produced 
non-financial  assets 

Costs of ownership transfer on  non-produced 
non-financial  assets 

1904 

1  371 

1  215 

#U 

53 

P.52 

Changes in  inventories 

28 

P.53 

Acquisitions  less disposals  of  valuables 

P.6 

Exports of goods  and  services 

P.61 

Exports of  goods 

P.62 

Exports of  services 

### 

-  271  -

INTEGRATED  ECONOMIC  ACCOUNTS 

8.83. 

The integrated economic accounts give a concise overview of the accounts of an economy: 
current accounts, accumulation accounts and balance sheets. 

They bring together  in the same table the accounts of all the institutional  sectors, the total 
economy  and  the  rest  of  the  world,  and  balance  all  the  flows  and  all  the  assets  and 
liabilities. They also enable the aggregates to be read off directly. 

8.84. 

8.85. 

8.86. 

In  the  table  of  integrated  economic  accounts,  uses,  assets  and  changes  in  assets  are 
recorded  on  the  left-hand  side,  while  resources,  liabilities,  changes  in  liabilities  and  net 
worth are recorded on the right-hand side. 

To  make  the  table  readable  while  giving  a  picture  of  the  whole  economic  process,  the 
levels of aggregation used are the highest compatible with an understanding of the structure 
of the system. 

The  columns  in  the  table  represent  the  institutional  sectors,  namely:  non-financial 
corporations,  financial  corporations,  general  government,  non-profit  institutions  serving 
households, and households. There are also a column  for  the total economy, a column  for 
the  rest  of  the  world,  and  a  column  which  balances  uses  and  resources  of  goods  and 
services 

8.87. 

The rows in the table represent the various categories of transactions, assets and liabilities, 
balancing items and certain aggregates. 

-  2J[l  273 

Current  accounts 

Uses 

Accounts 
I  Production/ 

external  account 

of  goods  and 

( I I I.  Generation  of 

income  account 

II 1.2.  Allocation  of 

primary income 

fl  2.  Secondary 

distribution  of 

income  account 

D.3.  Redistribution  of 

income  in  kind 

account 

II.4.  Use of  income  account 

Integrated  economic  accounts 

S.15 

- S . 14 

S . 13 

S . 12 

S . 11 

N o n-

Goods 

and 

service 

Total 

(res.) 

Rest 
of the 
world 

Total 
eco-
nomy  NPISHs 

House- 
holds 

Finan- 

finan-

General 

cial 

cial 

govern- 

corpo- 

corpo-

Transactions  and  other 

flows 

ment 

rations 

rations 

C o de 

stocks  and  balancing  items 

497 

536 

3595 

I 9 04 

133 

222 

I  602 

768 

191 

459 

442 

247 

432 

466 

1  861 

322 

332 

1  854 

1632 

228 

1854 

1632 

1399 

1  399 

11 

455 

233 

497 

3  595 

133 

222 

1602 

762 

191 

133 

58 

459 

442 

247 

432 

P.7 

P.6 

PI 

Imports of  goods  and  services 

Exports of  goods  and  services 

Output 

Intermediate  consumption 

Taxes  less  subsidies  on  products 

872 

B.lg/B.I«g 

Value added,  gross/Gross  domestic 

product 

30 

158 

10 

63 

137 

735 

K.1 

Consumption  of  fixed  capital 

B.ln/B.l* 

Value added,  net/Net  domestic 

product 

External  balance  of goods  and  services 

23 

0 

8 

5 

39 

2 

92 

442 

60 

432 

15 

3 

545 

51 

D.I 

Compensation  of  employees 

D.2-D.3 

Taxes  less  subsidies on  production 

D.2I-D31 

Taxes  less subsidies  on  products 

3 

51 

D.29-D39 

Other taxes  less subsidies  on 

and  imports 

55 

258 

45 

121 

B.2g 

B.3g 

B.2n 

B.3n 

production 

Operating  surplus", gross 

Mixed  income,  gross 

Operating  surplus,  net 

Mixed  income,  net 

66 

380 

1855 

138 

29 

145 

209 

D.4 

B.5g 

Property  income 

Balance  of  primary  incomes, 

gross/National  income,  gross 

3 

1  348 

19 

72 

B.5n/B.5*n 

Balance  of  primary 

net/National 

income,  net 

322 

332 

I  854 

1 6 32 

228 

I  854 

1632 

I  399 

1399 

455 

233 

322 

0 

1206 

I  164 

1434 

1392 

1243 

1015 

202 

160 

289 

141 

386 

356 

212 

174 

144 

156 

368 

0 

20 

-10 

Current taxes on  income,  wealth  etc 

D.61 

D.62 

13 

Social  contributions 

Social  benefits  other than  social 

transfers  in  kind 

Other current  transfers 

186 

49 

B.6g 

B.6n 

Disposable  income,  gross 

Disposable 

income,  net 

33 

23 

186 

49 

D.63 

B.7g 

B.7n 

B.6g 

B.6n 

P.4 

P.3 

D.8 

Social  transfers  in  kind 

Adjusted  disposable  income,  gross 

Adjusted  disposable 

income,  net 

Disposable  income,gross 

Disposable 

income,  net 

Actual  final  consumption 

Final  consumption  expenditure 

Adjustment  for the change  in net equity 

of households  on  pension  funds 

18S 

48 

B.8g 

B 8n 

Saving,  gross 

having,  net 

Current  external  balance 

-  274  -

Resources 

S . 11 

Non-

finan- 

cial 

corpo- 

rations 

S . 12 

R n an 

cial 

corpo 

rations 

S . 14 

General 

govern 

ment 

House 
holds 

NPISHs 

S .1 

Total 
eco 
nomy 

Rest 
of  the 
world 

Goods 

and 

service 

(uses) 

92 
442 

8 

5 

78 

209 

160 

29 

213 

268 

386 
356 

174 

144 

386 

356 

0 

332 

1206 

1  164 

228 
1434 
1392 

1206 

I  164 

186 
49 

186 
49 

186 
49 

766 
I9I 

133 

58 

459 
442 
247 
432 

407 

1855 

322 

332 

1854 
1632 

228 
1854 
1632 

1854 
1632 

Total 

Accounts 

I. Production/ 
extemal account 
of goods and 
services 

497 
536 
3 595 
I 904 
133 

I 824 

II. I. I. Generation of income 
account 

II. 1.2. Allocation of primary 
income account 

768 
191 

133 
58 

459 

442 

247 

432 

1 861 

11.2. Secondaiy distribution of 
income account 

322 

332 

1 854 
I 632 

II 3  Redistribution of income 
in kind account 

11.4  Use of income account 

I 854 
1632 

1854 
1632 
1  399 
1  399 
11 

1  399 
I  399 

-  27 s-

Integrated  economic  accounts  (cont.) 

Accumulation  accounts 

Changes in assets 

Goods 

and 

service 

Total 

(res.) 

Rest 

of  the 

world 

Total 

eco-

nomy 

III  I  I  Change  in net worth  due  to  saving 

and capital  transfer  account 

III  12  Acquisition  of non-fmancial 

assets  account 

S.15 

S.12 

S.11 

Finan 

General 

cial 

Non-

finan 

cial 

House 

govern 

corpo 

corpo 

Transactions  and  other  flows 

holds 

ment 

rations 

rations 

C o de 

stocks  and balancing items 

B . 8n 

B . 12 

D .9 

D .9 

S a v i n g,  n et 

Current  e x t e r n al  b a l a n ce 

Capital  t r a n s f e r s,  r e c e i v a b le 

Capital  t r a n s f e r s,  p a y a b le  (-) 

B. 10  i 

Changes  in net  worth  due  to  saving 

and  capital 

transfers 

376 

-222 

28 

10 

0 

19 

-3 

0 

0 

1 

61 

-42 

2 

5 

4 

37 

-30 

0 

3 

2 

9 

250 

P.51 

Gross  fixed  capital  formation 

-10 

-137 

K.1 

Consumption  of  fixed  capital  (-) 

0 

0 

26 

2 

P.52 

P.53 

Changes  in  inventories 

Acquisitions  less  disposals  of 

0 -7 

K.2 

Acquisitions  less  disposals  of 

valuables 

3 76 

- 2 22 

28 

10 

130 

143 

254 

III 2  Financial  account 

III 3 I. Other changes i 

volume of assets 

account 

-I 

119 

138 

244 

44 

36 

61 

non-produced 

non-financial  assets 

Net  lending  (+-/  net  borrowing  (-) 

Net  acquisition of financial  assets\ 

Net  incurrence of liabilities 

Monetary  gold and  SDRs 

Currency  and  deposits 

Securities  other than  shares 

Loans 

Shares  and other equity 

Insurance technical  reserves 

Other accounts  receivable/payable 

15 

53 

167 

F 

F 

F.I 

F2 

F.3 

F.4 

F.5 

F.6 

F.7 

K.3-I0 

and  K.12 

Other volume  changes,  total 

K.3 

K.4 

K.5 

K.6 

K.7 

K.8 

K.9 

K.12 

ofwhich: 

AN 

AN.l 

AN.2 

AF 

Economic  appearance of 

non-produced  assets 

Economic  appearance of produced 

assets 

Natural  growth of non-cultivated 

biological  resources 

Economic  disappearance of 

non-produced  assets 

Catastrophic  losses 

Uncompensated  seizures 

Other volume  changes  in  non-financial 

assets n.e.c 

Other volume  changes in financial 

assets  and liabilities  n.e.c 

Changes  in classifications  and structure 

Non-financial  assets 

Produced assets 

Non-produced  assets 

Financial  assets/Liabilities 

Changes  in net  worth  due  to  other 

changes  in volume  of  assets 

144 

63 

K.I1 

AN 

AN.l 

AN.2 

AF 

Nominal  holding  gains/losses 

Non-financial  assets 

Produced  assets 

Non-produced  assets 

Financial  assets/Liabilities 

Changes  in net  worth  due to 

nominal  holding  gains  (+)/losses  (-) 

-  2?S-

(10) 

III 3 2  Revaluation 

account 

280 

126 

154 

91 

280 

126 

154 

Changes  in liabilities  and  net  worth 

S.11 
Non-
finan- 
rial 
corpo- 
rations 

48 

33 
-16 

S.12 

S.13 

Rnan 
cial 
corpo 
rations 

11 

General 
govern-

Total 
eco 
nomy 

Rest 
of the 
world 

NPISHs 

Goods 
and 
service 
(uses) 

6 
-34 

23 
-5 

62 
-65 

-41 
4 
-1 

Total 

Accounts 

DILL  Change in net worth due 

to 

saving and capital 

transfer account 

2 33 
-41 
66 
-66 

III. 1.2.  Acquisition of non-
financial assets account 

3 76 

376 

28 
10 

28 
10 

132 
123 
217 

130 
143 
254 
46 
36 

111.2  Financial account 

IŒ.3.1. Other changes in 
volume of assets 
account 

18 

134 

76 

288 

78 

292 

UI.3.2. Revaluation 
account 

-  2 f 

I n t e g r a t ed  e c o n o m ic  a c c o u n ts  (cont.) 

Balance  sheets 

Assets 

Accounts 

Total 

(res.) 

Goods 

and 

service 

Rest 

of  the 

world 

IV. I. Opening balance 

sheet 

rV.2. Changes  in 

balance sheet 

9 922 

6 047 

3  875 

482 

289 

193 

Total 

eco-

S . 13 

S . 12 

S . 11 

N o n-

Finan- 

finan-

General 

cial 

cial 

govern- 

corpo- 

corpo-

Transactions  and  other 

flows 

n o my 

NPISHs 

m e nt 

rations 

rations 

Code 

stocks  and  balancing  Kerns 

9 922 

6 047 

3  875 

324 

243 

81 

2 822 

1698 

1124 

1591 

1001 

590 

144 

104 

40 

5 041 

AN 

3 001 

A N .l 

2 040 

AN.2 

Non-financial assets 

Produced assets 

Non-produced assets 

0 

0 

482 

289 

193 

110 

61 

I 

1 

2 

290 

182 

108 

AN 

A N .l 

AN.2 

Financial  assets/liabilities 

Total  changes in assets 

Non-financial  assets 

produced assets 

non-produced assets 

Financial  assets/liabilities 

B.10 

B.10.1 

B.10.2 

B.10.3 

Changes  in net  worth, 

total 

Saving  and  capital 

transfers 

Other  changes  in  volume  of  assets 

Nominal  holding  gains  (+)/losses 

(-) 

IV.3. Closing balance 

sheet 

10 404 

6 336 

4 068 

0 

0 

10 404 

6336 

4 068 

349 

264 

85 

2 932 

1759 

1173 

1647 

1026 

620 

145 

103 

5  331 

AN 

3  183 

A N .l 

Non-financial  assets 

produced assets 

42 

2  148 

AN.2 

non-produced assets 

2  018 

519 

3  802 

978 

AF 

Financial  assets/liabilities 

B.90 

Net  worth 

-  27ë  -

S.11 
Non-
finan 
cial 
corpo 
rations 

S.12 

S.13 

S.14 

Rnan 
cial 
corpo- 
rations 

General 
govern-
ment 

House 
holds 

Total 
eco 
nomy 

Rest 
of the 
world 

Goods 
and 
service 
(uses) 

Total 

1  817 

3  384 

289 

121 

6  298 

297 

4  121 

268 

4  352 

375 

10416 

276 

216 

66 

17 

134 

2 

-40 

2 

38 

276 

178 

2 

535 

230 

17 

288 

1972 

3  669 

863 

322 

149 

6  975 

4  337 

278 

1302 

4  628 

406 

10951 

-34 

-38 

388 

242 

IV. 1. Opening  balance 

sheet 

IV.2.  Changes  in 

balance  sheet 

IV.3.  Closing  balance 

sheet 

6  595 

10 692 

501 

192 

17 

292 

7  362 

11  193 

279 

AGGREGATES 

8.88. 

The  aggregates  are  summary  indicators  of  the  result  of  the  activity  of  the  total  economy 
and  key  magnitudes  for  purposes  of macroeconomic  analysis  and  comparisons  over  time 
and space. 

Gross domestic product at market prices (GDP) 

8.89.  Gross  domestic  product  at  market  prices  is  the  final  result  of  the  production  activity  of 

resident producer units. 

It can be defined  in three ways: 

GDP  is  the  sum  of  gross  value  added  of  the  various  institutional  sectors  or  the  various 
industries plus taxes and less subsidies on products (which are not allocated to sectors and 
industries). It is also the balancing item in the total economy production account. 

GDP is the sum of final domestic uses of goods and services (actual final consumption and 
gross capital formation), plus exports and minus imports of goods and services. 

GDP is the sum of uses in the total economy generation of income account  (compensation 
of employees, taxes on production  and imports  less subsidies, gross operating  surplus and 
mixed income of the total economy). 

8.90.  By deducting  consumption  of fixed  capital from GDP, we obtain  net domestic product at 

market prices (NDP). 

Operating surplus of the total economy 

8.91. 

The gross  (or net) operating  surplus of the total  economy  is the  sum of the  gross  (or net) 
operating surpluses of the various industries or the various institutional sectors. 

Mixed income of the total economy 

8.92. 

The gross  (or net) mixed  income of the total  economy  is identical  with the  gross  (or net) 
mixed income of the household sector. 

Entrepreneurial income of the total economy 

8.93. 

The gross (or net) entrepreneurial  income of the total economy  is the sum of the gross (or 
net) entrepreneurial incomes of the various sectors. 

National income (at market prices) 

8.94.  Gross  (or  net)  national  income  (at  market  prices)  represents  total  primary  income 
receivable by resident  institutional  units: compensation  of employees, taxes on production 
and  imports  less  subsidies,  property  income  (receivable  less  payable),  (gross  or  net) 
operating surplus and (gross or net) mixed income. 

- 2 8 0-

Gross  national  income  (at  market  prices)  was  called  Gross  national  product  (GNP)  (at 
market prices) in 1979 ESA. 

Gross  national  income  (at  market  prices)  equals  GDP  minus  primary  income  payable  by 
resident  units to non-resident  units plus primary  income receivable  by resident  units  from 
the rest of the world. 

National  income  is  not  a  production  concept  but  an  income  concept,  which  is  more 
significant  if  expressed  in  net  terms,  i.e.  after  deduction  of  the  consumption  of  fixed 
capital. 

National disposable income 

8.95.  Gross  (or  net)  national  disposable  income  is  the  sum  of  the  gross  (or  net)  disposable 

incomes of the institutional sectors. 

Gross (or net) national disposable income equals gross (or net) national income (at market 
prices) minus current transfers  (current taxes on income, wealth  etc., social  contributions, 
social  benefits  and  other  current  transfers)  payable  to  non-resident  units,  plus  current 
transfers receivable by resident units from the rest of the world. 

Saving 

8.96. 

This aggregate measures the portion of national disposable income that is not used for final 
consumption expenditure. 

Gross  (or. net)  national  saving  is  the  sum  of  the  gross  (or  net)  savings  of  the  various 
institutional sectors. 

Current external balance 

8.97. 

The  balancing  item  in  the  external  account  of  primary  incomes  and  current  transfers 
represents the surplus (if it is negative) or the deficit  (if it is positive) of the total economy 
on its current transactions (trade in goods and services, primary  incomes, current  transfers) 
with the rest of the world. 

Net lending (+) or borrowing (-) of the total economy 

8.98. 

The net lending (+) or borrowing (-) of the total economy  is the sum of the net lending or 
borrowing of the institutional sectors. It represents the net resources that the total economy 
makes available to the rest  of the world  (if  it  is positive)  or receives from the rest  of the 
world (if it is negative). 

The net lending (+) or borrowing  (-) of the total economy  is equal but of opposite  sign to 
the net borrowing (-) or lending (+) of the rest of the world. 

Net worth of the total economy 

8.99. 

The net worth of the total economy is the sum of the net worth of the institutional sectors. 

It represents the value of the non-financial  assets of the total economy minus the balance of 
financial  assets and liabilities of the rest of the world. 

28! 

MATRIX  PRESENTATION 

A. 

Introduction 

8.100.  Previous  parts  of  this  chapter  have  presented  a  sequence  of  (T-)  accounts.  At  the  same 
time,  the  concepts  and  definitions  of  the  System  allow  other  methods  of  presentation. 
These serve to provide additional insights and to enable different  types of analysis. 

8.101.  The input-output table is a widely used matrix framework  to supply detailed and coherently 
arranged  information  on the flow of goods and services and on the structure of production 
costs.  This  matrix' contains  more  information  than  T-accounts  for  goods  and  services, 
production  and  the  generation  of  income;  for  example,  final  consumption  expenditure  is 
shown by product group or industry of origin and intermediate consumption is shown both 
by  product  group  or  industry  of  origin  and  by  product  group  or  industry  of  destination. 
Disaggregated  linkages between these accounts are further  developed  in the ESA's supply 
and use tables, through a specification of output of product groups by industry. 

8.102.  The  rest  of  this  section  will  demonstrate,  first,  that  the  full  sequence  of  accounts  and 
balancing items can also be presented  in a matrix format.  In this table, all transactions are 
presented  for the total economy and for the rest of the world, respectively.  In addition, an 
aggregate goods and services account is included. 

8.103.  Next, the general purposes that can be served by an accounting matrix will be discussed. A 
crucial feature  is the wide range of possibilities for expanding or condensing such a matrix 
in accordance with specific circumstances and needs. Finally, it will be illustrated how this 
works out in practice. In particular, the linkages between the supply and use tables and the 
sectoral accounts will be elaborated through the insertion of labour accounts, to arrive at a 
Social  Accounting  Matrix  (SAM)  framework.  A  SAM  serves,  among  other  things,  to 
enable  a  more  integrated  analysis  of  economic  and  social  policy  issues,  including 
unemployment. 

B.  Matrix presentation of ESA accounts 

8.104.  Table VIII.xl  presents the full  sequence of accounts and balancing  items in a matrix. For 
this purpose, the accounts for the primary distribution of income, for use of income and for 
other changes in assets have not been subdivided.  Besides, the option is left  open whether 
or not to combine the account for the redistribution  of income in kind with the secondary 
distribution of income. Finally, an account that records net worth has been inserted. 

8.105.  The  figures  which  are  presented  in  the  tables  of  this  section  correspond  exactly  to  the 
numerical  example  worked  out  in the  preceding  part  of  this  chapter.  In  all  matrices,  the 
boxes containing a balancing item have been framed  with bold lines. 

2 8 2-

8.106.  A matrix presentation permits each transaction to be represented  by a single entry  and the 
nature of the transaction to be inferred  from  its position. Each account  is represented  by a 
row and column pair and the convention  is followed  that resources are shown  in the rows 
and uses are shown in the columns. For instance, net domestic product (1602) is payable by 
the economy's producers and received on the primary distribution of income account. Table 
VIII.xl  shows  this  in  cell  (3,2),  that  is,  in  row  3  and  column  2.  Since  this  table 
distinguishes  transactions  with  the  rest  of  the  world  in  a  separate  account,  its  diagonal 
items, that is cells (3,3), (4,4), (5,5), (6,6), (7,7) and (8,8), contain only transactions among 
resident institutional units. 

8.107.  The row and column totals have not been named. Their main function  in matrix accounting 
is  to  ensure  that  all  accounts  indeed  represent  complete  balances,  in  the  sense  that  total 
incomings (row sums) equal total outgoings (column sums). In turn, meaningful  balancing 
items, which connect successive accounts, can only be derived if this condition is  fulfilled. 

8.108.  Row  1  shows  the  uses  of  goods  and  services,  at  purchaser's  prices:  intermediate 
consumption  (1904)  in  column  2,  final  consumption  (1371)  in  column  5,  gross  capital 
formation (414) in column 7 and exports (536) in column 14. 

8.109.  The  elements  in  row  1 add  up  to  total  use  of  goods  and  services,  at  purchaser's  prices 
(4225).  Column  1  presents  the  supply  of  goods  and  services  (also  totalling  4225,  of 
course). Output  (at basic prices) plus taxes  less  subsidies  on products  (3728)  is shown at 
the intersection with row 2. Imports (497) originate from the external account of goods and 
services (row 14)r 

8.110.  Row 2 shows output (at basic prices) plus taxes less subsidies on products. Because of this 
valuation, the sum of row 2 (3728), and the concomitant sum of column 2, are inclusive of 
taxes  less  subsidies  on  products.  This  ensures  that  these  taxes  are  incorporated  in  the 
balancing  item  of  account  2, net domestic  product  (NDP), see  cell  (3,2). Most  balancing 
items  can  be  calculated  gross  or  net.  In  this  matrix,  all  balancing  items  are  shown  net. 
Consumption  of  fixed  capital  (222)  is  put  directly  on  the  capital  subaccount  for  the 
acquisition of non-financial assets (row 7 and column 2). 

8.111.  Row 3 shows the receipts of primary income by the total economy:  net domestic product 
in  cell  (3,2),  property  income  from  other  resident  sectors  (341)  on  the  diagonal,  and 
primary income flows from the rest of the world (72) in cell (3,15). As this matrix does not 
subdivide  the  account  for  primary  distribution  of  income,  it  does  not  break  down  value 
added  payable  by  producers  into  various  categories  cf  value  added,  as  recorded  in  the 
generation of income account. 

8.112.  Apart from  the diagonal item, column 3 contains primary income payable to the rest of the 
world (41) in cell (15,3) and the balancing item, net national  income (1633), that connects 
this account and the next one. 

283 

8.113.  This  matrix  leaves  open  the  option  whether  or  not  to  combine  the  account  for  the 
redistribution of income in kind with the secondary distribution of income. If redistribution 
of  income  in  kind  is  not  shown,  then  the  diagonal  contains  current  transfers,  excluding 
social transfers  in kind, between resident sectors (1096). These transfers  consist of current 
taxes on income, wealth, etc., social contributions and benefits other than social transfers in 
kind,  and  other  current  transfers.  If redistribution  of  income  in kind  is  incorporated,  then 
the  diagonal  of  account  4 also  records  social  transfers  in kind;  aggregated  with  the  other 
current  transfer  flows,  this  equals  1315.  In  both  cases,  row  4  opens  with  net  national 
income, while current transfers  from  the rest of the world  (10) are recorded  in cell (4,15). 
Column 4 shows, in addition to the diagonal item, current transfers to the rest of the world 
(39),  in cell  (15,4), while  the balancing  item,  (adjusted)  net  disposable  income  (1604), is 
put on the use of (adjusted)  disposable income account. 

8.114. 

If  redistribution  of  income  in kind  is  incorporated,  then  account  5  is  the  use  of  adjusted 
disposable  income  account.  Otherwise,  this  account  is  the  use  of  disposable  income 
account.  At  the  aggregate  level, this  is only  a matter  of  terminology,  for  total  disposable 
income  equals  total  adjusted  disposable  income  and  total  final  consumption  expenditure 
equals  total  actual  final  consumption.  Apart  from  disposable  income, 'the  row  of  this 
account records an adjustment  for changes in net equity of households on resident pension 
funds  (11) on the diagonal  and an adjustment  for  changes  in net equity  of  households  on 
non-resident  pension  funds  (0)  in  column  15.  The  column  contains,  in  addition  to final 
consumption (1371) and the diagonal item, an adjustment  for changes in net equity of non 
resident households on resident pension funds  (0), see cell (15,5), and the balancing  item, 
net saving (233), which is put on the first capital subaccount (account 6). 

8.115.  For the capital  account, two subaccounts have been distinguished.  First,  in the row of the 
account  for  change  in  net  worth  due  to  saving  and  capital  transfers,  net  saving  is 
augmented  with  capital  transfers  receivable  from  resident  sectors  (61), see cell  (6,6), and 
from  abroad (1), see cell (6,16). In the column of this account, capital transfers payable are 
shown, to resident  sectors and to abroad (4), see cell (16,6). This yields a balancing  item, 
change  in  net  worth  due  to  saving  and  capital  transfers  (230),  that  is  transferred  to  the 
changes in balance sheet account (account  11). 

8.116.  Next, the row of the account  for  acquisition  of non-financial  assets presents  consumption 
of  fixed  capital  (cell  7,2),  the  acquisitions  less  disposals  of  non-produced  non-financial 
assets by resident units (0), see cell (7,7), and by non-resident units (0), see cell (7,17) and 
the changes  in assets due to saving and capital transfers  (833), see cell (7,12). This yields 
the total  sum that is available to residents for the acquisition  of assets. That acquisition is 
shown  in  two  stages:  first  the  acquisition  of  non-financial  assets,  in  the  column  of  this 
account, and then the acquisition of financial assets (including external financial assets), in 
the column of the next account. The column of this account, account 7, thus contains gross 
capital  formation  (cell  1,7),  the  diagonal  item  (7,7)  discussed  above,  the  changes  in 
liabilities due to saving and capital transfers (603), see cell (12,7), and a balancing item, net 
lending of the total economy (38), that is put on the next account, for financial  transactions. 

284-

8.117.  Account  8, the financial  account, opens with  net  lending  of the total  economy  (cell  8,7)  and 
adds  financial  transactions  between  resident  sectors  (553)  on  the  diagonal  and  also  the  net 
incurrence  of  external  liabilities  (50),  see  cell  (8,18).  The  column  contains  the  diagonal 
item  and  the  net  acquisition  of  external  financial  assets  (88)  in  cell  (18,8).  Of  course,  the 
net  incurrence  of  external  liabilities  plus  net  lending  of  the  total  economy  equals  the  net 
acquisition  of external  financial  assets,  so that  in  this  account  too  the  balance  between  row 
and column totals is  maintained. 

8.118.  The  account  for  other  changes  in assets, account  9, records  in the row the changes  in  assets 
due to other changes  (379), see cell  (9,12), and  in the column:  the changes  in  liabilities  due 
to  other  changes  (74), see  cell  (12,9), and  the  balancing  item,  changes  in  net  worth  due  to 
other changes  (305), see cell  (11,9). 

8.119.  The  last  four  accounts  for  the  total  economy  refer  to  the  balance  sheets  and  the  changes 
therein.  First,  the  opening  balance  sheet  gives  in  the  row  the  opening  stock  of  assets 
(16714), see cell  (10,12), and  in the column  the opening  stock  of  liabilities  (6298),  see  cell 
(12,10), and the opening  net worth  (10416),  see cell  (13,10). Next,  the account  for  changes 
in balance  sheet  records  both  components  of these  changes  in the  row,  see  cells  (11,6)  and 
(11,9),  and  the  total  changes  in  net  worth  (535)  in  the  column,  see  cell  (13,11).  Then,  the 
closing  balance  sheet  presents  in the  row  the  opening  stock  of  liabilities  (cell  12,10),  both 
components  of  changes  in  liabilities  (cells  12,7  and  12,9),  and  the  closing  net  worth 
(10951),  see  cell  (12,13).  Of course, the  sum  of  these  elements  equals  the  closing  stock  of 
assets,  which  is  also  computed  in  the  column  of  this  account:  the  opening  stock  of  assets 
(cell  10,42) plus  both components  of changes  in assets,  see cells  (7,12)  and  (9,12).  Finally, 
the  extra  account  for  net  worth  gives  opening  net  worth  (cell  13,10)  and  total  changes  in 
net worth (cell  13,11) in the row and closing net worth in the column  (cell  12,13). 

8.120.  For  the  rest  of  the  world,  the  same  accounts  have  been  included  as  for  the  total  economy, 
albeit  in  a  slightly  more  aggregate  form.  First,  the  external  account  of  goods  and  services 
presents  in  the  row  imports  by  the  total  economy  (cell  14,1)  and  in  the  column:  exports 
(cell  1,14)  and the balancing  item (cell  15,14), the external balance  of goods  and  services  (-
39). Note that  all balancing  items  of accounts  for  the rest  of the  world  are  viewed  from  the 
perspective  of the  rest  of  the  world.  In  order  to  obtain  the  relevant  aggregates  for  the  total 
economy, the sign must therefore  be  reversed. 

8.121.  Secondly,  the  external  account  of  primary  incomes  and  current  transfers  records  the 
balancing  item  of  the  previous  account,  and  also  primary  income,  current  transfers  and 
adjustment  for  the  change  in  net  equity  of  households  on  pension  funds,  to  and  from  the 
rest  of  the  world,  respectively.  These  items  have  already  been  discussed  above.  All  this 
yields the current external  balance (-41), shown  in cell  (16,15). 

285 

8.122.  Thirdly,  the  capital  account  for  the  rest  of  the  world  has  also  been  split  into  two 
subaccounts: one for the current  external  balance, capital transfers  to and from the rest of 
the world  and the balancing item, changes  in the net external financial position due to the 
current  external  balance  and  capital  transfers  (-38),  see  cell  (21,16);  another  one  for 
changes  in  assets  due  to  the  current  external  balance  and  capital  transfers  (50),  see  cell 
(17,22),  acquisitions  less  disposals  of  non-produced  non-financial  assets  by  non-resident 
units,  see cell  (7,17), changes  in  liabilities  due to the current  external  balance  and  capital 
transfers (88), see cell (22,17), and the balancing item net lending of the rest of the world (-
38), transferred  to the next account. 

8.123.  Fourthly,  the  financial  account  gives  the  net  acquisition  of  external  financial  assets  (cell 
18,8) and net lending of the rest of the world (cell  18,17) in the row, and the net incurrence 
of  external  liabilities  (cell  8,18) in  the  column.  Fifthly,  the  account  for  other  changes  in 
assets  presents  in the row such changes  of assets  (7), see cell  (19,22), and  in the  column 
such changes of liabilities (3), see cell (22,19), and also the balancing  item, changes in the 
net external financial position due to other changes (4), see cell (21,19). 

8.124.  Finally,  the  balance  sheets  for  the  rest  of  the  world  are  analogous  to  those  for  the  total 
economy.  Elements  not  yet  mentioned  above  are:  the  opening  stock  of  external  assets 
(573), see cell (20,22), the opening  stock of external  liabilities  (297), see cell  (22,20), the 
opening net external financial position of the rest of the world vis-a- vis the total economy 
(276), see cell (23,20), total changes in the net external financial position of the rest of the 
world (-34), see cell (23,21), and the closing financial position of the rest of the world vis 
a-vis the total economy (242), see cell (22,23). 

8.125.  As a next step, this reduced format  matrix can be disaggregated  to show the full  sequence 
of accounts, including details for transactors  and transaction  categories. However,  the  full 
potential  of matrix accounting  can be realized  if not all accounts  are detailed  in the same 
way, but instead for each account the most relevant classification  is selected. This feature is 
dealt with at greater length in the next subsection. 

C. 

Properties of accounting matrices 

8.126.  Each entry in an aggregate matrix such as table VIII.xl  can be considered as the grand total 
of  a  submatrix  in  which  categories  of  transactors  involved  at  either  end  of  the  set  of 
transactions  under  consideration  are  presented.  A  very  useful  option  in  a  matrix 
presentation of accounts is that different  types of transactors and groupings thereof can be 
selected  in  each  account,  without  giving  up  the  coherence  and  the  integration  of  the 
complete  accounting  system.  This  means  that  one  may  apply  'multiple  actoring  and 
multiple  sectoring', by choosing  in each account a unit and a classification  of  units which 
are most relevant to the set of economic flows under consideration. 

8.127. 

In principle, each account can be broken down in two rather different  ways: by subdividing 
the total economy into groups of units, or by assigning the categories of transactions shown 
in an account to various sub-accounts. For instance, a subdivision  of the total  economy in 
the first five accounts could run as follows: 

2 8 6-

(l)Distinguish  products  in  the  goods  and  services  account  and  classify  these  by  product 

groups. 

(2)Distinguish  local  kind-of-activity  units  in the production  account  and  classify  these by 

industries. 

(3)Distinguish  institutional units in the accounts for the primary and secondary  distribution 
of income and for the use of income and classify  these by institutional (sub)sectors. 

8.128.  These  subdivisions  have two major  consequences.  First,  for  all  categories  of  transactions 
distinguished  in  a  single  cell  of  these  accounts  it  becomes  clear  which  group  of  paying 
units has exchanged what with which group of receiving units. Secondly, the  interrelations 
among  various  economic  flows  are  revealed  through  detailed  cross-  classifications.  For 
instance, in the example given in the previous paragraph, a simple circular  flow  of income 
is presented, at a meso-level, through the following mappings: 

(l)Submatrix  (3,2)  shows  which  institutional  subsector  receives  net  value  added  from 

which industries; 

(2)Submatrices (4,3) and (5,4) show which institutional subsector receives primary  income 
and  disposable  income from  which institutional  subsector  (naturally,  in the  distribution 
of  income  accounts  and  in  the  use  of  income  account  different  classifications  can  be 
applied, and then these submatrices are no longer diagonal); 

(3)Submatrix  (1,5)  shows  which  product  group  is  consumed  by  which  institutional 

subsectors; and 

(4)Submatrix (2,1) shows which industry makes which product groups. 

8.129.  When  compiling  such  a  matrix,  it  is  convenient  to  start  by  designing  an  accounting 
structure which is relevant to the applications envisaged. Subsequently, in each account the 
most appropriate units and classifications  of units are selected. However, in practice it will 
be  an  interactive  process.  Suppose,  for  instance,  that  there  is  a  transaction  category  for 
which  only  total  receipts  and  payments  of  transactors  (the  row  and  column  totals  of  a 
submatrix)  are  known,  and  not  who paid  whom  (the  interior  structure  of  the  submatrix). 
This problem can be solved by the insertion of an undivided, dummy account. 

8.130.  Among the general properties of a matrix presentation of accounts are the following: 

(1)A  detailed  matrix  presentation  is  suitable  for  mathematical  treatment  using  matrix 

algebra; this can also be of help when balancing the accounts. 

(2)A  detailed  matrix  presents  a  simultaneous  breakdown  of  interrelated  transactions  by 
paying and receiving units; as a consequence,  it is an appropriate  format  to reveal, at a 
meso-level,  interrelations  among  economic  flows;  this  includes  those  flows  which 
involve  two  different  types  of  units  (e.g.  final  consumption  expenditure  on  various 
categories of goods and services by a number of household subsectors). 

(3)For a set of accounts giving a breakdown of transactions by paying and receiving units, 
a matrix  presentation  is more concise than  other  methods  of presentation;  the  payment 
by one unit and the receipt by another unit  involved  in each transaction  are represented 
by a single entry. 

287 

8.131.  An  aggregate  matrix  for  the  total  economy  can  serve  as  a  reference  table  for  subsequent, 
more  detailed  tables.  As  soon  as the  reader  is then  introduced  to  a  detailed  presentation  of 
parts  of the  System  (supply  and use tables, sector accounts, etc.), the relation  of the  detailed 
submatrices  to the  aggregate  matrix  should  be  clear  through  a system  of  codes.  The  matrix 
format  is  particularly  advantageous  if  it  is  not  possible  or  desirable  to  show  an  equally 
detailed  classification  in all accounts of the  System. 

8.132.  The  matrix  presentation  is  a  suitable  tool  for  exploring  the  flexibility  of  the  System.  For 
instance,  one  may  further  elaborate  on  the  interrelations  between  the  social  and  economic 
aspects  of  the  System  to  arrive  at  a  Social  Accounting  Matrix.  The  SAM  approach  is  set 
out and  illustrated  in the next subsection of this  chapter. 

D. 

Adaptation  of the  reduced  format  matrix to specific  types  of  analysis 

8.133.  The  supply  and  use  tables  opt  for  a  classification  of  rows  and  columns  which  is  most 
suitable  to  describe  the  economic  processes  under  consideration,  namely  the  processes  of 
production  and  use  of  products.  However, 
the 
interrelations  between  value  added  and  final  expenditure.  By  extending  a  supply  and  use 
table,  or  an  input-output  table,  to  show  the  entire  circular  flow  of  income  at  a  meso-level, 
one captures an essential  feature  of a Social Accounting  Matrix  (SAM). 

those  matrices  do  not 

incorporate 

8.134.  A  SAM  is defined  here as: The presentation  of ES A-accounts  in  a matrix  which  elaborates 
on  the  linkages  between  a supply  and  use  table  and  sector  accounts.  SAMs  typically  focus 
on the role of people in the economy, which may  be reflected  by, among other things,  extra 
breakdowns  of  the  household  sector  and  a  disaggregated  representation  of  labour  markets 
(i.e. distinguishing  various categories of employed  persons). 

8.135.  An  important  social  concern  is  the  level  and  composition  of  (un)employment.  A  SAM 
commonly  provides  additional  information  on this  issue, via a subdivision  of  compensation 
of  employees  by  type  of  person  employed.  This  subdivision  applies  to  both  the  use  of 
labour  by  industry,  as  shown  in  the  supply  and  use  tables,  and  the  supply  of  labour  by 
socio-economic  subgroup,  as  shown  in  the  allocation  of  primary  income  account  for 
households.  It  implies  that  the  matrix  presents  not  only  the  supply  and  use  of  various 
product  groups, but also the supply and use of various categories of labour  services. 

8.136.  The  classification  of  (self-)employed  persons  may  be  based  on  a  combination  of 
background  and  (main)  job  characteristics,  such  as  sex,  schooling,  age  and  place  of 
residence  on  the  one  hand,  and  occupation,  type  of  job  contract  (full-time/part-time, 
permanent/  temporary)  and  region  and  subsector  of  employment  on  the  other  hand. 
Another  consideration  should  be that  within-group  variations  in  relative  wage  rate  changes 
are  smaller  than  between-group  variations.  A  classification  by  industry  of  employment  is 
less relevant,  because this  is already  shown  in the  SAM by the  cross-classification  of  value 
added. 

8.137.  Both  resident  persons  employed  in  non-resident  enterprises  and  non-resident  persons 
working  for  resident  enterprises  plus  employees  working  temporarily  abroad  should  be  set 
apart.  In  this  way,  employment  can  be  estimated  by  counting  the  number  of  (national) 
employed  person  units.  Evidently,  this  includes  the  self-employed,  for  whose  labour  input 
an  imputed  remuneration  may  then  be  isolated  from  the  rest  of  net  mixed  income  in  the 
SAM. 

288 

8.138. 

In particular, comparing (1) labour incomes of all employed persons as shown in the SAM, 
(2) a decomposition  of these  incomes into hours worked  and average wage rates per hour 
and (3) the potential supply of labour by type of person and household group (expressed in 
'full-time'  equivalents)  yields  detailed  information  on  the  composition  of  unemployment 
and an aggregate indicator  ('full-time  equivalent unemployment') which is consistent, both 
conceptually  and numerically, with the other macro-economic  indicators; these can also be 
derived from  the SAM framework.  Moreover, juxtaposing the head-count of the employed 
persons  (excluding  foreigners)  and  the  potential  labour  force  in  this  data  set  reveals 
unemployment as conventionally  defined. 

8.139.  At this stage, it is perhaps useful  to work out an illustrative  SAM. For this purpose, Table 
VIII.x2 exemplifies the design of a SAM which records all transactions distinguished in the 
System (that is, all flows  excluding 'other changes in assets'). The main novelty refers to a 
new  meaning  that  is attached  to the generation  of income  account,  in order  to  facilitate  a 
linkage of detailed  labour market  analyses and the national  accounts. The aggregate  SAM 
shown  here  is  meant  as  a  summary  table,  to  which  subsequent,  more  detailed  tables  can 
refer.  Possible  types  of classifications  in each  account  are  indicated  in parentheses  in the 
row and column headings. 

8.140.  The sequence of accounts in this matrix is the same as in table VIII.xl. Turning that matrix 

into the aggregate SAM presented here implies: 

(l)deleting  the other  changes in assets account, the opening  balance sheet, the  changes  in 
balance sheets account, the closing balance sheet and the net worth account, both for the 
total economy and for the rest of the world, and deleting the external financial  account; 

(2)subdividing  the  primary  distribution  of  income  account  and  the  second  capital 

subaccount; and 

(3)combining  both capital  subaccounts  (excluding fixed capital  formation)  and  combining 
the external account of goods and services and the external account of primary  incomes 
and current transfers. 

8.141.  The  first  two  rows  and  columns  of  table  VIII.x2  contain  an  aggregated  version  of  the 
supply and use table, here explicitly linked up with the other accounts of the System. Note 
that rows and columns of the supply table (cell 11,1) have been transposed. 

8.142.  The  third  account  records  the  generation  of  income  and  plays  an  important  role.  It  is 
classified  by primary  input category: (1) compensation  of various types of employees, (2) 
other  taxes  less  subsidies  on  production,  (3)  net  operating  surplus  and  (4)  net  mixed 
income. 

8.143.  Here,  this  account  accommodates  transactions  between  two  different  types  of  units.  In 
particular,  this  refers  to  compensation  of  employees,  which  is  recorded  as  a  transaction 
(work  in  return  for  compensation)  between  an  institutional  unit  (employer)  and  a  person 
(employee).  In this  SAM, employed  persons  are considered  as separate  units  who  receive 
compensation of employees in the generation of income account and distribute this income 
to  their  household  in  the  allocation  of  primary  income  account.  These  units  are 
subsequently  classified  into  groups  of (self-)employed  persons. This  representation  serves 
to integrate labour market analyses and the national accounts. 

289  -

8.144.  The (residual) mixed income and operating surplus remain with the producing unit, but the 
classification  of  producing  units  need  not  be  the  same  as  in  the  production  account.  In 
effect,  some  classification  by  institutional  subsector  is  particularly  relevant  to  operating 
surplus  and  mixed  income.  This  implies  a  cross-classification  of  these  value  added 
components by industry and institutional subsector in the SAM. 

8.145.  As the balancing  item in cell (III, II) equals total domestic  value  added, the primary  input 
categories  encompass  all  persons  employed  in  resident  enterprises.  In  column  III, 
compensation of non-resident persons employed in resident enterprises is then handed over 
to the rest of the world. A meaningful,  national balancing  item is only obtained  in account 
III if compensation  of resident persons employed  in non-resident enterprises  is added first. 
This is done in row III and for this purpose a separate category, resident persons employed 
in  non-resident  enterprises,  may  be  created.  An  additional  advantage  of  inserting  this 
category is that it facilitates the estimation of employment as conventionally  defined. 

8.146.  The  result  of  all  this  is  that  the  generation  of  income  account  is  closed  with  a  new 
balancing  item  (1473),  in  between  total  net  value  added  and  NNI.  This  balancing  item, 
named  total  net  generated  income,  at  basic  prices,  gives  total  income  earned  by  resident 
institutional units as a result of being engaged in production. 

8.147.  The  allocation  of  primary  income  account  of  a  detailed  SAM  presents  household  labour 
income(s)  as a contribution  by one or more  (self-)employed  household  members.  Among 
other  things, this  will  indicate  to what extent  each household  group  depends  on  multiple 
sources  of  (labour)  income. Apart  from  this, the  transaction  categories  in the  distribution 
and use of income accounts are the same as in the previous table. 

8.148. 

In the design of this SAM, the capital and financial accounts have been interlaced, with the 
financial  account  classified  not by institutional  sector  but  by type  of financial asset.  As a 
consequence,  a  disaggregation  of this  SAM  would  show,  by  institutional  subsector,  both 
acquisitions  less  disposals  of  various  types  of  financial  assets,  see  cell  (IX,VII),  and 
incurrence  less  repayment  of  various  types  of  liabilities,  see  cell  (VII,IX).  These  two 
categories  of transactions  have been combined  as far  as the rest of the world  is  involved. 
This serves to include the balancing item net lending in table VIII.x2, though with a reverse 
sign when viewed from the standpoint of the national economy (cell IX,XI). 

8.149.  A  large part  of total  volume  changes  in net worth  probably  consists  of  increases  in fixed 
assets.  If  one  is  particularly  interested  in the  dynamics  of an economy,  it  is  important  to 
show  in  which  industries  production  capacity  has  been  expanded.  This  is  the  aim  of  the 
fixed capital formation  account (account VIII) inserted in this SAM. A more detailed table 
would then present: 

(l)who invests where in the rows of this account - cell (VIII,VII); and 

(2)where does one invest in what in the columns - cell (I,VIII). 

290 

In this case, the who refers to an institutional subsector, the where refers to an industry, and 
the what refers  to a product  group. Through this fixed capital formation  account  the SAM 
shows  at  a  meso-level  the  linkages  which  exist  between  fixed  capital  formation  by 
institutional  sector,  as  presented  in  the  capital  account,  and  fixed  capital  formation  by 
product group, as contained in the supply and use tables. 

8.150.  Table  VIII.x3  serves  to  illustrate  what  kind  of  information  can  be  derived  from  a  more 

detailed SAM. Its main purpose is to show: 

The circular flow of income, including a subdivision of labour income by a few  categories 
of  employed  persons; this  enables  a  more  detailed  analysis  of the  linkage  between  value 
added of industries and primary income of household subgroups. 

The  interdependence  between  the  distribution  of  income  and  the  structure  of  production; 
among  other  things,  this  is  related  to  diverging  demand  patterns  of  various  household 
subgroups. 

The subsectoral  allocation of saving, including a subdivision of fixed capital  formation  by 
investing  industry;  this  enables  a  more  detailed  analysis  of  the  linkagp  between  fixed 
capital formation of subsectors and fixed capital formation by product group. 

For purposes of presentation, the number of groups in each account is kept to a minimum. 
Obviously, a fully-fledged  SAM should distinguish more categories per account. 

8.151.  As a SAM integrates both income and expenditure flows and the supply and use tables at a 
meso-level, it may serve as a format for the estimation of a wide set of accounts. The SAM 
approach  is  particularly  useful  if  one  wants  to  reconcile  detailed  information  on,  for 
example,  production  and  international  trade  with  basic  data  from,  for  example,  a  labour 
force  survey,  a  household  budget  survey  and  an  investment  survey  for  industries.  In 
addition,  casting  accounts  into  a  SAM  framework  implies  that  matrix  algebra  can  be 
applied to balance them. 

8.152. 

Integration of more basic data entails the possibility of more policy issues being monitored 
and  analysed  in  an  interrelated.  Above  all,  the  linkage  of  employment  and  income 
distribution  aspects  to  more  macro- oriented  objectives  such  as NDP  growth,  balance  of 
payments equilibrium, stable price levels, etc. comes within reach with a SAM. In addition, 
the SAM provides a framework  and consistent (base-year) data for economy-wide  (general 
equilibrium)  models  with  detailed  classifications  of  actors,  including  industries,  labour 
types and household subgroups. 

8.153.  Table VIII.x4 shows part of the information  contained  in a fully- fledged SAM. It looks at 
total  net  value  added,  i.e.  cell  (3,2)  of  the  aggregate  table VIII.x2, through  a  magnifying 
glass.  To  facilitate  cross-reference  with  the  supply  and  use  table,  industries  are  only 
classified  by  NACE  sections.  Male  and  female  labour  incomes  are  broken  down  by 
category  of  occupation  and  place  of  residence  of  the  employed  person.  Net  operating 
surplus  is shown according to the (sub)sector  of the enterprise to which the  establishment 
belongs,  and  net  mixed  income  according  to  the  location  of  the  household  enterprise.  In 
this  example,  mixed  income  still  includes  an  imputed  remuneration  for  the  labour  of  the 
self-employed.  Obviously, the figures  in this table add up to the concomitant  totals  shown 
in  tables  VIII.x2  and  VIII.x3.  For  instance,  total  net  value  added  appears  in  the  bottom 
right-hand corner. 

291 

8.154.  The  additional  insights  which  can  be obtained  from  such a table  include the  following: 

-  The  share of female  labour  income by industry  and  region. 

-  The  degree  of concentration  of female  labour  income  in a certain  occupational  category, 

by  industry  and  region. 

-  The  composition  of  labour  income  by  occupation  in  each  industry  and  region,  for  both 

sexes. 

-  The regional  split  of mixed  income by  industry. 

-  The  weight  of  public  enterprise  and  foreign-controlled  corporations  in  the  operating 

surplus  of each  industry. 

8.155. 

In  this  table,  the  detailed  information  on  compensation  of  employees  comes  from  labour 
statistics;  its  integration  into  a national  accounts  framework  will  improve  the  relevance  as 
well  as the reliability  of both this source and the national  accounts. 

Labour  incomes  as  presented  in  this  table  can  be  decomposed  into  a  volume  and  a  price 
component  by  labour  type  and  industry:  full-time  equivalent  employment  and  (weighted, 
full-time  equivalent)  wage  rates,  respectively.  Apart  from  that,  a  fully-fledged  SAM  also 
contains  a  table  showing  the  allocation  of  these  labour  incomes  and  the  concomitant 
employment  to  household  groups.  Similar  transactions  might  be shown  for  imputed  labour 
income  of the  self-employed. 

A  data  set  which  contains  an  estimate  of  imputed  labour  income  of  the  self-employed 
person  units  as  well  as  a  split  of  all  labour  income  into  a  volume  and  a  price  component 
yields  detailed  labour  data  which  are  quite  useful  for  all  kinds  of  analysis  and  which  are 
directly  linked  to all important  macro-economic  aggregates, including  employment  (that is, 
the  total  number  of  employed  person  units)  and  full-time  equivalent  employment  (that  is, 
total  labour  input  volume). 

292  -

( 1 9) 

TABLE VIII.xl : Matrix prcsenialion of Ihe full  sequence of accounts and balancing items 
ACCOUNT 

0. Goods and 
services 

I. Production 

il. 1  ramary 
distribution of 
income 

0. Goods and 
services 

1 

Trade and 
transport 
margins 

Intermediate 
consumption 

i 

1904 

or Ihc total economy 
•" 
11.1/J Secondary 
(re)dislribution 
of income 
(in kind) 
4 

TT.4 Use 01 
(adjusted) 
disposable 
income 
5 
Final 
consumption 

1-IV.  TOTAL  ECONOMY 

III.l. 1  i>aving 
and capital 
transfers 

til. 1.2 Acqui 
sition of non-
financial  assets 

b 

1371 

; Gross capital 

formation 

414 

111.2 financial 

changes in 
assets 

IV.1 Upcning 
balance sheet 

IV.2 Changes in 
balance sheet 

IV.3 Closing 
>alance sheet 

8 

9 

IU 

u 

12 

WCTboUKTIc 
PRODUCT 

Property income 

1602 

341 

NATIÔNAL 
1NCOME.NET 

Current  transfers 

(1315) 

1633 

1(196 

(AfjJUsTE6) 
DISPOSABLE 
INCOME. NET 

Adjustment  for the 
change in net equity 
of households on 
pension  funds 

1604 

11 

SAVIUI!.  WET 

Capital  transfers 

233 

61 

Consumption of 
fixed  capital 

222 

Acquisitions less 
disposals of non-
produced non-
financial assets 

0 

Nfcl  liWDINU 
OF THE TOTAL 
ECONOMY 

3S 

Net acquisitions 
of financial  assets 
(-. net incurrence 
of liabilities) 

553 

Changes in 
assets due to 
saving and 
capital  transfer 
833 

Changes in 
assess due to 
other changes 

379 
Upemng stock 
of assets 

16714 

C H A N G E I N W ET 
WORTH  D UE  TO 
SAVING  AND 
CAPITAL 
TRANSFERS 230 

Changes in 
liabilities 
due lo saving and 
capital  transfers 

603 

CHANGE IN WE 
WORTH DUE T 
OTHER 
CHANGES 

305 

Changes in 
liabilities 
due to other 
changes 

Opening slock 
of liabilities 

74 

6298 

OPENING 
NET WORTH 

CHANGE  IN  WE 
WORTH.  TOTAL 

10416 

535 

Primary  income 
to the rest of 
(he world 

Current  transfen 
to the rest of 
the world 

Adjustment  for the 
change in net equity 
of households on pen 
sion funds lo the 
rest of the worid 

41 

39 

0 

Capital  transfen 
to the rest of 
the worid 

4 

Net acquisition 
of external 
financial  assets 

88 

T 
0 
T 
A 
L 

E 
C 
0 
N 
O 
M 
Y 

R 
E 
S 
T 

0 
F 

T 
H 
E 

W 
0 
R 
L 
D 

0 
uurpuia  taxes 
less subsidies 
on products 

372» 

i. rroaucuoa 

111 Primary 
distribution of 
income 

11.2/3 Secondary 
(rc)distribu(ion 
of income 
(in kind) 
11.4 Use of 
(adjusted) 
disposable 
income 

IILI.I Saviauj 
and capital 
transfers 

111. 1.2 Acqui 
sitions of non-
financial assets 

I 

3 

4 

5 

6 

7 

III /  financial 

X 

lll.J Utter 
changes In 
assets 

IV.I Upeninf 
balance sheet 

IV.2 Changes to 
balance sheet 

tV.J Closing 
balance sheet 

u 

IU 

II 

12 

Net worth 

13 

V.l  External 

services 

V J  External 
primary incomes 
and eurent 
tianfcrs 

V 3.1.1 Saving 
and capital 
transfers 

V.J. 1.2 Acqui 
sitions of non-
finandal assets 

U 

Import! of good! 
and services 

497 

IS 

16 

IV 

V.3 J  Financial 

18 

19 

VJ.JUthcr 
changes in 
assets 

V.4.1 Upaung 
balance sheet 

V.4.2 Changes i 
balance sheet 

21 

V.4.3 Closing 
balance sheet 

22 

Net worth 

23 

TÔT/1 

L 

nu 

3728 

Joli 

iW 

il 

ïàii 

641 

ih 

16714 

535 

•"""" 

" T OT 

- 

IM 

~  294  -

Not worth 

V.I bxlcmal 
goods and 
services 

Exports of good, 
and services 

V.2 txtemal 
primary incomes 
and current 
transfers 
15 

v.j.i  saving 
and capital 
transfers 

VJ.2  Acqui 
sition of non-
financial  assets 

v.j. 1 f uianci 

V.J .3 IHher 
changes in 
assets 

V.4.1 Opening 
balance sheet 

V.4.2 Changes m 
balance sheet 

V.  R E ST  OP  TflE-wTTRTB 

: 

v.«.j Closing 
balance sheet 

ToTÂT 

Net worth 

lb 

1/ 

IX 

19 

2» 

21 

22 

ZJ 

536 

Primary income 
from the rest 
of the worid 

Current transfers 
from the rest 
of the  worid 

72 

10 

Adjustment for the 
change in net equity 
of households on pen 
sion funds from the 
rest of the  worid 

0 

Capital transfers 
from the rest 
of the  worid 

1 

Acquisitions less 
disposals of non-
produced non-
financial  assets 

0 

Nd 
incurrence 
of external 
liabilities 

50 

CLOSIWG 
NET 
WORTH 

10951 

EXTERNAL 
BALANCE 
OF G O O DS  A N! 
SERVICES 

3 

-39 

CURRENT 
EXTERNAL 
BALANCE 

-41 

NlMfLErAlNG 
OF THE REST 
OF THE WORLD 

-38 

OUNCE IN WET 
EXTERNAL 
FINANCIAL 
POSITION DUE TO 
CURRENT EXTER 
NAL BALANCE 
AND CAPITAL 
TRANSFERS 

-38 

Changes in external 
liabilities due to 
current external 
balance and 
capital  transfers 

88 

I095I 

497 

41 

-37 

50 

50 

4225 

3728 

2015 

2739 

1615 

295 

1055 

641 

379 

16714 

305 

17926 

10951 

497 

41 

-37 

50 

50 

7 

573 

-34 

630 

242 

Changes in external 
assets due 10 
current external 
balance and 
capital transfers 

50 

Changes m external 
assets due 10 
other changes 

Upcning stock 
of externa! 
assets 

7 

573 

CHANGE fN WET 
EXTERNAL 
FINANCIAL 
POSITION 
DUE TO OTHER 
CHANGES 

4 
Changes in extemal 
liabilities due lo 
other changes 

Opening stock 
of external 
liabilities 

ÔPEWIWG 
NET 
EXTERNAL 
FINANCIAL 
POSITION 

3 

7 

297 

276 
573 

CHAWGE IN WE 
EXTERNAL 
FINANCIAL 
POSITION. 
TOTAL 

-34 
-34 

CLOSING 
NET 
EXTERNAL 
FINANCIAL 
POSITION 

242 

630 

242 

-  295  -

TABLE VIII.x2: Schematic presentation of a Social Accounting Matrix 
ACCOUNT 

0. Goods and 
services 

I, Production 

0. Goods and 
services 
(products) 

1 -1 

(products) 

(Industries) 

1 -1 
Trade and 
transport 
margins 

I I -2 
Intermediate 
consumption 

U -2 

Output 

0 

1904 

II.I.I  Generation 
of  income 

(primary  input 
categories) 
III -  3a 

11.1 Allocation 
of primary 
income 
(institutional 
sectors) 
I V - 3b 

T O T AL 

II 2 Secondary 
distribution 
of  Income 
(Institutional 
sectors) 
V -4 

E C O N O MY 
11.4 Use of 
disposable 
Income 
(institutional 
sectors) 
V l -5 
Final 
consumption 

Capital 

(institutional 
sectors) 
VII-6/7a 
Changes in 
inventories  1) 

Fixed  capital 
formation 

(industries) 

V l l l - 7b 
Gross fixed 
capital 
formation 

1371 

38 

376 

1. Production 
(industries) 

11.1.1 Generation 
of income 
(primary input 
categories) 
II. 1.2 Allocation 
of primary 
income 
(institutional 
sectors) 
11.2 Secondary 
distribution 
of income 
(institutional 
sectors) 
11.4  Use of 
disposable 
income 
(institutional 
sectors) 

Capital 
(institutional 
sectors) 

Fixed capital 
formation 
(industries) 

III.2 Financial 
(financial 
assets) 

T 
0 
T 
A 
L 

E 
C 
0 
N 
0 
M 
Y 

R 
0 
W 

III-3a 

I V - 3b 

V -4 

VT-5 

V.l  -  6/7a 

V l l l - 7b 

I X -8 

NET VALUE 
ADDED (BASIC 
PRICES) 

1469 

3595 

133 

Taxes less 
subsidies on 
products 

Property  income 

GENERATED 
INCOME,  NET 
(BASIC 
PRICES) 

1473 

NATIONAL 
INCOME. NET 

341 

Current 
transfen 

1633 

1096 

DISPOSABLE 
INCOME, NET 

Adjustment  for the 
change In net equity 
of households on 
pension  funds 

1604 

11 

SAVING, NET 

Capital  transfers  2) 

233 

Net fixed capital 
formation 

Net acquisitions 
of  financial 
assets 

Consumption 
of fixed 
capital 

222 

Current 

X-14/15 

Imports of 
goods and 
services 

Capital 

X I-  16/17 

Compensation 
of employees 
to the rest 
of the world 

Property  income 
and taxes less 
subsidies on pro 
duction to the 
rest of the world 

Current 
transfers 
to the rest 
of the world 

Adjustment  for the 
change in net equity 
of households on 
pension funds  to the 
rest of the world 

497 

2 

39 

39 

0 

Capital  transfers 
to the rest of 
the world 

TOTAL 

4225 

3595 

1475 

2013 

2739 

1615 

1) Including  acquisitions  less disposals of valuables. 

2)  Including  acquisitions  less disposals of non-produced non-financial  assets. 

III.2 Financial 

R E ST  OF  T HE  W O R LD 
Current 

Capital 

TOTAL 

(financial 
assets) 
I X -8 

X-14/15 
Exports of goods 
and  services 

X I-  16/17 

536 

6 

66 

10 

0 

Compensation of 
employees from  the 
rest of the world 

Property  income and 
taxes less subsidies 
on production  from 
the rest of the world 

Current  transfers 
from  the rest 
of the world 

Adjustment  for the 
change In net equity 
of households on pen 
sion funds from  the 
rest of the world 

4225 

3595 

1475 

2013 

2739 

1615 

Net incurrence 
of  liabilities 

Capital  transfers 
from  the rest 
of the world 2) 

603 

1 

898 

NET LENDING 
OF THE REST 
OF THE WORLD 

376 

-38 

603 

CURRENT 
EXTERNAL 
BALANCE 

376 

603 

-41 
577 

-37 

577 

-37 

61 

154 

641 

4 
898 

I II  Allocation 

of  primary 

IU  Secondary 

distribution 

(Inatrtutionat 

sectors) 
rva 

rvb 

0 M t h « l o n sl 
factors) 

rvc 

rvd 

Va 

Vb 

^ 

T O T AL 

E C O N O MY 

R OW 

TOTAL 

11.4  Use  of 

dtapotablc 

(tmllrulional 

aeetors) 

Capital 

Fixed  capital 

III  2  Financial 

Current 

C a p i ul 

(inHrftnlonal 

aeclori) 

formatioo 

(industries) 

(financial 

assets) 

Vc 

Vd 

Via 

Vlb 

Vic 

Vld 

Vila 

Vllb  VIIo 

Vlld 

Villa  VHIb  Vlllc 

IXa 

DCb 

IXc 

X 

XI 

16 

339 

208 

12  • 

269  - 

2 

3 

1  -

4 

2 

28 

3 

2  -

9 

152 

13 

357 

109 

233 

23  -

0.  Goods  and 

services 

L  Production 

tL 1.1  Oencration 

(products) 

(industrial) 

rfinotrmc 

(primary  input 

categories) 

la 

ID 

Ic 

lia 

lib 

lie 

n ia 

Ilfb 

IIIc  Hid 

lllc 

Illf 

111, 

2 

87 

76 

-78 

2  -

2112 

11 

39 

1344 

3 

36 

7 

71 

969 

14 

246 

209 

"  349 

8 

1 

-2 

II 

14 

311 

95 

1 

49 

64 

262 

153 

192 

1 

11 

142 

156 

2 

111 

20 

452 

278  - 

20 

10  - 

- 

6  - 

- 

- 

16 

60 

416 

15 

52 

141  -

3 

28 

174 

58 

16  • 

23  -

II 

24 

II 

771 

577 

94 

58 

59 

191 

320 

134 

646 

499 

56 

23 

16 

37 

197 

92 

12 

92 

107 

352 

2  • 

9  -

II 

92 

119 

37 

345 

115 

128 

2685 

1412 

89 

2123 

1383 

472 

288 

2 

2 

4 

9 

26  -

4 

35 

4 

14 

12 

5 

82 

36  -

92 

44 

194 

102 

1 

56 

26 

7 

7 

45 

68 

4 

6 

58 

217 

432 

778 

614 

384 

237 

1024 

692 

243 

780 

648 

508 

107 

352 

86 

130 

516 

166 

11 

132 

233 

132 

217 

254 

85 

75 

83 

-10 

1 

4 

4  • 

16 

4 

7 

25 

28 

95 

94 

130 

2 

1 

4 

175 

74 

7 

435 

94 

6 

32 

27 

7 

4 

6 

-41 

577 

128 

2685 

1412 

89 

2123 

1383 

472 

288 

2 

6 

58 

217 

432 

778 

614 

384 

237 

1024 

692 

243 

780 

648 

508 

107 

352 

86 

130 

516 

166 

Ii 

I32 

233 

132 

2 I7 

254 

577 

-37 

1 

13 

-27 

-24 

•37 

TAJll.F.  VIT! V?  Example  0  i  more  detailed  Social  Accounting  Matrix 

ACCOUNT 

0  Goods  and 

Agriculture,  forestry  and  fishery  products  (0) 

Ores  and  minerals,  electricily,  manufacturing  and construction  (t>5) 

(product») 

Services  (6-9) 

1.  Production 

(industries) 

Agriculture,  hunting,  forestry  and  fishing  (A-B) 

Mining,  manufacturing,  electricily  and construction  (C-F) 

II. 1.1  Generation 

of  income 

(primary  input 

Services  (O-P) 

Compensation 
or 
employees 

Domestic 

Resident  male 

Resident  female 

Non-residents 

Ouier  taxes  less  subsidies  on 

production 

Residents  abroad 

Operating  surplus,  net 

Mixed  income,  net 

0 
r 

r. 
c 
0 

N 
o 
M 

Y 

II. 1 2  Allocation 

Households,  employees 

of  primary 

Households,  other 

Corporations  and  NPISHs 

(institutional 

General  govemment 

sectors) 

II.2  Secondary 

Households,  employees 

dislnhution 

Households,  other 

(institutional 

sectors) 

11.4  Use  of 

Corporations  and  NPISHs 

General  government 

Households,  employees 

Households,  other 

Corporations  and  NPISHs 

(institutional 

General  government 

sectors) 

Capital 

Households,  employees 

(institutional 

Households,  other 

sectors) 

Corporations  and  NPISHs 

General  govemment 

fixed  capital 

formation 

(.ndustriss) 

Agriculture,  hunting,  forestry  and  fishing  (A-B) 

Mining,  manufacturing,  electricity  and construction  (C-F) 

Services  (G-P) 

III.2  Financial 

Currency  and  deposits 

Loans 

Other  financial  assets 

(financial 

a s s e t s^ 

C a p i ul 

« 

[ l O l Ai 

la 

lb 

Ic 

lia 

lib 
nc 
Ilia 

n ib 

lire 
nid 
irte 
nif 
nig 
IVa 
rvb 
rvc 
rvd 

Va 

Vb 

Vc 

Vd 

vu 
V lb 

Vic 

Vld 

Vila 

Vllb 

Vile 

Vlld 

Villa 
vim, 
VHIc 

IXa 
rxb 
IXc 

X 

XI 

to 

TABLE VIII x4: Example of a detailed submatrix: NET VALUE ADDED (BASIC PRICES) 

(TABLE VT.II.x2, cell  3,2) 

Com-
pen-

Resi-
dent 
male 

Agricultural 

Clerical, sales, service 

Professional, 
managerial, etc. 
Agricultural 

Manual 

Resi 
dent 
female 

Clerical,  sales, service 

Professional, 
managerial, etc. 
iplo yees 

Non-resident em] 

Residents In non-resident enterprises 

Other taxes less subsidies on production 
Opera-

Households (owner-occupied housing) 
NPISHs and govemment unincorporated 
enterprises 
Corporations 

Public 
National private 
Foreign 

Mi.xcd  i 

Rural 
Urban 

SUBTOTALS: 
Compensation of employees (paid by resident prod) 
- Resident male 
- Resident female 
• Non-resident 
Mixed income and operating surplus 
- Operating surplus, net 
-Mixed income,'net 
TOTAL NET VALUE ADDED 

Rural 
Urban 
Rural 
Urban 
Rural 
Urban 
Rural 
Urban 
Rural 
Urban 
Rural 
Urban 
Rural 
Urban 
Rural 
Urban 

Ilia I 
IIIa2 
iïla3 
nia4 
IIIa5 
IIIa6 
II1«7 
IllaS 
Illbl 
IIIM 
Illb3 
IIIb4 
Htb5 
Iirb6 
iin>7 
nibs 

inn 
HID 
Ulf4 
inrs 

IHgl 
nig2 

I N D U S T R I ES 

(by NACE-sections) 

Fishing 

Mining 
and 
quarrying 

Manufac 
turing 

Agri- 
culture, 
hunting 
and 
forestry 

Elec-
tricity, 
gas and 
water 
supply 

IIb3 

Construc 
tion 

Wholesale, 
retail trade, 
repair of 
motor vehicles 
households 
goods 
IIcl 

Transport, Financial 
storage, 
communi-  mediation 
cation 

Inter-

restau 
rants 

Public 
adminlstra-

Real 
estate, 
rentlng  Hon, 
and 
defence and 
business  compulsory 
socsecurHy 
services 
IIc6 
HcS 

0.0 

Educa 
tion 

Health 
and 
social 
work 

Other 
communlt 
social, 
personal 
services 

IIc8 

Hc9 

Financial 
Inter 
mediation 
services 
Irrflrectly 
measured 
IIclO 

21.1 
105.3 
5.9 
35.6 
17.7 

47.7 

14.0 
2 0! 

24.2 
36.6 

6.8 
0.5 
46.0 
165.9 
20.0 
75.9 
46.1 
111.0 
1.1 
0.0 
7.5 
18.8 
47.8 
142.1 
21.0 
493 

2.01 

13.0 
II.I 

65.4 
161.6 

317.3 

233.3 

254.0 
27.0 
227.0 

18.5 
15.4 

232 
10.8 
12.4 

10.7 

20.4 

39.0 
17.3 
21.3 
0.2 
25.5 
-5.6 
31.1 

32.9 
61.1 

18.4 
11.3 

205.5 
111.5 
94.0 

15.9 
14.3 

15.5 
12.5 

35.5 
20.1 
13.4 
0.0 
23.5 
18.5 
5.0 

21.9 
16.9 

37.1 

29.9 

18.3 
7.5 

49.6 

42.6 

-48.0 
-48.01 

761.8 
472.2 
287.6 
2.0 
649.1 
217.1 
432.0 

21.0 
10.1 
11.5 

21.01 

26  3 j 

103.71 

-33.0 

OO 

CHAPTER IX 

INPUT-OUTPUT FRAMEWORK 

- 2 99 

INTRODUCTION 

9.01. 

The input-output framework  consists of three types of tables: 

supply and use tables; 

tables linking the supply and use tables to the sector accounts; 

symmetric input-output tables. 

9.02. 

Supply  and  use  tables  are  matrices  by  industry  and  product  describing  the  domestic 
production  processes  and  the  transactions  in  products  of  the  national  economy  in  great 
detail. These tables show: 

the structure of the costs of production and the income generated in the production 
process; 

the flows of goods and services produced within the national economy; 

the flows of goods and services with the Rest of the World. 

9.03.  A supply table shows the supply of goods and services by product and by type of supplier, 
distinguishing output by domestic industries and imports. A simplified  example of a supply 
table is given in table IX. 1. 

Table IX. 1 A simplified  supply table 

Supplies 

Industries 

Rest of the World 

(1) 

(2) 

Total 

(3) 

Products 

(1) 

Output by product and 

Imports by product 

Total supply by product 

by industry 

Total 

(2) 

Total output by industry 

Total imports 

Total supply 

9.04.  A  use  table  shows  the  use  of  goods  and  services  by  product  and  by  type  of  use,  i.e.  as 
intermediate  consumption  (by  industry),  final  consumption,  gross  capital  formation  or 
exports.  Furthermore,  the  table  shows  the  components  of  gross  value  added,  i.e. 
compensation  of  employees, other taxes  less  subsidies  on production,  net  mixed  income, 
net operating surplus and consumption of fixed capital. A simplified  example of a use table 
is given in table IX.2. 

300-

Table IX.2 A simplified  use table 

Uses 

Industries 

ROW 

Final cons. 

Gross cap. 
formation 

Total 

(1) 

(2) 

(3) 

(4) 

(5) 

Products 

(1) 

Intermediate 
consumption by 
product and by 
industry 

Components of 
value added 

Total 

Value added by 
component and 
by industry 

Total inputs by 
industry 

(2) 

(3) 

Exports 

Final 
consumption 
expenditure 

Gross capital 
formation 

Total use by 
product 

' 

-

-

-

-

9.05.  Between  the  supply  and  use  tables,  two  types  of  identities  hold  good  (provided  supplies 

and uses are valued consistently, see tables IX.5 and IX.6): 

(1)  The  identity  by  industry:  Output  by  industry  =  Input  by  industry.  In  terms  of  our 
simplified  supply and use table, this indicates that the row vector in cell (2,1) in table 
IX. 1  should be equal to that in cell (3,1) in table IX.2. 

So, for each industry: 

Output = Intermediate consumption + Value added. 

(2)  The identity by product: Total supply by product = Total use by product. 

In terms  of  our  simplified  tables, the column  vector  in cell  (1,3)  of table  IX. 1 should  be 
equal to the column vector in cell (1,5) of table IX.2. 

So, for each product: 

Output + Imports = Intermediate consumption + Exports + Final consumption  expenditure 
+ Gross capital  formation. 

These identities by industry and product can be used to check and improve the consistency 
and completeness of estimates (see para 9.11.). 

301 

9.06. 

Supply  and  use  tables  are  the  central  framework  for  all  tables  by  industry,  e.g.  those  on 
employment, gross fixed capital formation and capital stock. 

9.07. 

The supply and use tables contain all the flows in the following accounts: 

the goods and services account; 

the production account; 

the generation of income account. 

9.08.  A supply table and a use table can also be combined  and presented  as a single table. This 
can be achieved by adding two rows and a column to the use table, for output and imports 
(see table  IX.3). Note  that the rows and columns  from  the  supply  table presented  in para 
9.03. have been transposed here. 

Table IX.3 A simplified  combined supply and  use table 

Products 

Industries 

ROW 

Final cons. 

Gross cap. 
formation 

Total 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

Products 

(1) 

-

Intermediate 
consumption 

Exports 

Final 
consumption 
expenditure 

Gross capital 
formation 

Total use by 
product 

Industries 

(2) 

Output 

-

Components 
of value added 

(3) 

ROW 

Total 

(4) 

(5) 

-

Value added 

Imports 

_ 

Total supply 
by product 

Total inputs 
by industry 

-

-

_ 

-

-

-

_ 

-

-

-

_ 

-

Total output 
by industry 

-

_ 

-

- 302 

9.09.  A  symmetric  input-output  table  is  a  product  by  product  or  industry  by  industry  matrix 
describing  the  domestic  production  processes  and  the  transactions  in  products  of  the 
national  economy  in  great  detail.  A  symmetric  input-output  table  rearranges  both  supply 
and  use  in a  single table. There  is one major  conceptual  difference  between  a  symmetric 
input-output  table  and  a combined  supply  and  use table:  in the  supply  and  use table, the 
statistics  relate  products  to  industries,  while  in  the  symmetric  input-output  table  the 
statistics  relate products  to products  or industries  to industries.  So, in a symmetric  input-
output  table  either  a product  or an  industry  classification  is employed  for  both  rows  and 
columns (see table IX.4). 

Table IX.4 A simplified symmetric input-output table (product by product) 

Products 

ROW 

Fin^l 
consuniption 
expenditure 

Gross capital 
formation 

Total 

(1) 

(2) 

(3) 

(4)? 

(5) 

Products 

(1) 

Intermediate 
consumption 

Exports 

Final 
consumption 
expenditure 

Gross capital 
formation 

Total use by 
product 

Components of 
value added 

(2) 

Value added 

ROW 

Total 

(3) 

(4) 

Imports 

Total supply by 
product 

-

_ 

-

-

_ 

-

-

_ 

-

-

_ 

Total supply = 
Total use 

9.10.  Most statistical information that can be obtained from producer units indicates what type of 
products  they  have  sold  and,  usually  less  detailed,  what  type  of  products  they  have 
bought/used. The format  of the supply and use tables is designed to fit in with this type of 
statistical  information  (i.e. industry by product). By contrast, information  of  a product by 
product  or  industry  by industry  nature as required  by the  symmetric  input-output  table is 
not  often  available.  For example, surveys  of  industries  usually  provide  information  about 
the type of products  used  and about the products  produced.  However,  information  on the 
inputs  in  terms  of  products  and  value  added  components  for  each  product  produced  is 
usually not collectable (ideally, the  administration  of  an enterprise  should  show  all  costs 
allocated  to  the  various  types  of  output  and,  simultaneously,  show  the  composition  of 
intermediate  consumption  by  type  of  product).  In  practice,  information  arranged  in  the 
form  of  supply  and  use  tables  is therefore  a  practical  starting  point  for  constructing  the 
more  analytic  information  in the  symmetric  input-output  tables.  The  industry  by  product 
information  in the supply and use tables can be converted into product by product (industry 
by industry)  statistics  by adding extra statistical  information  on the  input  structures, or by 
assuming constant input structures by product or by industry (see paras 9.54. - 9.60.). 

303 

9.11. 

The supply and use tables serve both statistical and analytical purposes. 

Important statistical purposes are: 

identifying  gaps and inconsistencies in basic data sources; 

weighting and calculation of index numbers and price and volume measures; 

making  estimates  by  residual  (estimating  a  variable  by  first  estimating  all  other 
variables  in  the  identity),  e.g.  for  the  production  or  final  consumption  of  specific 
products; 

checking and improving the consistency, plausibility  and completeness  of figures  in 
the  supply  and  use  tables  and  the  derived  figures  (such  as  those  in  the  production 
accounts). To this end, the balancing process should not be limited to the supply and 
use tables at current prices: 

* 

By  compiling  supply  and  use tables  at  current  and  constant  prices  for  two or 
more years, estimates of changes in volumes,' values and prices can be balanced 
simultaneously: compared to integrating supply and use tables for a single year 
in  isolation,  this  is  a  major  extension  of  the  effectiveness  of  the  integration 
framework. 

*  With me aid of me tables showing the linkage with the sector accounts, a direct 
comparison can be made with information from the latter, e.g.  information  on 
the  distribution  of  income,  on  saving  and  on  net  lending  (calculated  as  the 
result  of  financial  transactions).  This  at  least  guarantees  that,  after  the 
balancing  process, consistency  is  obtained  between  the  supply  and  use  tables 
and the sector accounts. 

* 

Trying to derive symmetric input-output tables from  the supply  and use tables 
may reveal inconsistencies and weaknesses in the supply and use tables. In this 
respect,  there  is  therefore  also  a  feedback  from  the  symmetric  input-output 
tables to the supply and use tables. 

estimating  figures  for  periods  on  which  less  reliable  information  is  available,  e.g. 
estimating  annual figures on  the  basis  of  the  detailed  supply  and  use  figures  for  a 
benchmark year or estimating quarterly figures on the basis of annual supply and use 
tables. 

9.12. 

The supply  and use tables and symmetric  input-output  table give a detailed  picture  of the 
composition  of the supply and use of goods, services and labour and the primary  incomes 
involved.  These  tables  and the ratios that can be derived from them,  such  as  productivity 
figures, are an important subject for economic analysis. 

304 

9.13. 

The  supply  and  use  tables  and  input-output  table  can  also  be  used  as  tools  of  economic 
analysis.  Both  types  of  tables  have  different  merits.  For  calculating  direct  and  indirect 
effects,  the  supply  and  use  tables  need  to  be  accommodated  with  specific  assumptions  or 
extra  statistical  information.  For  calculating  cumulative  effects,  these  assumptions  and 
extra  data  requirements  are  the  strongest.  In  fact,  the  requirements  for  calculating 
cumulative  effects  with  a  supply  and  use  table  amount  to  constructing  a  symmetric  input-
output  table.  Therefore,  for  calculating  cumulative  effects,  the  symmetric  input-output 
table  is  the  preferrable  tool.  However,  for  calculating  direct  effects  and  first-order  effects, 
the  supply  and  use  tables  adjusted  with  a  selected  amount  of  assumptions  (or  extra 
statistical  information)  is in general  to be preferred,  because: 

the calculation  is less dependent  on  assumptions; 

the supply and use table provides more detail than the symmetric  input-output  table; 

the  information  in  the  supply  and  use  table  can  be  better  linked  to  other  types  of 
statistical  data. 

These  features  are  also  helpful  when  the  supply  and  use  tables  are  integrated  in  a  macro-
economic  model: the  resulting  overall  model  is more  close to  real  statistics,  can  show a  lot 
of  detail  and  can  relatively  easily  be  linked  to  areas  on  which  other  statistical  data  are 
available  (e.g. on the labour market or the environment). 

9.14. 

The supply  and use tables and symmetric  input-output  table can be used to  calculate: 

effects  of changes  in prices or tax rates on the values of supply  or use; 

effects  of changes  in volumes on the values of supply  or use; 

effects  of changes  in prices of supply on prices of use. ; 

effects  of changes  in the volume of use on the volume of  supply; 

effects  of changes  in the volume of supply  on the volume of use; 

The  calculations  can  show  indirect  as  well  as  direct  effects.  For  example,  a  significant 
increase  in  energy  prices  will  affect  not  only  those  industries  that  use  energy  intensively, 
but  also  those  industries  that  use  the  outputs  of  the  energy-intensive  producers.  With  the 
aid of some assumptions, estimates of the size of such indirect  effects  can be  deduced  from 
the  supply  and  use  and  symmetric  input-output  tables.  Examples  of  common  assumptions 
are: 

a constant  input  structure  in terms of values; 

a constant  composition  of the value of output by industry  and by  product; 

a  constant  composition  of the  value  of  final  consumption  expenditure  of  households 
by  product. 

These  assumptions  are rather rigid  as they  imply that relative prices do  not change, that  the 
production  processes  remain  technically  the  same  and  that  no  substitution  occurs  between 
categories  of  final  consumption  expenditure  by  households.  However,  these  general 
assumptions  can  be  modified  by  allowing  first  for  changes  in  relative  prices,  e.g.  the 
Leontief-price  model. This can then be extended  with econometric  or other  estimates  of the 
technical  coefficients  or  final 
influence  of  relative  prices  and  other  variables  on 
consumption  expenditure  by  households. 

-  305 

The  calculations  need  not be confined  to the  supply  and  use of  goods  and  services. They 
could also be applied to the supply and use of labour and the components of value added. 

9.15. 

The  supply  and  use  tables  and  the  symmetric  input-output  table  can  be  integrated  into 
macro-economic  models  to  provide  the  latter  with  a detailed  meso-economic  foundation. 
Specific  types of analysis served by supply and use tables and the symmetric  input-output 
table are, for example: 

analysis of production, cost structures and productivity; 

analysis of prices; 

analysis of employment; 

analysis of the structure of capital formation, final consumption, exports,etc; 

analysis  of  the relationship  between  domestic  production  and  the  environment  (e.g. 
focusing on the use of specific products like fuel, paper and glass); 

analysis of imports of energy required; 

impact analysis of new technologies; 

sensitivity analysis of the effects  of changes in tax rates and regulation. 

SUPPLY AND USE TABLES 

9.16. 

Tables IX.5 and IX.6 show the supply and use tables in more detail. 

9.17. 

9.18. 

9.19. 

9.20. 

The classification  used for  industries  is the NACE.Rev.  1 and the classification  employed 
for  products  is the CPA; these classifications  are fully  aligned to each other: at each level 
of  aggregation,  the  CPA  shows  the  principal  products  of  the  industries  according  to  the 
NACE.Rev. 1. 

In  the  supply  and  use  tables,  the  classification  for  products  is  at  least  as  detailed  as  the 
classification  for  industries, e.g. the three digit-level  of the CPA (200 groups) and the two 
digit-level of the NACE.Rev.  1  (60 groups). 

The  distinction  between  market  output,  output  for  own  final  use  and  other  non-market 
output is only to be used for the total output by industry; the distinction is not required  for 
each product group. 

The distinction between market producers and producers for own final use on the one hand 
and other non-market  producers on the other  hand  should  only  be used  by  industry  when 
both  types  of  producers  are  present  within  one  industry.  In  general,  this  distinction  will 
therefore  only  be  used  for  subclassifying  a very  limited  number  of  industries,  e.g.  health 
care and education (see para 3.56.). 

9.21. 

Imports and exports should be subdivided into: 

intra-EU deliveries; 

imports and exports with other countries. 

306 

Table IX.5. A supply table at basic prices, including a transformation  into purchasers' prices 

Industries (NACE) 

12  3  4... 

....n 

(1) 

Imports 
cif 

2(1) 
(2) 

(3) 

Total supply 
at basic 
prices 
(4) 

Trade and 
transport margins 

(5) 

Taxes less 
subsidies on 
products 
(6) 

Total supply 
at purchasers' 
prices 
(7) 

1 
2 
3 
4 

V 

Products 
(CPA) 

(1) 

Output by product and by industry at 
basic prices 

o 
- vJ 

m 

(Adjustm.  items) 
2(1) 
Total  ofwhich: 
Market output 
For own final use 
Other non-market 
output 

(2) 

(3) 

Total output by industry 

0 

0 

0 

0 

0 

Table IX.6. A use table at purchasers' prices 

Industries (NACE) 

1  2  3  .... 

...n 

(1) 

2(1) 
(2) 

1 
2 
3 

Products 
(CPA) 

(1) 

Intermediate consumption at purchasers' 
prices by product and by industry 

2(3) 
(4) 

2(1) + 
2(3) 
(5) 

Final uses 
a)  b)  c)  d)  e)  f) 
(3) 
Final uses at purchasers' 
prices: 

Final consumption  exp: 
a) by households 
b) by NPISH 
c) by government 

Gross capital  formation: 
d) gr. fixed  capital form, 
and valuables 
e) changes in inventories 

f) Exports 

(Adjustment  items) 
2(1) 
Comp.of empl. 
Other net taxes on 
production 
Cons, of fixed  capital 
Oper. surplus, net 
1(3) 
2(1) + 2 (3) 
Suppl.  information: 
Gr. fixed  cap. form. 
Stocks of fixed assets 
Labour inputs 

m 

(2) 

(3) 

(4) 
(5) 

(6) 

Total interm. consumption by industry 

Total final uses by type 

Total use 

Components of value added by industry 

Value added by industry 
Output at basic prices by industry 

-

9.22. 

In the supply table, flows of goods and services are valued at basic prices. In the use table, 
the flows of goods and services are valued at purchasers' prices. In order to attain identities 
between  supply  and  use, table  IX.5  also  shows the transition  of  supply  at  basic prices to 
supply  at  purchasers'  prices. As supply  should  be equal  to  use, the  table  reveals  also  the 
transition  of  uses  at  purchasers'  prices  to  uses  at  basic  prices.  As  a  consequence,  two 
identities can be derived from this transition: 

supply at purchasers' prices is equal to use at purchasers' prices; 

supply at basic prices is equal to use at basic prices. 

9.23.  Value added  is recorded  at basic prices. It is the net result of output  valued  at basic prices 

less intermediate consumption valued at purchasers' prices. 

9.24.  Value  added  at  factor  cost  is not  a concept  in the  ESA. Nevertheless,  it  could  be  derived 

from value added at basic prices by subtracting other taxes less subsidies on production. 

9.25.  GDP  is  valued  at  market  prices. This  aggregate  can  be  derived  from  the  supply  and  use 

tables in three different  ways: 

the  aggregate  of  output  at  basic  prices  by  industry  minus  the  aggregate  of 
intermediate consumption at purchasers' prices by industry plus net taxes on products 
(the production approach); the intermediate consumption by industry includes the use 
of  financial  intermediation  services  indirectly  measured  that  are  recorded  in  a 
nominal industry (see para 9.33.); 

the aggregates of the various components  of value added at basic prices  by  industry 
minus the use of financial  intermediation  services indirectly measured  (recorded in a 
nominal  industry,  see  para  9.33.)  plus  the  net  taxes  on  products  (the  income 
approach); 

the  sum  of  final  uses  categories  minus  imports:  exports  -  imports  +  final 
consumption  expenditure  +  gross  capital  formation  (all  at  purchasers'  prices)  (the 
expenditure approach). 

9.26. 

9.27. 

The  use  table  IX.6  also  contains  some  supplementary  information:  gross  fixed  capital 
formation,  stocks of fixed assets and labour inputs by industry. This information  is crucial 
for  productivity  analysis and may also serve several  other types  of analyses  (e.g. analysis 
of employment). 

In the ESA, the stocks of fixed assets are valued at the market prices prevailing on the date 
of the balance sheet. For fixed assets bought in earlier years, this implies that consumption 
of fixed capital of the foregoing  years is to be deducted  from  the current  market prices of 
new assets  of the  same type and quality.  This net concept  of fixed capital  stock  could be 
used  in  calculating  capital  intensity.  However,  for  productivity  analysis  more  often  a 
specific  gross  concept  of fixed capital  stock  is used.  According  to  this  gross  concept  all 
fixed assets  should  be valued  at the current  market  prices  of new  assets  of  the  same type 
and  quality;  no  deduction  should  be made for  capital  consumption  in the  last  and  earlier 
years. This gross concept of fixed capital stock is no standard concept  in the ESA, but can 
easily  be calculated  with the aid of the Perpetual  Inventory Method. Considering  the great 
use of such gross figures, it is recommended to include both gross and net figures  on fixed 
capital stock as supplementary  information. 

- 3 0 9-

(20] 

9.28. 

For productivity  analysis, hours worked  is the preferable  labour input variable. In drawing 
inferences  about  employed  persons,  however,  also  the  number  of jobs  may  be  relevant. 
Both variables can be subclassified,  e.g.  into the part pertaining  to employees  and to self-
employed persons. 

9.29. 

For a proper compilation and understanding of the supply and use tables, it is important to 
recall some of the accounting conventions employed in the ESA: 

The outputs of ancillary activities are not recorded  separately; all the inputs consumed 
by  an  ancillary  activity  are  treated  as  inputs  into  the  principal  or  secondary  activity 
which  it  supports.  Ancillary  activities  may  be,  for  example,  marketing,  accounting, 
storage and cleaning (see paras 3.12. and 3.13.). 

Goods  or  services  produced  and  consumed  within  the  same  accounting  period  and 
within  the  same  local  KAU  are  not  separately  identified.  They  are  therefore  not 
recorded  as  part  of the  output  or  intermediate  consumption  of  that  local  KAU.  This 
may pertain for example to: 

* 

* 

* 

seeds and plants for sowing and planting; 

hard coal consumed in the production of briquettes by coal mines; 

electrical energy consumed by power stations. 

Minor processing, maintenance, servicing or repair on behalf of other local KAUs is 
to be recorded net, i.e. excluding the value of the goods involved. By contrast, when 
the  goods  are  subject  to  a  substantial  physical  change,  the  transaction  should  be 
recorded gross, i.e. as the purchase and sale of the goods involved. 

Durable  goods  can  be  rented  or  be  subject  to  operating  leasing.  In  such  instances, 
they  are recorded  as fixed capital  formation  and fixed capital  stock  in their  owner's 
industry; in the industry of the user intermediate consumption by amount of the rent 
is recorded. 

Persons  working  via  temporary  agencies  are  recorded  as  being  employed  in  the 
industry  of  these  agencies  and  not  in  the  industries  in  which  they  are  actually 
working. As  a consequence,  in the  latter  industries, the  payments  for  these  persons 
are recorded  as intermediate  consumption  (and  not  as compensation  of  employees). 
Labour contracted out is treated similarly. 

Employment and compensation of employees in the ESA are broad concepts: 

* 

* 

Employment for social reasons is also counted as employment; this applies, for 
example,  to  work  placements  for  disabled  people,  employment  projects  for 
people  who  have  been  unemployed  for  a  long  time  and  employment 
programmes  for  young  people  seeking  jobs.  As  a  consequence,  the  people 
involved  are  employees  and  receive  compensation  of  employees  (not  social 
transfers), though their productivity may be (much) lower than that of the other 
employees. 

Employment  includes  also  some  cases  in  which  the persons  involved  are  not 
expected  to work  at all, e.g.  persons  dismissed  but  receiving  for  some  period 
payments from their former employer. However, labour input in terms of hours 
worked is not distorted by this convention, as no hours are actually worked. 

310 

9.30. 

In the supply and use tables, two adjustment  items should be introduced  for reconciling the 
valuation of imports in the supply and use tables and in the sector accounts (see also table 
3.2). 

In the supply  table, imports of goods are valued  at cif values. This  is an overstatement  of 
the costs of imports when the transport and insurance services incorporated  in the cif value 
are provided  by  residents  (e.g. own-account  transport  or transport  by  specialized  resident 
transporters).  In order to obtain the right balance between  imports and exports, exports of 
services  should  thus also be increased  by amount of this overstatement  of  imports. In the 
sector  accounts,  imports  of  goods  are  valued  at  fob  values.  This  is  an  overstatement  of 
imports  like  in  the  case  of  cif  valuation.  However,  in  the  case  of  fob  valuation  the 
overstatement is smaller, which implies that the imputed increase in exports is smaller too. 
The result of employing different  valuation principles  is thus that net total  imports are the 
same,  but  that  both  total  imports  and  total  exports  are  larger  for  cif  valuation.  The  two 
valuation  principles  can  be  reconciled  in  the  supply  and  use  tables  by  introducing 
adjustment  items for  imports as well as exports. The adjustment  items should  be equal to 
the value of the transport and insurance services by residents  incorporated  in the cif value 
but not in the fob value, i.e. referring  to the transport and insurance from the border of the 
exporting  country  to  the  border  of  the  importing  country.  These  adjustment  items,  once 
incorporated  in  the  supply  and  use  tables,  need  no  special  treatment  in  the  input-output 
calculations. 

9.31. 

The transfer  of existing goods is recorded in the use table as a negative expenditure for the 
seller  and  a  positive  expenditure  for  the  purchaser.  For  the  product  group  involved,  the 
transfer  of an existing good amounts to a reclassification  among uses. Only the transaction 
costs  are  not  a  reclassification:, they  are  recorded  as  a  use  of  business  or  professional 
services. For the purposes  of description  and  analysis,  it can  be useful  to  show  for  some 
product  groups  the  relative  size  of  the  transfer  of  existing  goods  separately,  e.g.  the 
importance of second-hand cars or the importance of recycled of paper. 

9.32.  Direct  purchases  abroad  by  residents  and  purchases  on  the  domestic  territory  by  non 
residents  are  commonly  estimated  as  a  special  excercise  in  the  statistical  compilation 
process. They  are introduced  as adjustments  to  inititial  estimates  of  imports, exports and, 
by  amount  of  the  consumption  part  of  the  purchases  abroad,  final  consumption 
expenditure.  In  order  to  obtain  a  balance  between  supply  and  use  by  product,  all  these 
purchases should be split over the various product groups involved. For the product groups 
where these  types of purchases  are important,  they could  be shown  as a subcategory,  e.g. 
expenditure on accommodation. 

9.33. 

Throughout the supply and use tables, the NACE.Rev.  1 industry classification  is extended 
with  a  nominal  industry  for  the  use  of  financial  intermediation  services  indirectly 
measured.  In the  supply  table, no transactions  are recorded  at  all  for  this  industry.  In the 
use table, the total use of financial  intermediation  services indirectly  measured  is recorded 
as the  intermediate  consumption  of this  nominal  industry.  As this  nominal  industry  does 
not have any  other transactions,  its net operating  surplus  is negative  by the  amount  of its 
intermediate  consumption;  all  other  components  of  its  value  added  are  zero.  As  a 
consequence, its total gross value added is equal to its (negative) net operating surplus. 

-311 

9.34. 

The transition from  supply and use at basic prices to purchasers' prices involves: 

reallocating trade margins; 

reallocating transport margins; 

adding taxes on products (except deductible VAT); 

deducting subsidies on products. 

The  estimation  of  this  transition  is  an  important  part  of  the  balancing  process.  Separate 
tables  can  show the transition  in more detail  (see tables  IX.7 and  IX.8). These tables can 
also  serve  important  analytical  purposes,  e.g.  analysis  of  prices  and  analysis  of  the 
consequences of changes in the rates of taxes on products. 

9.35. 

In general, when preparing supply and use tables and making the proper balancing between 
the two sides, there is always a choice of emphasis between two opposite ways of  adjusting 
statistical data: 

(1)  Supply  of  each  product  at  basic  prices  could  be  adjusted  to  a  purchasers'  prices 

valuation to allow balancing with uses at purchasers' prices; 

(2)  Each of the uses at purchasers' prices could be adjusted  to a basic prices' valuation to 

match with supply at basic prices. 

9.36. 

In practice, both types of balances may be needed to build up a supply and use table. Both 
alternatives  deal  with  or require  similar  kinds  of adjustments,  i.e.  for  taxes  less  subsidies 
on products and trade and transport margins by products. In fact, the first alternative is not 
possible without the  second,  since it is usually  not possible to know the columns of taxes 
on  products,  subsidies  on  products  and  trade  and  transport  margins  broken  down  by 
products in the supply table unless the distribution among uses of the individual products is 
known from the use table at purchasers' prices (table IX.6). 

9.37. 

Thus, the following tables are involved in the balancing process: 

the supply and use tables IX.5 and IX.6 showing the final results of balancing totals 
of supply and use by products at purchasers' prices and at basic prices; 

the  tables  on  trade  and  transport  margins  and  on  taxes  less  subsidies  on  products 
(tables IX.7 and IX.8). 

9.38. 

The  transition  of  supply  and  use  from  basic  prices  to  purchasers'  prices  (see  para  9.34.) 
amounts  to  reallocating  trade  margins:  valuation  at  basic  prices  implies  that  the  trade 
margins  are  recorded  as  part  of  the  product  trade,  while  valuation  at  purchasers'  prices 
implies  that  the  trade  margins  are  allocated  to  the  products  to  which  they  pertain.  An 
analogous situation holds for transport margins. 

9.39. 

The  total  of  trade  margins  by product  is  equal  to  the total  of  trade  margins  by  the  trade 
industries  plus  the  secondary  trade  margins  by  other  industries.  An  analogous  equation 
holds for the transport margins. 

- 3 12 

Table IX.7. A simple trade and transport margins table. 

1 
2 
3 

m 

Products 
(CPA) 

I 

2(1) 

Industries (NACE) 

1  2  3  .... 

...n 

(1) 

2(1) 
(2) 

Final uses 
a)  b)  c)  d)  e)  f) 
(3) 

Trade and transport 
margins on final uses: 

2(3) 
(4) 

2(1) + 
2(3) 
(5) 

0) 

Trade and transports margins on 
intermediate consumption by product and 
by industry 

Final consumption  exp: 
a) by households 
b) by NPISH 
c) by government 

Gross capital  formation: 
d) gr. fixed capital form, 
and valuables 
e) changes in inventories 

f) exports 

(2) 

Trade and transports margins on interm. 
consumption by industry 

Trade and transport 
margins on  final uses by 
type 

Total tr. & 
tr. margins 

Table IX.8. A simple taxes less subsidies on products table. 

Industries (NACE) 

1  2  3  .... 

...n 

(1) 

2(1) 
(2) 

Final uses 
a)  b)  c)  d)  e)  f) 
(3) 
Taxes less subsidies on 
products for final uses: 

2(3) 
(4) 

2(1) + 
2(3) 
(5) 

1 
2 
3 

Products 
(CPA) 

0) 

Taxes less subsidies on products on 
intermediate consumption by product and 
by industry 

i 

2(1) 

m 

(2) 

Taxes less subsidies on products  for 
interm. consumption by industry 

Final consumption  exp: 
a) by households 
b) by NPISH 
c) by government 

Gross capital  formation: 
d) gr. fixed capital form, 
and valuables 
e) changes in inventories 

f) Exports 

Taxes less subsidies on 
products for  final uses 
by type 

Total taxes 
less 
subsidies 
on 
products 

9.40. 

The  transport  margin  consists  of  all  transportation  costs  that  are  included  in  the  use  of 
products at purchasers' prices but not in the basic prices of a manufacturers'  output or in the 
trade margins of wholesale or retail traders. The transport margin includes in particular: 

transport  of  goods  from  the  place  where  it  is  manufactured  to  the  place  where  the 
purchaser  takes  delivery  of  it  in  case  the  manufacturer  pays  a  third  party  for  the 
transport; 

transport of goods arranged in such a way that the purchaser has to pay  separately  for 
the  transport  costs  even  when  the  transport  is  done  by  the  manufacturer  or  the 
wholesale or retail trader himself. 

All other costs of transporting goods are not recorded as transport margins, e.g.: 

if  the  manufacturer  transports  the  goods  himself,  these  transportation  costs  will  be 
included  in the basic prices of the manufacturer's  output;  this transport  represents an 
ancillary  activity  and  the  individual  costs  of  transport  will  be  not  identifiable  as 
transportation costs; 

if the manufacturer  arranges for the goods to be transported without a separate invoice 
for the transport services, these transportation costs will be included in the basic prices 
of the manufacturer's  output; these transportation costs will be identifiable  as such and 
be recorded as part of the manufacturer's  intermediate consumption; 

if  wholesale  and  retail  traders  arrange  for  goods  to  be  moved  from  where  they  take 
delivery  of  them  to  where  another  purchaser  takes  delivery,  these  costs  will  be 
included  in  the  trade  margin  if  no  separate  charge  is  made  for  transportation  to  the 
purchaser.  Again, as with manufacturers,  these costs  may  represent  ancillary  activity 
of wholesale and retail traders or the purchase of an intermediate service, thus entering 
trade margins but not transport margins. 

if a household  buys goods for final consumption  purposes  and  arranges  for  transport 
by a third party, these transport costs are recorded as final consumption expenditure on 
services (and not included in some trade or transport margin). 

9.41. 

Table  IX.7  shows  a somewhat  simplified  picture  of  a trade and transport  margins matrix, 
because: 

No. explicit  distinction  is  made  between  trade  and  transport  margins.  Both  types  of 
margins could be shown for  each product group. Another  solution  is to have separate 
tables: one for trade margins and one for transport margins; 

For  trade  margins,  a  distinction  between  wholesale  trade  and  retail  trade  should  be 
made  in  order  to  take  account  of  the  differences  in  their  prices.  In  drawing  up  the 
tables, it should be realized that wholesale traders may also sell directly to households 
(e.g.  furniture)  and  that  retail  traders  may  also  sell  to  industries  (e.g.  to  cafes  and 
restaurants). 

315 

In  calculating  and  analysing  trade  margins  on  products  for  final  consumption 
expenditure  by  households,  for  each  product  group  the  most  important  distribution 
channels could also be distinguished in order to take account of the differences  in their 
prices; the distinction between wholesale trade and retail trade is in fact too rough. For 
example,  goods  and  services  can  be  bought  by  households  in  the  supermarket,  the 
grocery,  flower  shop,  department  store,  abroad  or  obtained  as  income  in  kind. 
Furthermore,  for  some  products,  secondary  sales  may  be  very  important,  e.g.  in  the 
case of cigarettes this can pertain to the sales by cafes, restaurants  and petrol stations. 
Of course, such more refined  distinctions can only be introduced  if the available data 
sources provide sufficient  information  for at least rough estimates of the importance of 
each of the distribution channels. 

In  calculating  transport  margins,  a  distinction  by  type  of  transport  (e.g.  by  rail,  air, 
sea/inland waterway or road) could be very useful. 

9.42. 

Taxes on production and imports consist of: 

taxes on products (D21): 

* 

* 

* 

value-added-type taxes (VAT) (D211); 

taxes and duties on imports; except VAT (D212); 

taxes on products, except VAT and import taxes (D214); 

other taxes on production (D29). 

Similar categories are distinguished for subsidies on production and imports. Subsidies are 
treated as if they were negative taxes on production and imports. 

The definitions  of all these categories are given in paras 4.17. - 4.24. 

9.43. 

Supply  at basic prices  includes net other taxes  on production  (i.e. less other  subsidies on 
production). In order to make the transition from basic prices to purchasers' prices (or vice 
versa; see para 9.34.), the various taxes on products  should be added and the subsidies on 
products should be deducted (or vice versa). 

9.44.  VAT may be deductible, non-deductible or just not applicable: 

Deductible VAT usually applies to most of intermediate consumption,  most of gross 
fixed capital formation and part of changes in inventories. 

Non-deductible  VAT  often  applies  to  final  consumption  expenditure,  part  of  gross 
fixed  capital  formation,  part  of  changes  in  inventories  and  part  of  intermediate 
consumption. 

VAT is in general not applicable for: 

* 

* 

* 

exports (at least those to countries outside the EU); 

any goods or services subject to a zero rate of VAT regardless of their use; 

any  producers  exempted  from  VAT  registration  (small  businesses,  religious 
organizations, etc.). 

3 1 6-

9.45.  VAT  is  recorded  net  in  the  ESA:  all  supplies  are  valued  at  basic  prices,  i.e.  excluding 
invoiced VAT; intermediate and final uses are recorded at purchasers' prices, i.e. excluding 
deductible VAT. 

9.46. 

Table IX.8 on taxes less subsidies on products is simplified,  because: 

the  different  types  of taxes  on products  are not  distinguished  and  subsidies  are not 
shown separately; 

different  tax rates and subsidies can apply to different  distribution channels; the latter 
should  therefore  also  be  distinguished  when  relevant  and  sufficient 
information 
exists. 

9.47. 

Taxes and subsidies on products are the amounts due for payment only when evidenced by 
tax assessments, declarations, etc. or the amounts actually paid (see para 4.27.). Taxes (and 
subsidies)  on  products  are  usually  estimated  by  product  by  applying  the  official  tax 
(subsidy)  rates  to  the  various  flows.  Afterwards  an  analysis  should  be  made  of  the 
differences  with the tax assessments or the amounts actually paid. 

Some of  these  differences  indicate that  the  initial  estimate  of taxes  on products  does 
not comply to the ESA definitions: 

* 

* 

in case of exemption the initial estimate of taxes on products  should  therefore 
be lowered; 

in  case  of  evasion  of  the payment  of  taxes  on  products  (e.g.  the  payment  of 
taxes  is  compulsory  but there  is  no tax  assessment),  the  estimate  of  taxes  on 
products should therefore be lowered; 

* 

in case of fines the estimate of taxes on products should be increased. 

Changes  in  the  estimates  of  taxes  on  products  has  concomittant  effects  on  variables 
estimated by adding up or deducting the estimate of taxes on products. For example, output 
at basic prices of a specific  product  group may be estimated  by deducting  inter  alia taxes 
on products from  the estimated use at purchasers' prices. However, an estimate of output at 
basic prices may also be combined with inter alia estimates of taxes on products to arrive at 
an estimate of uses at purchasers' prices. 

Several  other  types  of differences  should  not  be accounted  for  in the  supply  and use 
table: 

* 

* 

differences  in timing,  e.g.  payments  may  relate  to  tax  assessments  of  several 
years; 

enterprises  being  unable to  pay  (bankruptcies):  this  should  be  recorded  as an 
other  change  in  the  volume  of  financial  assets  and  liabilities,  i.e.  not  in  the 
supply and use table. 

In some  instances, the differences  may also  indicate that the initial estimate  for  taxes 
and  subsidies  on products  is subject  to  serious error,  e.g. because the output  of some 
product  is  underestimated.  Then  also  modifications  of  the  estimates  of  the  flows  of 
goods and services can be justified. 

3 1 7-

9.48. 

9.49. 

9.50. 

9.51. 

In the  transition  from  uses by product  at purchasers'  prices to  basic  prices,  the  modification 
of the  initial  estimate  of taxes and  subsidies  on products  may  be  shown  as  a separate  item. 
However,  for  all  input-output  calculations  it  will  be  necessary  to  allocate  this  modification 
by  product,  even  if  this  can  only  be  based  on  a  simple  mathematical  device  (e.g. 
proportional  allocation). 

The  use  table  IX.6  does  not  show  to  what  extent  the  goods  and  services  used  have  been 
produced  domestically  or  imported.  This  information  is necessary  for  all  analyses  in  which 
the  link  between  supply  and use of goods and  services  within  the  national  economy  plays a 
role.  A  case  in  point  is  the  analysis  of  the  impact  of  changes  in  exports  or  final 
consumption  expenditure  on  imports,  domestic  production  and  related  variables  such  as 
employment.  In  fact,  it  applies  to  most  analyses  indicated  in  paras  9.14.  and  9.15.  The 
input-output  framework  therefore  contains  also  a  use  table  for  imported  products  and  one 
for  domestically  produced  goods and services (see tables  IX.9 and IX. 10). 

The  use  table  for  imported  products  should  be  compiled  by  exploiting  all  information 
available  on  the  uses  of  imports,  e.g.  for  some  products  the  major  importing  enterprises 
may  be  known  and  for  some  producers  information  on  the  amount  of  imports  may  exist. 
However,  in  general,  direct  statistical  information  on  the  use  of  imports  is  scarce.  This 
information  has therefore  usually  to be supplemented  by assumptions  by product  group. 

The  use  table  for  goods  and  services  produced  domestically  can  then  be  obtained  by 
deducting  the use table for  imported products  from  the general  use  table. 

In  order  to  serve  more  specific  purposes, the  supply  and  use tables  presented  above  can  be 
modified  by  introducing  alternative  and  supplementary  classifications.  Important  cases  in 
point  are: 

more  detailed  product and  industry  classifications  based  on national  classifications  or 
to  take  account  of  specific  purposes,  e.g.  for  the  analysis  of  the  role  of  research  and 
development  in the national  economy; 

more  detailed  geographical  breakdown  of  imports  and  exports,  e.g.  intra-EU  trade 
subclassified  by  country  and  extra-EU  trade  subclassified  by  economic  regions  and 
some  specific  countries such as the United  States and  Japan; 

classification  of imports into: 

* 

imports of products that are also domestically  produced 

('competitive  imports'); 

* 

imports of products that are not domestically  produced 

('complementary  imports'). 

Both types  of imports  can be expected  to have  a different  relationship  with  and 
importance  for  the  national  economy.  Competitive  imports  can  be  the  subject 
of  analysis  (and  economic  policy)  as  they  may  be  a  substitute  for  domestic 
output;  they  could  therefore  be  incorporated  as  a  separate  category  of 
(potential)  final  use in the use tables. For complementary  imports, analyses  will 
mainly  focus  on  the  impact  of  changes  in  their  prices  or  volume  (e.g.  in  the 
case of an oil crisis) on the national  economy; 

3  IX 

Table IX.9. A use table for imports 

Industries (NACE) 

1  2  3  .... 

...n 

(1) 

2(1) 
(2) 

1 
2 
3 

m 

Products 
(CPA) 

i 

O 

(1) 

For imported products: Intermediate 
consumption at cif values by product and 
by industry 

2(1) 

(2) 

Total interm. consumption of imported 
products by industry 

Final uses 
a)  b)  c)  d)  e)  f) 
(3) 
For imported products: 
Final uses at purchasers' 
prices: 

Final consumption  exp: 
a) by households 
b) by NPISH 
c) by government 

Gross capital  formation: 
d) gr. fixed capital form, 
and valuables 
e) changes in inventories 

f) exports 

Total final uses of 
imported products by 
type 

2(3) 
(4) 

2(1) + 
2(3) 
.(5) 

Total 
imports 

Table IX. 10. A use table at basic prices for domestic output 

Industries (NACE) 

1  2  3  .... 

...n 

0) 

(1) 

For domestic output: Intermediate 
consumption at basic prices by product 
and by industry 

1 
2 
3 

m 

Products 
(CPA) 

2(1) 
(2) 

Final uses 
a)  b)  c)  d)  e)  f) 
(3) 

2(3) 
(4) 

2(1) + 
2(3) 
(5) 

For domestic output: 
Final uses at basic prices: 
Final consumption  exp: 
a) by households 
b) by NPISH 
c) by government 
Gross capital  formation: 
d) gr. fixed capital form, 
and valuables 
e) changes in inventories 

f) Exports 

2(1) 

(2) 

Total interm.cons. of domestic  output at 
basic prices by industry 

Final use of domestic 
output at basic prices 

Use of imported products 

(3) 

Net taxes on products 

. 

2(1)+  (3)+ (4) 
Comp.ofempl. 
Other net taxes on 
production 
Cons, of fixed  capital 
Oper. surplus, net 
2(5) 
2(1)+  (3)+2 (5) 
Fixed capital  formation 
Fixed capital stock 
Labour inputs 

(4) 

(5) 

(6) 

(7) 
(8) 

(9) 

Total interm. cons, of imported products 
by industry 
Net taxes on products for  intermediate 
consumption by industry. 

Final use of imported 
products at basic prices 
Net taxes onproducts for 
final use 

Total interm. cons, at purch.p. by industry 

Total final uses by type 

Components of value added by industry 

Value added by industry 
Output at basic prices by industry 

Total 
dom. 
output. 
Total 
imports 
Total net 
taxes on 
products 
Total use 

classification  of compensation  of employees  by  criteria  such  as  level  of  education, 
part-time/full-time,  age and sex. This classification  could then also be applied to the 
supplementary  information  on employment.  In  this  way,  the  supply  and  use  tables 
can also be used for all kinds of analyses of the labour market; 

breakdown of compensation of employees into: 

* 

wages and salaries, ofwhich: 

social contributions by employees (global estimation of this concept may be necessary 
when the social contribution of an employee depends not only on the wage and salary 
but also on, e.g. the other revenues of the employee, the age and the marital status); 

* 

employers' social contributions; 

This  breakdown  permits  analysis  of the  role  of social  contributions  for  the price of 
labour inputs and the shifting  of this burden towards gross operating surplus; 

classification  of  final  consumption  by  purpose  (for  households:  COICOP  and  for 
government: COFOG). The functional  classification  of these expenditure enables the 
impact of each function  on the rest of the economy to be assessed.  For example, the 
importance  of public and private expenditure  on health  care,transport  and  education 
can  then  be  assessed.  Another  case  in  point  is  the  analysis  of  the  impact  of 
government  expenditure  on  defence  for  some  domestic  industries,  in  particular  the 
producers of aircraft, trucks and weapons; 

reclassification  of fixed capital formation and fixed capital stock for fixed assets that 
are rented out by the owner, e.g. in the case of operating leasing: the fixed assets can 
be recorded as if owned by the user (unlike the standard treatment  in the ESA). The 
purpose  of this reclassification  is to  make the  cost  structures  of  industries  that  rent 
fixed  assets  and  those  that  own  similar  fixed  assets  comparable.  For  a  consistent 
accounting  treatment,  this  reclassification  requires  also  the  modification  of  the 
intermediate consumption of the lessor and the output of the lessee by amount of the 
rent of the fixed asset; 

reclassification  of employment and compensation of employees for labour contracted 
out  and  persons  working  via  temporary  employment  agencies:  the  purpose  of  this 
reclassification  is  to  make  the  cost  structure  of  industries  more  comparable  by 
recording  persons  as  employees  in  the  industries  'where  they  actually  work'.  This 
reclassification  also  amounts  to  a  modification  of  the  concepts  of  intermediate 
consumption and output of the industries involved. 

- 3 21 

TABLES LINKING THE SUPPLY AND USE TABLES TO THE SECTOR ACCOUNTS 

9.52. 

The  information  in  the  supply  and  use  tables  should  be  linked  to  the  sector  accounts, to 
ensure that the supply and use table is consistent with the sector accounts. This is achieved 
by  introducing  a table with variables  cross-classified  by  industry  and by  sector  (see table 
IX. 11). 

Table IX.11. Table linking the supply and use tables to the sector accounts 

Industries  (NACE) 

1  2  3 

(1) 

£(1) 

(2) 

I.  Non-financial  corporations 

Total output 

Market output 

Output for  own final use 

Other non-market  output 

Intermediate  consumption 

Gross value added 

Compensation  of  employees 

Other net taxes on production 

Consumption of fixed capital 

Operating  surplus,  net 

Gross fixed  capital  formation 

(1) 

II.  Financial  corporations 

Total  output 

Gross fixed capital  formation 

m.  General  government 

rV.  Households 

V.  NPISH 

Total of sectors 

Output 

Gross  fixed  capital  formation 

(2) 

"22 

SYMMETRIC  INPUT-OUTPUT  TABLES 

9.53. 

9.54. 

9.55. 

9.56. 

In the ESA, the product-by-product input-output table is the most important symmetric 
input-output table and this table is described here. 

The product-by-product  input-output table (see tables IX.4 and IX. 12) can be compiled by 
converting the supply and use tables, both at basic prices. This involves a change in format, 
i.e.  from  two  asymmetric  tables  to  one  symmetric  table  (see  also  para  9.09.).  The 
conversion can be divided into three steps: 

(1)  allocation of secondary products in the supply table to the industries ofwhich they are 

the principal products; 

(2)  rearrangement of the columns of the use table from inputs into industries to inputs into 

homogeneous branches (without aggregation of the rows); 

(3)  aggregation of the detailed products (rows) of the new use table to the homogeneous 

branches shown in the columns, if appropriate. 

Step (1) involves transfers of outputs in the form of secondary products in'the supply table. 
Since secondary products appear as "off-diagonal"  entries in the supply table, this kind of 
transfer  is  a  comparatively  simple  matter.  These  secondary  products  are  treated  as 
additions  into the industries  for which they are principal and removed from the  industries 
in which they were produced. 

Step (2) is more complicated, as the basic data on inputs relate to industries and not to each 
individual  product  produced  by  each  industry.  The  kind  of  conversion  to  be  made  here 
entails the transfer  of inputs associated with secondary outputs from the industry  in which 
that  secondary  output  has  been  produced  to  the  industry  to  which  they  principally 
(characteristically)  belong.  In  making  this  transfer,  two  different  approaches  might  be 
taken: 

by means of supplementary statistical and technical  information; 

by means of assumptions. 

9.57. 

Supplementary  statistical and technical information  should be utilized as much as possible. 
For example, it might be possible to obtain specific  information  on the inputs required to 
produce  certain kinds of output. However,  information  of this kind  is usually  incomplete. 
Ultimately  it  will  usually  be  necessary  to  resort  to  simple  assumptions  to  make  the 
transfers. 

9.58. 

The  assumptions  used  to  transfer  outputs  and  associated  inputs  hinge  on  two  types  of 
technology assumptions: 

(1) 

industry  technology,  assuming  that  all  products  produced  by  local  KAUs  in  an 
industry are produced with the same input structure; 

(2)  product  technology,  assuming  that  all  products  in  a  product  group  have  the  same 

input structure, whichever industry produces them. 

323 -

Table IX. 12. A symmetric input-output table at basic prices (product by product) 

Product (CPA) 

1  2  3  .... 

...n 

(1) 

2(1) 
(2) 

(1) 

Intermediate consumption at basic prices 
by product and  byproduct 

Products 
(CPA) 

1 
2 
3 

n 

2(1) 

Taxes on products 
Subsidies on products (-) 
1(1)+  (3) 

Comp.ofempl. 
Other net taxes on 
production 
Cons, of fixed capital 
Oper. surplus, net 
2(5) 
2(1)+  (3)+2 (5) 
Imports 
(7)+(8) 
Fixed capital  formation 
Fixed capital stock 
Labour inputs 

(2) 

(3) 

(4) 

(5) 

(6) 
(7) 
(8) 
(9) 

(10 
) 

Total interm.cons.at basic prices by 
product 
Net taxes on products by product 

Total interm. cons, at purchasers' prices by 
product 

Components of value added by product 

Value added by product 
Output at basic prices by product 
Imports cif by product 
Supply at basic prices by product 

2(3) 
(4) 

2(1) + 
2(3) 
(5) 

Total use 
at bas.pr. 
Tot.net 
tax.prod. 
Total use 
at purch.p. 

Final uses 
a)  b)  c)  d)  e)  f) 
(3) 

Final uses at basic' 
prices: 
Final consumption  exp: 
a) by households 
b) by NPISH 
c) by government 

Gross capital  formation: 
d) gr. fixed  capital  form, 
and valuables 
e) changes in inventories 

f) Exports 
Final use at basic prices 
by type 
Net taxes on products by 
type of final use 
Total final uses by type 
at purchasers' prices 

-

The  choice  of the  best  assumption  to apply  in each  case  is not  an  easy  one.  It must,  in  fact, 
depend  on  the  structure  of  national  industries,  e.g.  the  degree  of  specialization,  and  on  the 
homogeneity  of  the  national  technologies  used  to  produce  products  within  the  same 
product  group.  For  example,  boots  may  be  made  from  leather  and  from  plastic.  Assuming 
the  same  product  technology  for  all  boots  (or,  when  a  higher  level  of  aggregation  is  used, 
e.g.  footwear)  can  thus  be  problematic;  assuming  industry  technology  can  then  be  a  better 
alternative. 

Simple  application  of  the  product  technology  assumption  has  often  shown  results  that  are 
unacceptable,  insofar  as  the  input-output  coefficients  sometimes  generated  are  improbable 
or  even  impossible  (for  example,  negative  coefficients).  Improbable  coefficients  may  be 
due  to  errors  in  measurement  and  to  heterogeneity  (product-mix)  in  the  industry  of  which 
the  transferred  product  is  the  principal  product.  This  might  be  overcome  by  making 
adjustments  based  on  supplementary  information  or  exploiting  informed  judgement  to  the 
fullest  extent  possible.  Of course, another  solution  is to apply  the  alternative  assumption  of 
industry  technology.  In practice, employing  mixed  technology  assumptions  combined  with 
supplementary  information  is  the  best  strategy  for  compiling  symmetric  input-output 
tables. 

9.59. 

9.60. 

The  importance  of  the  role  played  by  the  assumptions  depends  on  the  extent  of  secondary 
production,  which  in turn depends not only  on how production  is organized  in the  economy 
but  also  on  the  product  breakdown.  The  more  detailed  the  product  breakdown,  the  more 
secondary  output  can be  expected. 

Step  (3)  involves  the aggregation  of the products  in the new use table  to the  industries  that 
generate  them  according  to  step  (1) and  this  results  in a symmetric  input-output  table  with 
products  cross-classified  against  by-products.  While  these  amendments  start  from  data 
based  on  local  KAUs, the resulting  entries  are made  to  conform  to  those  of  "homogeneous 
units of  production". 

9.61. 

The  classifications  in  the  symmetric  input-output  table  coincide  with  those  in  the  supply 
and  use  tables,  as  the  former  is  a  transformation  of  the  latter  (except  of  course  the 
classification  by  industry/homogeneous branch). 

9.62. 

The  symmetric  input-output  table IX. 12 should be accompanied  by at least two tables: 

a matrix  showing  the use of imports; the format  of this table  is the  same  as that  of the 
import  table  supporting  the  supply  and  use  tables  (see  table  IX. 10),  except  that  the 
product-by-product  classification  is used; 

a  symmetric  input-output table for  domestic  output (table IX. 13). 

The  latter  table  should  be  used  in  calculating  the  cumulated  coefficients,  i.e.  the  Leontief-
inverse.  In  terms  of  table  IX. 13,  the  Leontief-inverse  is  the  inverse  of  the  difference 
between  the  identity  matrix  I and  the  matrix  in  cell  (1,1). The  Leontief-inverse  could  also 
have  been  calculated  for  domestic  output  and  competitive  imports  (see  para  9.51.).  It 
should  then  be  assumed  that the  competitive  imports  have  been  produced  in  the  same  way 
as the competing  domestic  produce. 

-  325  -

(21) 

Table IX.13. A symmetric input-output table for domestic output (product by product). 

Products (CPA) 

1  2  3  .... 

...n 

(1) 

2(1) 
(2) 

Final uses 
a)  b)  c)  d)  e)  f) 
(3) 

2(3) 
(4) 

2(1) + 
2(3) 
(5) 

Products 
(CPA) 

1 
2 
3 

n 

(1) 

For domestic output: Intermediate 
consumption at basic prices by product 
and by product 

For domestic output: 
Final uses at basic prices: 
Final consumption  exp: 
a) by households 
b) by NPISH 
c) by government 
Gross capital  formation: 
d) gr. fixed capital  form, 
and valuables 
e) changes in inventories 

f) Exports 

2(1) 

(2) 

Total interm.cons. of domestic output at 
basic prices by product 

Final use of domestic 
output at basic prices 

Use of imported products 

(3) 

Net taxes on products 

2(1)+  (3)+ (4) 
Comp.ofempl. 
Other net taxes on 
production 
Cons, of fixed capital 
Oper. surplus, net 
2(5) 
2(1) + (3) +2 (5) 
Fixed capita! formation 
Fixed capital stock 
Labour inputs 

(4) 

(5) 

(6) 

(7) 
(8) 

(9) 

Total interm. cons, of imported products 
by product 
Net taxes on  products for  intermediate 
consumption by product 

Final use of imported 
products at basic prices 
Net taxes on products for 
final use 

Total interm. cons, at purch.p. by product 

Total final uses by type 

Components of value added by product 

Value added by industry 
Output at basic prices by industry 

Total 
dom. 
output 
Total 
imports 
Total net 
taxes on 
products 
Total use 

CHAPTER X 

PRICE AND VOLUME MEASURES 

- 3 27 

INTRODUCTION 

10.01. 

In a system of economic accounts, all the flows and stocks are expressed in monetary units. 
The  monetary  unit  is  the  only  common  denominator  which  can  be  used-to  value  the 
extremely diverse transactions recorded in the accounts and to derive meaningful  balancing 
items. 

The problem when using the monetary unit as a measuring unit is that this unit is neither a 
stable nor an international  standard.  A major  concern in economic analysis  is to measure 
economic  growth  in  volume  terms  between  different  periods.  It  is  then  necessary  to 
distinguish, in the value changes for certain economic aggegates, the changes arising solely 
from price changes from the remainder which is called the change in "volume". 

Economic  analysis  is  also  concerned  with  comparisons  in  space,  i.e.  between  different 
national economies. These focus on international comparisons in volume terms of the level 
of production and income, but the level of prices is also of interest. It is therefore necessary 
to  factor  the  differences  in  value  of  economic  aggregates  between  pairs  or  groups  of 
countries  into  components, which reflect  the differences  in volume  and the differences  in 
price. 

10.02.  When  time  comparisons  of flows and  stocks  are  concerned,  equal  importance  should  be 
attached  to  the  accurate  measurement  of  changes  in  prices  and  in  volumes.  In  the  short 
term,  observation  of  price  changes  is  of  no  less  interest  than  the  measurement  of  the 
volume of supply and demand. On a longer term basis, the study  of economic growth has 
to  take  account  of  movements  in  the  relative  prices  of  the  different  types  of  goods  and 
services. 

The  primary  objective  is  not  simply  to  provide  comprehensive  measures  of  changes  in 
prices  and  volumes  for  the  main  aggregates  of  the  system  but  to  assemble  a  set  of 
interdépendant  measures  which  make  it  possible  to  carry  out  systematic  and  detailed 
analyses of inflation  and economic growth and fluctuations. 

10.03.  The general rule for comparisons in space is that accurate measures must be made for both 
the volume and the price components of the economic  aggregates. As the spread  between 
the Laspeyres and Paasche formulae  often  is significant  in spatial comparisons, the Fisher 
index formula is the only acceptable one for this purpose. 

10.04.  The  economic  accounts  have  the  advantage  of  providing  a  suitable  framework  for 
constructing  a system  of volume and price  indices  as well  as ensuring  the consistency  of 
the statistical data. 

The advantages of an accounting approach can be summarized as follows: 

1) On a conceptual level, the use of an accounting framework  covering the entire economic 
system requires the prices and physical units for the different  products and flows  in the 
system to be specified  consistently.  In a framework  of this type, it is imperative that, for 
example, the price and volume concepts for a given group of products should be defined 
identically in both resources and uses. 

328 

2)  On a statistical  level, the use of the economic accounts  framework  imposes  accounting 
constraints  which  must  be  respected  at  both  current  and  constant  prices  and  will 
normally  require  some  adjustments  to be made  to  ensure  consistency  of  the  price  and 
volume data. 

3)  Furthermore,  the  creation  of  an  integrated  system  of  price  and  volume  indices  in  the 
context  of  a  system  of  economic  accounts  provides  the  national  accountant  with  extra 
checks.  Assuming the existence of a balanced system of supply and use tables at current 
prices, the construction of such balanced tables at constant prices means that a system of 
implicit  price  indices can be automatically  derived.  Examination  of the plausibility  of 
these  derived  indices  can  lead to revision  and  correction  of the  data  at  constant  prices 
and even, in some cases, of the values at current prices. 

4)  Finally, the accounting approach permits themeasurement of price and volume changes 
for certain balancing items in the accounts, the latter being derived by definition  from 
the other elements in the accounts. 

10.05.  Despite the advantages  of an integrated  system based on the balance - both overall and by 
industry  - of transactions  in goods  and  services, it has to  be  acknowledged  that  the price 
and volume indices thus obtained do not meet all needs or answer all possible questions on 
the subject  of change in prices or volume.  Accounting  constraints and the choice of price 
and  volume  index  formulae,  although  essential  for  the  construction  of  a coherent  system, 
can sometimes be a hindrance. There is also a need for information  for shorter periods such 
as months or quarters. In these cases, other forms  of price and volume  indices may prove 
useful. 

SCOPE OF PRICE AND VOLUME INDICES IN THE ACCOUNTS SYSTEM 

10.06.  Amongst the flows, which appear in economic accounts at current prices, there are some -
mainly concerning products - where the distinction between changes in price and volume is 
similar  to  that  made  at  micro-economic  level.  For  many  other  flows  in  the  system,  the 
distinction is far less obvious. 

In  the  former  case,  the  flows  cover  a  group  of  elementary  transactions  in  goods  and 
services,  the value  of  each  being  equivalent  to the product  of a  number.of physical  units 
and their  respective  unit price.  In this case it is sufficient  to know the breakdown  of the 
flow in question into elementary transactions in order to determine its average variation in 
price and volume. 

In  the  latter  case  -  which  concerns  a  number  of  transactions  relating  to  distribution  and 
financial  intermediation as well as to balancing items such as value added - it is difficult  or 
even impossible to separate directly current values into price and volume components and 
special solutions have to be adopted. 

- 3 29 

There  is also  a need  to measure  the real purchasing  power  of a number  of  aggregates,  such 
as  compensation  of employees, disposable  income  of households  or National  Income.  This 
can  be  done,  for  example,  by  deflating  them  by  means  of  an  index  of  the  prices  of  the 
goods and  services which can be bought with  them. 

10.07. 

It  must  be  emphasised  that  the  objective  and  the  procedure  followed  in  the  last  case  is 
fundamentally  different  from  those  in  the  other  two  cases.  For  these  an  integrated  system 
of  price  and  volume  indices  can  be  established,  which  is  useful,  amongst  other  things,  for 
measuring  economic  growth.  The  valuation  in  real  terms  of  flows  of  the  last  type  uses 
price  indices  of  flows  other  than  those  considered,  which  may  differ  according  to  the 
objectives  of the analysis:  it can  only be a convention  and cannot  be done  in  a unique  way 
within  an integrated  system  of price and volume  indices. 

The integrated  system  of price and volume  indices 

10.08.  The  systematic  division  of  changes  in  current  values  into  the  components  "changes  in 
price" and  "changes  in volume"  is restricted  to  flows  representing  transactions,  recorded  in 
the goods and  services accounts  (0) and  in the production  accounts  (I); it is carried  out  both 
for  the  data  relating  to  individual  industries  and  for  those  relating  to  the  total  economy. 
Flows representing  balancing  items, e.g.  value added,  cannot  be directly  factored  into  price 
and  volume  components;  this  can  only  be  done  indirectly  using  the  relevant  flows  of 
transactions. 

The use of the  accounting  framework  imposes  a double constraint  on the calculation  of  the 
data: 

1)  the  balance  of  the  goods  and  services  account  must  for  any  sequence  of  two  years  be 

obtained  at both  constant  and current prices; 

2)  each  flow  at the level of the total economy  must be equal to the sum of the 

corresponding  flows  for the various  industries. 

A third  constraint,  not  inherent  in the use of an accounting  framework  but  resulting  from  a 
deliberate  choice,  is that every  change  in the  value of transactions  must  be  attributed  either 
to a change in price or to a change in volume, or to a combination  of the two. 

If  these  three  requirements  are  fulfilled,  valuation  of  the  goods  and  services  accounts  and 
production  accounts  at  constant  prices  means  that  an  integrated  set  of  price  and  volume 
indices can be  obtained. 

10.09.  The items to be considered  when constructing  such an integrated  set are as  follows: 

a) 

Transactions  in  products 

Output 

Market  output 

Output  for own  final  use 

Other  non-market  output 

Intermediate  consumption 

Final  consumption  expenditure 

P. 11 

P. 12 

P. 13 

P.l 

P.2 

P.3 

3 3 0-

Individual final consumption expenditure 

Collective final consumption expenditure 

Actual final consumption 

P.4 

Actual final individual consumption 

Actual final collective consumption 

Gross capital formation 

P.5 

Gross fixed capital  formation 

Changes in inventories 

Acquisition less disposals of valuables 

Exports of goods and services 

P.6 

Exports of goods 

Exports of services 

Imports of goods and services 

P.7 

Imports of goods 

Imports of services 

b) 

Taxes and subsidies on products 

P.31 

P.32 

P.41 

P.42 

P.51 

P.53 

P.61 

P.62 

P.71 

P.72 

P.52 

Taxes on products, excluding VAT 

Subsidies on products 

VAT on products 

D.21 part 

D.31 

D.21 part 

c) 

d) 

Consumption of fixed capital 

K. 1 

Balancing items 

Value added at basic prices 

GDP at market prices 

B.l 

B. lg 

Price and volume indices for other aggregates 

10.10. 

In addition to the price  and volume measures considered  above, the  following  aggregates 
can also be decomposed  into their own price and volume components. The objectives  for 
these measures vary. 

e) 

f) 

g) 

Inventories 

Stock of produced fixed assets 

Compensation of employees 

AN. 12 

AN. 11 

D.1 

$31  -

Inventories  at  the  beginning  and  at  the  end  respectively  of  each  period  may  have  to  be 
calculated  at constant prices  in order to estimate the volume  change  in  inventories  during 
the period. 

The  stock  of  produced  fixed  assets  has  to  be  calculated  at  constant  prices  to  estimate 
capital output ratios, as well as to obtain a basis for estimating consumption of fixed capital 
at constant prices. 

Compensation  of  employees  has  to  be  calculated  at  constant  prices  for  purposes  of 
measuring  productivity  and  in some  instances  also  when  outputs  have  been  estimated  by 
using constant price data on inputs. 

10.11.  Compensation  of  employees  is  an  element  of  income.  For  the  purpose  of  measuring 
purchasing  power  it can be valued  in real  terms  by deflating  with  an  index  reflecting  the 
prices of products purchased by employees. Other income elements too, such as disposable 
income  of  households  and  National  Income,  can  be  measured  in  real  terms  in  the  same 
general way. 

GENERAL PRINCIPLES OF MEASURING PRICE AND VOLUME INDICES 

Definition  of prices and volumes of market products 

10.12.  The  creation  of  an  integrated  system  of  price  and  volume  indices  is  based  on  the 
assumption that, at the level of a single homogeneous good or service, value (v) is equal to 
the price per unit of quantity (p), multiplied by the number of quantity units (q), that is 

v = pq. 

10.13.  Definition: 

Price is defined  as the value of one unit of a product, for which the quantities are  perfectly 
homogeneous  not  only  in  a  physical  sense  but  also  in  respect  of  a  number  of  other 
characteristics  described  in  para  10.16.  To  be  additive  in  an  economic  sense,  quantities 
must be identical and have the same unit price. For each aggregate of transactions ill goods 
and services shown in the accounts, price and quantity measures have to be constructed so 
that 

value index = price index * volume index. 

This  means  that  each  and  every  change  in  the  value  of  a  given  flow  must  be  attributed 
either to a price change or to a change in volume or to a combination of the two. 

10.14.  For transactions in goods it is in many cases easy to define the physical unit involved in the 
transaction and hence the price per unit. In a number of cases, e.g. for unique capital goods, 
it is more difficult  and special solutions have to be adopted. 

-  332 

For  transactions  in  services  it  is  frequently  more  difficult  to  specify  the  characteristics 
which  determine  the  physical  units  and  differences  of  opinion  on  the  criteria  to  be  used 
may  arise.  This  may  concern  important  industries  such  as  financial  intermediation 
services,  wholesale  and  retail  trade,  services  to  enterprises,  education,  research  and 
In  view  of  the  growing  importance  of  the  service 
development,  health  or  recreation. 
industries, it is essential to find common solutions to the problem of the choice of physical 
units, even if they are only conventional ones. 

Differences  in quality and differences  in price 

10.15.  The  physical  and  other  characteristics  to  be  taken  into  consideration  when  identifying 
products constitute differences  in quality and play an important role, while at the same time 
raising difficult  statistical problems. 

The  fact  is  that  for  many  goods  and  services  intended  for  a  specific  purpose  there  exist 
several varieties of differing  qualities, each with its own price. 

10.16.  Definition: 

Differences  in quality are reflected by the following  factors: 

i.  Physical characteristics. 

ii.  Deliveries in different  locations. 

iii. Deliveries at different  times of the day or at different  periods of the year. 

iv. Differences  in conditions of sale or the circumstances or environment in which goods or 

services are supplied. 

With  given  physical  characteristics,  the  differences  in  the  other  factors  imply  that  the 
physical units are not identical in an economic sense, and that the value differs  amongst the 
units.  These differences  in unit values are considered to be differences  in volume and not 
as differences  in price. 

In reality, the payment made when a good is purchased covers not only the price of a good 
but also the price  of the  services  associated  with the supply  of goods. This means that in 
principle  identical  goods  sold  at different  prices  and in different  circumstances  should  be 
considered  to  be  different  products.  This  conclusion  is  explicitly  acknowledged  in  the 
supply and use tables, where the value of trade and transport margins - which represent the 
main services associated with the provision of goods - is recorded separately. 

10.17.  Within  a  given  market  and  in a single period,  the coexistence  of  several  unit  values  can, 
except  in the cases described  in para  10.19, be considered  as evidence of the existence of 
quality differences.  Accordingly, the various models of cars and even different  versions of 
the same model must be treated as different  products similarly, a distinction must be made 
between first-class and second-class railway journeys. 

For  the  purposes  of  calculating  price  and  volume  measures,  it  is  necessary  to  use  as  a 
detailed  product  classification  as  possible  so  that  each  product  identified  has  maximum 
homogeneity, regardless of the level of detail used in the presentation of results. 

333  -

10.18.  The dimension of quality  has to be taken  into account also when changes over  time are to 
be  recorded.  The  change  in quality  due, for  example, to the  modification  of  the physical 
characteristics  of a product must be considered  to be a change in volume  and  not in price. 
Also the  effects  of aggregation  have to be considered.  Variations  in  the  composition  of a 
flow  which  imply,  for  example,  a  shift  in  favour  of  higher  average  quality  have  to  be 
recorded  as a volume  increase and not as a price  increase. It follows  that  for  outputs, the 
effect  of  shifts  between  markets  with  differing  prices,  e.g.  domestic  vs  external,  or 
industrial uses vs markets for consumer products, will be treated as changes in volume and 
not as changes in price. It also follows that a price change for a given flow  can occur only 
as result of changes in prices at the level of individual transactions. 

10.19.  Definition: 

The existence of observed unit value differences  is not to be considered  as an indicator of 
differences  in quality when the following  circumstances apply, namely lack of  information, 
price discrimination reflecting  limitations in freedom  of choice and the existence of parallel 
markets. In these cases, the unit value differences  are considered as differences  in price. 

10.20.  Lack  of  information  means  that  purchasers  may  not  always  be  properly  informed  about 
existing  price  differences  and  may  therefore  inadvertently  buy  at  higher  prices.  This  - or 
the opposite - may occur also in situations where individual buyers and sellers negotiate or 
bargain  over  the  price.  On the  other  hand,  the  difference  between  the  average  price  of a 
good purchased  in a market or a bazaar, where such bargaining often  occurs, and the price 
of the same good sold in a different  type of retail outlet, such as a department store, should 
normally be treated as reflecting differences  in quality due to different  sales conditions. 

10.21.  Price discrimination  implies that sellers may be in a position to charge  different  prices to 
different  categories  of purchasers  for  identical  goods  and  services  sold  under  exactly  the 
same circumstances. In these cases, there is no or limited freedom  of choice on the part of a 
purchaser  belonging to a special category. The principle adopted  is that  variations in price 
are to  be  regarded  as price  discrimination  when  different  prices  are  charged  for  identical 
units  sold  under  exactly  the  same  circumstances  in  a  clearly  separable  market.  Price 
variations due to such discrimination do not constitute differences  in volume. 

The possibility of the retrading of goods in a given market implies that price discrimination 
for  these  types  of  products  in  most  cases  can  be  assumed  to  be  insignificant.  The  price 
differences  that  may  exist  for  goods  can  normally  be  interpreted  as  due  to  lack  of 
information or to the existence of parallel markets. 

In service industries, e.g. in transportation, producers may charge lower prices to groups of 
individuals with typically lower incomes, such as pensioners or students. If these are free to 
travel  at  whatever  time  they  choose,  this  must  be  treated  as  a  price  discrimination. 
However, if they are charged lower fares on condition that they travel only at certain times, 
typically off-peak  times, they are being offered  lower-quality transportation. 

10.22.  Parallel  markets may  exist  for  several reasons.  Buyers may  be unable to  buy as much as 
they would like at a lower price because there is insufficient  supply available at that price, 
and a secondary, parallel  market, where higher prices are quoted, may exist.  There  is also 
the possiblity  that  a parallel  market  exists, where  sellers can charge  lower  prices  because 
they can avoid  certain taxes. In these cases too, a price variation constitutes a difference  in 
price and not in volume. 

334 

10.23.  A  change  in  the  structure  of  a  flow  affecting  its  total  value  may  occur  when  in  the 
circumstances  of  lack  of  information,  price  discrimination  and  the  existence  of  parallel 
markets identical products are sold at different  prices. 

Suppose that a certain quantity  of a particular  good or service is sold at a lower price to a 
particular category of purchasers without any difference  whatever in the nature of the good 
or  service  offered,  location,  timing  or  conditions  of  sale,  or  other  factors.  A  subsequent 
decrease  in  the  proportion  sold  at  the  lower  price  raises  the  average  price  paid  by 
purchasers  of  the  good  or  service.  This  must  be  recorded  as  a  price  and  not  a  volume 
increase. 

Principles  for  non-market  services 

10.24.  The  establishment  of  a  comprehensive  system  of  price  and  volume  indices  covering  all 
supply  and  uses  of  goods  and  services  encounters  a particular  difficulty  when  measuring 
the output of non-market  services.  These services differ  from  market services in that they 
are not sold at a market price and their value at current prices is calculated  by  convention 
as the sum of the costs incurred. These costs are intermediate consumption,  compensation 
of employees, other taxes less subsidies on production and consumption of fixed capital. 

10.25. 

In the absence of a unit market price, the change in the "unit cost" of a non-market service 
can  be considered  as an approximation  of the change  in the price. If non-market  services 
are consumed on an individual basis, it is in principle possible to estimate quantities which 
are homogeneous and which reflect the utilisation of these services and apply the unit costs 
of a base year to obtain data in constant prices. By such type of output-measurement  it will 
be  possible  to  analyse  changes  in  productivity  for  individual  non-market  services.  For 
collective  services  it  is  generally  not  possible  to  establish  unit  costs  and  quantities 
reflecting  their utilisation.  If attempts are made to account for  changes  in productivity  for 
collective services by indirect methods, users should be made aware of this. 

10.26. 

In the  context  of  the  economic  accounts, it is of prime  importance  to  adopt  the  principle 
that  the  production  and  consumption  of  non-market  services  -  like  the  production  and 
consumption of goods and market services - must be defined  in terms of the actual flows of 
these goods and services and not in terms of final results obtained from their use.  As these 
results depend  on several  other factors  as well, it is not possible to measure, for  example, 
the  volume  of  teaching  services  by  the  rise  in  the  level  of  education,  or  the  volume  of 
health services by the improvement in the health of the population. 

335 

Principles for value added  at basic prices and GDP 

10.27.  Value  added  at  basic  prices,  the  balancing  item  in  the  production  account,  is  the  only 
balancing item to form part of the integrated system of price and volume indices. The very 
special characteristics of this item must, however, be emphasized, as must the  significance 
of its related volume and price indices. 

Unlike the various  flows  of goods and services, value added does not represent  any single 
category  of  transactions.  It  cannot,  therefore,  be  directly  broken  down  into  a  price 
component and a volume component. 

10.28.  Definition: 

Value  added  at  constant  prices  is  defined  as  the  difference  between  output  at  constant 
prices and intermediate consumption at constant prices. 

VA = EP(0)Q(1)-Ip(0)q(l) 

where P and Q are prices and quantities for output and p and q are prices and quantities for 
intermediate  consumption.  The  theoretically  correct  method  to  calculate  value  added  at 
constant  prices  is  by  double  deflation,  i.e.  deflating  separately  the  two  flows  of  the 
production  account  (output  and  intermediate  consumption)  and calculating  the  balance of 
these two revalued  flows. 

10.29. 

In  some  cases, where the  statistical  data remain  incomplete  or not  sufficiently  reliable, it 
may be necessary to use a single indicator. If there are good data on value added at current 
prices, one  alternative  to  double  deflation  is  to  deflate  current  value  added  directly  by a 
intermediate 
price  index  for  output.  This  implies  the  assumption  that  prices  for 
consumption  change  at  the  same  rate  as  for  output.  Another  possible  procedure  is  to 
extrapolate value added in the base year by a volume index for  output. This volume index 
can  be  calculated  either  directly  from  quantity  data  or  by  deflating  the  current  value  of 
output by an appropriate price index. This method in fact assumes that the volume changes 
are the same for outputs and for intermediate consumption. 

For  certain  market  and  non-market  service  industries,  such  as finance, business  services, 
education  or  defence,  it  may  not  be  possible  to  obtain  satisfactory  estimates  of  price  or 
volume changes for output. In these cases the movements of value added at constant prices 
can  be  estimated  by  means  of  changes  in  compensation  of  employees  at  constant  wage 
rates and consumption of fixed capital at constant prices. Compilers of data may be  forced 
to  adopt  such  expedients,  even  when  there  is  no  good  reason  to  assume  that  labour 
productivity remains unchanged in the short or long term. 

10.30.  By  their  very  nature,  therefore,  the  indices  of  volume  and  price  for  value  added  are 

different  from the corresponding indices for the flows of goods and services. 

336 

The  same  applies  to  price  and  volume  indices  of  aggregate  balancing  items  such  as  Gross 
Domestic  Product  at  market  prices.  The  latter  is  equivalent  to  the  sum  of  all  the  values 
added  minus  FISIM  -  i.e.  to  an  addition  of  balancing  items  -  plus  taxes  less  subsidies  on 
products  and  from  another  point  of  view  can  be  seen  to  represent  the  balancing  item 
between total  final  uses and  imports. 

PROBLEMS  IN THE APPLICATION  OF THE  PRINCIPLES 

10.31.  To  apply  the  principles  of  price  and  volume  to  the  different  flows  in  the  system  it  is 
necessary  to  specify  the  solutions  to  be  adopted  for  a  number  of  problems  which  arise  in 
this  connection. 

General  application 

10.32.  The  need  to  determine  which  of  the  various  factors  described  in  the  previous  section 
explain differences  in price arises whenever  one  studies time  series of value  data and has to 
separate  price  changes  and  volume  changes.  It  follows  that,  even  at  a  fine  level  of  detail, 
series  of  quantity  data  may  give  only  crude  measures  of  volume  changes,  as  they  do  not 
properly  reflect  changes  that  may  have  occurred  in  the  mix  of  different  qualities.  This 
means  that,  for  example,  a  constant  number  of  physical  units, recorded  for  a  certain  flow, 
understates  the  volume  change  if  the  composition  has  changed  in  favour  of  units  with 
higher  quality.  This  shift  implies  a change  in  average  quality  and  must  be  registered  as  an 
increase  in the volume index. In general, the best method  of estimating  volume  changes  for 
flows  of goods  and  services  is deflating  value  data  with  price  indices.  Since  all  changes  in 
average quality are correctly reflected  in the value  series, dividing  by  a representative  price 
index, which is adjusted  for  quality  changes, gives a correct volume  index. 

10.33.  Deflation  with  price  indices  may  not  always  be best  in practice  and  other  methods  have  to 
be adopted.  Value  series may, for  example, have been established  by  multiplying  price  and 
quantity  data  and  constant  price  data  can  then  be  obtained  by  using  prices  from  the  base 
year. Alternatively,  some value  series may be of an inferior  quality  or difficulties  may  exist 
in  obtaining  reliable  price  indices.  Estimates  can  then  be  made  on  the  basis  of  quantity 
indicators. In these  cases care must  be taken that the quantities  refer  to products  that  are  as 
homogeneous  as possible.  If none  of the methods  described  above  are  applicable,  constant 
price data on outputs may have to be based  on estimates of inputs at constant  prices. 

10.34.  For  non-market  services  the possibility  of  deflating  values  by  using  price  indices  does  not 
exist  and  other  solutions  have  to  be  applied.  These  are  described  in  paragraphs  10.41.  -
10.46.  below. 

Application  to specific  flows 

a) 

Flows  of goods  and  market  services 

10.35.  Of all  the  flows  in the economy,  the changes  in the value  of the  flows  of goods  and  market 
services  are the  most readily  broken  down  into price and volume  changes.  In this context  a 
clear distinction  should  be made  between: 

J  3 

1-

i) 

flows 

representing  transactions  actually  carried out on the market  at a certain  price; 

ii) 

representing  output  for  own  final  use  (e.g.  own-account  production  of 

flows 
agricultural  products  and services  from  owner-occupied  dwellings); 

iii)  flows  whose value is defined  as a balance  between  transactions  in goods  and  services 

(e.g. trade  margins); 

iv) 

flows  whose  value  is  defined  as  a  difference  between  distributive  and/or  financial 
transactions  (e.g. financial  intermediation  services  indirectly  measured  and  insurance 
services). 

10.36.  The  flows  in  category  i)  are  by  far  the  most  numerous  and  commonplace.  Changes  in  the 
values  of these  flows  can,  by their very  nature,  be split  into  volume  and price  changes.  The 
general  method  of  deflating  the  current  value  of  these  flows  by  price  indices  is  applicable 
in  all  cases  where  goods  and  services  can  be  expressed  in  units, the  majority  ofwhich  are 
homogeneous  from  one year to the next. 

10.37.  The  flows  in category  ii), which  are notional  transactions,  are typified  by the  absence  of  an 
actual price  for  the transaction.  This  is the  case  for  such  goods  as agricultural  products  for 
own  final  use and  goods for  fixed  capital  formation  on own-account.  For  services, the  most 
important  type  refers  to  owner-occupied  dwellings.  Values  for  these  imputed  flows  are  to 
be  obtained  by  applying  prices  of  similar  products  when  marketed  and  the  deflator  should 
therefore  be  the  same.  Since  it  is  usually  necessary  to  value  output  of  own-account 
construction  by costs of production  rather than prices, the deflator  has to be adjusted  in  this 
respect. 

10.38.  The  most  important  flows  in  category  iii)  are  those  whose  value  at  current  prices  is 
obtained  as  a difference  between the values  of two  flows  of  goods.  This  arises  in the  case 
of  trade  margins,  whose  value  at  current  prices  is  defined  as  the  difference  between  the 
actual  or  imputed  price  realised  on a good  purchased  for  resale by  the  wholesale  and  retail 
trades  and  the price that would  have to be paid  by the distributor  to  replace the  good  at  the 
time  it  was  sold  or  otherwise  disposed  of.  By  one  method,  estimates  of  trade  margins  at 
constant  prices  can  therefore  also  be made  by  difference,  by  subtracting  the  constant-price 
value  of  goods  bought  for  resale  from  the  constant-price  value  of  goods  resold  by  these 
trades. An  alternative method  of measurement  would  be to  extrapolate  the trade  margins  of 
the  base  year  either  by  the  volume  of  sales  or  by  the  volume  of  purchases  made  by  the 
wholesale  and  retail  trades.  To be  correct,  this  alternative  has  to  take  into  account  the  fact 
is  explicitly 
that 
acknowledged  in the supply and use tables. 

trade  margins  vary  amongst  different  products  and  uses.  This 

10.39.  Category  iii)  also  includes  output  of  travel  agency  services  measured  as  the  value  of 
service  charges  of agencies  and  (fees  and  commission  charges). These  services  can  also  be 
measured  as  the  difference  between  two  flows  -  the  full  payment  made  by  the  purchaser 
and  the  expenditure  made  for  transport  and  accommodation  by  the  producer.  The  volume 
measure  can  be  obtained  as  the  difference  between  these  flows  calculated  at  constant 
prices. Alternatively,  the  fee or commission  can  be defined  as the price  per  unit  of  the  type 
of  transportation  or  accommodation  arranged  and  the  volume  indicator  for  the  service 
charge  would  therefore  move in the same way  as these  flows. 

- 3 38 

10.40.  The  flows  in category  iv) consist  of  financial  intermediation  services,  service  charges  from 
insurance  and  pension  funds  are  also  included.  Financial  intermediation  services  are 
provided  by  banks  and  other  financial  corporations  and  consist  of  lending  money  to 
businesses  or  households,  providing  a  safe  and  convenient  means  of  saving,  safeguarding 
money  and  other  valuables,  buying  and  selling  foreign  currencies,  clearing  cheques, 
providing  general  economic  intelligence,  dealing  in  stocks  and  bonds,  and  offering 
investment  advice. In some cases these services are easily  defined  and  specifically  paid  for, 
e.g.  in the case of renting  space in bank vaults, or when  fees  are charged  in connection  with 
issues  of  stocks,  bonds  or  loans.  The  current  value  of  transactions  can  then  be  defined,  as 
well  as  prices  and  quantities  necessary  for  price  and  volume  measurement.  However,  a 
breakdown 
intermediation  services 
indirectly  measured  and  for  insurance  services  can  usually  only  be  made  on  arbitrary 
grounds  and would  have to be based on  conventions. 

into  price  and  volume  components  for  financial 

b) 

Flows  of non-market  services 

10.41.  The  non-market  services  produced  by  general  government  and  non-profit 

institutions 
serving  households  (NPISH)  cover  a  vast  range  of  services  both  necessary  and  useful  to 
society.  They  fall  into two main  categories: 

a)  Services  provided  to  individuals,  i.e.  whose  consumers  or  beneficiaries  are  individually 
identifiable.  Consumption  of these  services  requires  individual  initiative  on  the  part  of 
those  concerned. 

b)  Pure collective  services, i.e. services which are consumed jointly  by  the 

entire  population. 

10.42.  The  services  provided  to  individuals  can  be  given  to  single  individuals  (e.g. medical  care) 
or  to  groups  of  individuals  (e.g. teaching).  By  their  nature,  these  services  can  be  supplied 
on a market  or a non-market  basis; in many  cases, the  individual  can obtain  services  of this 
type  either  by  applying  to  a  market  unit  (paying  the  price)  or  by  turning  to  a  non-market 
unit of general  government  or NPISH (getting the services  free,  or almost  free). 

For  market  units  the  method  of  deflating  current  values  by  price  indices  should  be  used, 
since the variations  in the mix of products  with  differing  prices  are then  correctly  shown  as 
influencing  volumes  rather  than  prices.  For  non-market  services  provided  to  individuals, 
output  estimates  can  be  based  on  quantity  indicators.  For  education  these  may  relate  to 
numbers  of  hours  spent  by  pupils  in  classes  or  in  individual  tutoring,  and  for  non-market 
health  services  the  indicators  should  reflect  treatment  in  hospitals  or  visits  to  doctors  or 
nurses.  In  both  cases  there  is  a  quality  dimension  reflected  in  the  amount  of  resources 
provided  per pupil  or patient.  Care must  be taken  to use  data  with  a detailed  breakdown  so 
that  each  indicator  for  which  calculations  are  made  is  as  homogeneous  as  possible  in 
respect  of  costs.  It  is  only  then  that  changes  in  the  mix  of  products  are  shown  correctly  as 
volume  changes. 

In  the  case  of  services  provided  to  individuals,  changes  in  the  volume  of  their  output  and 
consumption  should  in  principle  be  measured  on  the  basis  of  the  use  which  is  made  of 
these  services;  this  will  avoid  using  different  criteria  for  the  same  services  depending  on 
whether  they  are  market  or non-market.  Of  course,  any  change  in  quality  must  be  treated 
as  a  change  in  volume;  but  this  applies  as  much  to  market  services  as  to  non-market 
services  provided  to  individuals. 

539 

10.43.  The  pure  collective  services  are  produced  by  general  government  for  the  benefit  of  the 
entire  population.  In  fact,  they  cover  a  vast  range  of  activities  such  as  general  public 
services,  national  defence,  foreign  affairs,  justice  and  the  police,  town  planning  and  the 
environment,  economic  policy,  etc.  Since  these  services  are  consumed  collectively, 
indirectly and continuously, the volume of their output cannot be measured by the extent to 
which they are utilised. 

10.44. 

It  may  not  be  possible  in  practice  to  obtain  reliable  quantity  indicators  for  non-market 
services provided  for  individuals and these may therefore  have to be measured  in terms of 
volume  by  the  same  methods  as  for  pure  collective  services.  It  is  then  necessary  to  start 
from  a valuation at constant prices of the different  cost elements of this output, i.e.: 

a)  intermediate consumption 

b)  compensation of employees 

c)  other taxes on production 

d)  consumption of fixed capital. 

The use of input-measures as proxies for output implies that analysis of productivity is not 
possible. 

10.45.  The  calculation  of  intermediate  consumption  at  constant  prices  poses  no  particular 
theoretical problems base-year since intermediate consumption relates to goods and market 
services.  It can be done either by deflating  current values by a price index of  intermediate 
consumption or on the basis of quantities revalued at base-year prices. 

10.46.  Calculation  at  constant  prices  of the compensation  of employees  and  the  consumption  of 
fixed capital  in non-market  service industries  is done by the general methods  described  in 
paras  10.53.  and  10.54. below.  Other taxes  on production  are often  of  a type  that  can be 
related to a volume indicator, e.g. volume of employment, number of cars used. 

c) 

Taxes and subsidies on products and imports 

10.47.  Although  essentially  limited  to  transactions  involving  goods  and  services,  the  integrated 
system  of  price  and  volume  indices  does  not  exclude  the  possibility  of  calculating 
measures  of  changes  in price  and  volume  for  certain  other  transactions.  This  possibility 
exists,  in  particular,  in  the  case  of taxes  and  subsidies  directly  linked  to  the  quantity  or 
value of the goods and services which are the subject of certain transactions. In the supply 
and  use  tables, the  values  of  these  are  shown  explicitly.  By  applying  the  rules  described 
below,  it  is possible  to obtain  price and  volume  measures  for  the categories  of  taxes and 
subsidies which are recorded in the goods and services accounts, namely: 

- 

taxes on products, excluding VAT (D.21 part) 

-  subsidies on products (D.31) 

-  VAT on products (D.21 part). 

- 3 40 

10.48.  The  .simplest  case  is that of taxes  which  represent  a fixed  amount  per  unit of quantity  of the 
product  which  is  the  subject  of  the  transaction.  The  value  of  the  revenue  from  such  a  tax 
depends  upon: 

a)  the quantity  of products  involved  in the  transaction 

b)  the amount  levied  per unit, i.e. the taxation  price. 

The  breakdown  of  the  value  change  into  its  two  components  presents  virtually  no 
difficulties.  The  variation  in  volume  is  determined  by  the  change  in  the  quantities  of 
products  taxed;  the price variation  corresponds to the change  in the  amount  levied  per  unit, 
i.e. to the change  in the taxation  price. 

10.49.  A moie  frequent  case  is that  in which the tax  represents  a certain  percentage  of the value  of 

the transaction.  The value of the revenue  from  such a tax then depends  upon: 

a)  the quantity  of products  involved  in the  transaction 

b)  the pi ice of  the products  involved  in the  transaction 

c)  the  tax  iate (as a percentage). 

The  taxation  price  is  then  obtained  by  applying  the  rate  to  the  price  of  the  product.  The 
change  in  value  of  the  revenue  from  a  tax  of  this  type  can  also  be  divided  into  a  volume 
change  determined  by  the  change  in  the  quantities  of  products  taxed,  and  a  price  change 
corresponding  to the change in the taxation price (b x c). 

10.50. 

I he  amount  of  taxes  on  products  (excluding  VAT)  (D.21  part)  is  measured  in  terms  of 
volume  by  applying  to  the  quantities  of  products  produced  or  imported  the  taxation  prices 
of the  base  year  or  by  applying  to the  value  of  output  or  imports,  revalued  at the  prices  of 
the  base  year,  the tax rates of the base year. Attention has to be paid  to the fact  that  taxation 
prices  may  differ  among  different  uses  This  is  taken  into  account  in  the  supply  and  use 
tables 

10.51.  Siiiiilufi  Uie amount  of  subsidies  on  products  (D.31)  is  measured  in  terms  of  volume  by 
applying  U)  the quantities  of products  produced  or  imported  the  subsidy  prices  of the  base-
year  or  by  applying  to  the  value  of  output  or  imports,  revalued  at  the  prices  of  the  base-
year/the  rates  of  subsidy  of  the  base  year,  taking  into  account  different  subsidy  prices  for 
different  uses. 

10.52.  VAl  on  products  (D.21  part)  is,  both  for  the  whole  economy  and  for  individual  industries 
and  other  users,  calculated  on  a  net  basis  and  refers  only  to  non-deductible  VAT.  This  is 
defined  as  the  difference  between  VAT  invoiced  on  the  products  and  VAT  deductible  by 
the  users  of  these  products.  Alternatively,  it  is  also  possible  to  define  VAT  on  products  as 
the sum  of all non  deductible amounts which  have to be paid  by users. 

Non-deductible  VAT  at  constant  prices  can  be  calculated  by  applying  the  VAT  rates  in 
force  in  the  base-year  to  the  flows  expressed  in  the  prices  of  the  base-year.  Any  change  in 
the  rate of  VAT  for  the current  year  will  therefore  be reflected  in the price  index  and  not  in 
the  volume  index  of non-deductible  VAT. 

341 

(22) 

The  fraction  of  deductible  VAT  in  invoiced  VAT  and  hence  non-deductible  VAT  may 
change: 

a)  either  because  of  a change  in the right  to deduct  VAT, resulting  from  a change  in tax 

laws or regulations, taking effect  with or without a time lag; 

b)  or because of changes in the pattern of uses of the product (e.g. increase in the 

proportion of uses on which VAT may be deducted). 

A change  in the amount of deductible  VAT resulting  from  a change  in the right to deduct 
VAT  will  by  the method  described  be treated  as a change  in  the  taxation  price, as  will a 
change in the rate of invoiced VAT. 

On the other hand, a change in the amount of deductible VAT resulting from a change in 
the pattern of uses of the product constitutes a change in the volume of deductible VAT to 
be reflected  in the index of the volume of VAT on products. 

d) 

Consumption of fixed capital 

10.53.  The  calculation  of  volume  measures  of  the  consumption  of  fixed  capital  poses  few 
problems  when  good  data  on  the  composition  of  the  stock  of  fixed  capital  goods  are 
available.  The  perpetual  inventory  method,  used  by  most  countries,  already  implies,  for 
the estimation of the consumption of fixed capital at current prices, the need to pass via a 
calculation of the stock of fixed capital goods at constant prices.  To go from a valuation at 
historic cost to one at replacement cost, it is first necessary to value capital goods acquired 
over  a  number  of  different  periods  on  a  homogeneous  basis,  i.e.  base-year  prices.  The 
price and volume indices derived in the process can therefore be used to calculate the value 
of the consumption of fixed capital at constant prices and the associated price index. 

Where there is no perpetual inventory of the stock of fixed capital goods, the change in the 
consumption  of  fixed  capital  at  constant  prices  can  be  obtained  by  deflating  the  current 
price data by price indices derived  from  data on gross fixed capital  formation  by  product. 
Account has then to be taken of the age structure of the capital goods acquired. 

e) 

Compensation of employees 

10.54.  For the purpose of measuring the volume of input from  employee labour, the quantity unit 
for compensation of employees may be considered to be an hour's work of a given type and 
level  of  skill. As with  goods and  services, different  qualities  of work  must  be  recognized 
and quantity relatives calculated  for each separate type of work. The price associated  with 
each type of work is the compensation paid per hour, which may vary, of course, between 
different  types of work. A volume measure of work done may be calculated  as a weighted 
average  of  the  quantity  relatives  for  different  kinds  of  work,  weighted  by  the  values  of 
compensation  of employees  in the previous year or fixed base year. Alternatively,  a wage 
rate  index  may  be  calculated  for  work  by  calculating  a  weighted  average  of  the 
proportionate  changes  in hourly  rates  of  compensation  for  different  types  of  work,  again 
using  compensation  of  employees  as  weights.  If  a  Laspeyres-type  of  volume  index  is 
calculated  indirectly  by  deflating  the  changes  in  compensation  of  employees  at  current 
values  by  an  index  of  the  average  change  in hourly  compensation,  the  latter  should  be a 
Paasche-type index. 

342 

10.55.  For  the  purpose  of  measuring  the  real  purchasing  power  of  compensation  of  employees, 
this flow can be deflated  by an index reflecting  the uses made of these earnings. The price 
index  normally  chosen for this purpose is the implicit deflator  for  individual  consumption 
expenditure or the consumer price index. 

f) 

Stocks of produced fixed assets and inventories 

10.56.  Constant-price data are needed both for stocks of produced fixed assets and for inventories. 
For  the  former,  such  data as are necessary  for  the calculation  of  capital  output  ratios  are 
available  if use  is made of the perpetual  inventory  method.  In other  cases  information  on 
the values  of stocks of assets may be collected  from  producers  and  deflation  made by the 
price  indices  used  for  fixed  capital  formation,  taking  into  account  the  age  structure  of 
stocks. 

Changes in inventories are measured by the value of entries  into inventories  less the value 
of  withdrawals  from  inventories,  and  the  value  of  any  recurrent  losses  of  goods  held  in 
inventories during a given period. Constant-price estimates can be derived by the  deflation 
of these components. When changes in the volume and the prices of inventories  are  fairly 
regular, estimates of changes in inventories can also be obtained by multiplying the volume 
change of inventories by average prices for the current year  or the base year. As a second 
alternative and as a cross-check, estimates of changes in inventories can also be obtained as 
the  difference  between  stocks  of  inventories  held  at  the  end  and  the  beginning  of  the 
period, respectively. For this purpose the value of inventories minus revaluation  according 
to the accounts of producers has to be revalued and expressed  at the average prices, either 
relating  to the current year or to the base-year.  If they  refer  to the current  year, the value 
measures the volume changes in inventories at current prices. If the average prices refer to 
a base-year, the value corresponds to volume changes in inventories at base-year prices. 

g) 

Measures of real income for the total economy 

10.57. 

It is not possible to divide income flows into a price and a quantity component and for this 
reason price and volume measures cannot be defined  in the same way as for the flows and 
stocks described  earlier.  Income flows can be measured  in real  terms  only  if one  chooses 
some selected basket of goods and services on which the income is typically spent and uses 
the  price  index  for  this  basket  as  a  deflator  of  current  incomes.  The  choice  is  always 
arbitrary  in  the  sense  that  income  is  seldom  spent  specifically  for  purchases  during  the 
period in question. Some of it may be saved for purchases in later periods or, alternatively, 
the purchases during the period may be partly financed  from  savings made earlier. 

10.58.  Gross  Domestic  Product  at  constant  prices  measures  the  total  production  (less  the 
intermediate consumption)  in volume terms for  the total economy. The total  Real  Income 
of  residents  is  influenced  not  only  by  this  volume  of  production  but  also  by  the  rate  at 
which exports can be traded against imports from  the rest of the world. If the terms of trade 
improve, fewer  exports are needed to pay for a given volume of imports, so that at a given 
level  of  domestic  production  goods  and  services  can  be  reallocated  from  exports  to 
consumption or capital  formation. 

- 3 4; 

10.59.  The Real  Gross  Domestic Income can be derived by adding the so-called  Trading Gain to 
volume  figures  on  Gross  Domestic  Product.  The  Trading  Gain  - or,  as  the  case  may  be, 
Loss -  is defined  as 

T = XzM- 

P 

[  ) L - M_  1 
L  Px  Pm  J 

i.e.  the  current  balance  of  exports  less  imports,  deflated  by  a  price  index  P,  less  the 
difference  between  the  deflated  value  of  exports  and  the  deflated  value  of  imports.  The 
choice  of  an  appropriate  deflator  P  for  the  current  trade  balances  should  be  left  to  the 
statistical authorities in a country, taking of the particular circumstances of that country. In 
the circumstances  in which there is uncertainty  about the choice of  deflator  an average of 
the import and the export price indices is likely to provide a suitable  deflator. 

10.60.  Various  Real  Income  Aggregates  are  identified  and  defined  in  the  way  shown  in  the 

following table. 

1)  Gross Domestic Product at constant prices 

plus the trading gain or loss from changes in the terms of trade 

2)  equals Real Gross Domestic Income 

plus real primary incomes receivable from abroad 

minus real primary incomes payable to abroad 

3)  equals Real Gross National Income 

plus real current transfers receivable from abroad 

minus real current transfers payable to abroad 

4)  equals Real Gross National Disposable Income 

minus consumption of fixed capital at constant prices 

5)  equals Real Net National Disposable Income. 

To be able to express the various National Income aggregates in real terms, it is recommended that 
receivables  and  payables  of  primary  incomes and transfers  from  and  to  abroad  should  be  deflated 
with  an  index  of  Gross  Domestic  Final  Expenditure.  Real  National  Disposable  Income  is  to  be 
expressed  on  a  net  basis  by  deducting  from  its  gross  value  the  consumption  of  fixed  capital  at 
constant prices. 

CHOICE OF INDEX NUMBER FORMULAE AND THE BASE YEAR 

10.61.  The construction  of an  integrated  system  of price  and volume  indices  entails  a  deliberate 

choice as to the types of indices to be used. 

10.62.  The preferred  measure of year to year changes in volume is a Fisher volume index which is 
defined  as  the  geometric  mean  of  the  Laspeyres  and  the  Paasche  indices.  Changes  in 
volume over longer periods being obtained by chaining, i.e. by cumulating the year to year 
volume movements. 

- 3 4 4-

10.63.  The  preferred  measure  of  year  to  year  changes  in  prices  is  a  Fisher  price  index.  Price 

changes over long periods being obtained  by chaining  the year to year price  movements. 

10.64.  Chain  indices  that  use  Laspeyres  volume  indices  to  measure  changes  in  volume  and 
Paasche  price  indices  to  measure  year  to  year  price  movements  provide  acceptable 
alternatives  to Fisher  indices. 

10.65.  Altough  the preferred  measure  of volume  and  price  is a chain  index,  it  must  be  recognized 
that  the  lack  of  additive  consistency  can  be  a  serious  disadvantage  for  many  types  of 
analysis. 

An  aggregate  is  defined  as  the  sum  of  its  components.  Additivity  requires  this  identity  to 
be  preserved  when  the  values  of  both  an  aggregate  and  its  components  in  some  reference 
period  are extrapolated  over time using a set of volume  index  numbers. 

10.66. 

It  is therefore  recommended  that disaggregated  constant  price  data  -  i.e.  direct  valuation  of 
current  quantities  at base-year  prices - are  compiled  in addition  to the  chain  indices  for  the 
main  aggregates. 

Estimating  accounts  data  in  constant  prices  has  to  be  done  at  the  finest  level  of  detail 
possible  if  the  data  are  to  be  consistent  within  the  framework  of  an  integrated  system  of 
price  and  volume  measures.  The  supply  and  use  tables  form  the  central,  conceptual  and 
statistical  framework  for  all  the  measures  at  constant  prices.  Additional  data  are  found  in 
supplementary  tables. 

Constant  price  series  have  nevertheless  to  be  rebased  in  the  course  of  time.  The  ESA  has 
adopted  the  principle  of  changing  the  base  year  every  five  years  as  from  1995.  When  the 
base  year  is changed  it is customary  to  link the  data  on  the  old  base  to  the  date  on the  new 
base  rather  than  to carry  the rebasing  backwards.  When  the  base  year  is  updated  additivity 
is lost as a result  of  linking. 

10.67.  When  base  year  values  are  extrapolated  by  chain  volume  indices,  it  will  have  to  be 

explained  to users why there is no additivity  in the tables. 

The non-additive  "constant price" data is published  without  any  adjustment.  This method  is 
transparent  and  indicates to users the extent of the  problem. 

This  does  not  preclude  the possibility  that  there  may  be  circumstances  in  which  compilers 
may  judge  it  preferable  to  eliminate  the  discrepancies  in  order  to  improve  the  overall 
consistency  of the  data. 

INTERSPATIAL  PRICE AND  VOLUME  INDICES 

10.68.  Comparisons  of  prices  and  volumes  between  countries  have  to  overcome  the  difficulty  in 
comparing  different  national  currencies. Since exchange  rates are neither  sufficiently  stable 
for  this  purpose  nor  do  they  reflect  differences  in  purchasing  power  in  a  correct  way,  it  is 
necessary  to  use  a  methodology  similar  to  the  one  used  for  intertemporal  comparisons 
within  a  single  country.  Price  and  volume  indices  have  therefore  to  be  compiled  between 
pairs  of  countries,  applying  the  same  kinds  of  index  number  formulae  as  when  measuring 
changes  between  time  periods. Either  of the two  countries  A  and  B  can  be  used  to give  the 
weights  and  -  viewed  from  the  angle  of  country  A  -  a  Laspeyres-type  index  with  weights 
from  country  A can  be calculated  as well as a Paasche-type  using  weights  from  country  B. 

-  345 -

10.69. 

If  the  economies  of  the  two  countries  differ  much  from  one  another,  the  spread  between 
these two indices may be quite large and the results would depend too much on which one 
is chosen. For binary comparisons the ESA therefore  requires an average between the two, 
in the form of a Fischer index. 

10.70.  Direct  quantitative  comparisons  between  economic  situations  that  have  little  in  common 
with each other  are inherently  difficult  and the method  of deflation  of current  values with 
price  indices  is therefore  the best alternative. This applies  even more  in international  than 
in intertemporal  comparisons. By careful  specification  and identification  of products, price 
relatives can be calculated from information  collected  in price surveys in each country. As 
prices are quoted  in national currencies, the interpretation  of the price relatives  introduces 
the concept  of Purchasing  Power Parity  (PPP). For a given product  the  PPP  between  two 
currencies of countries A and B is defined  as the number of units of country  B's  currency 
that  are needed  in  country  B to purchase  the  same quantity  of  the  product  as  one  unit of 
country  A's  currency  will  purchase  in  country  A.  PPPs  for  groups  of  products  and 
successively  higher  levels  of aggregation  up to  GDP  are obtained  by  weighting  PPPs  for 
products  by  their  share  in  expenditure.  In  order  to  arrive  at  an  international  price  index 
between  the  two  countries, the PPP  index has to be  divided  by  the  current  exchange  rate 
between the two currencies concerned. 

10.71.  For non-market services, international comparisons face the same problem as intertemporal 
comparisons. This means that outputs are measured as the sum of inputs. The method used 
at present  in  interspatial  comparisons  is to obtain  PPPs on the  basis  of price  relatives  for 
important  elements  in  these  inputs. This  method,  which  implies  volume  comparisons  of 
inputs,  fails  to  take  into  account  differences  in  productivity  in  non-market  service 
production  in the countries compared. It is important, therefore, to develop methods which 
instead lead to comparisons of the volume of output of non-market services. This should in 
principle be feasible  for  individual non-market  services, in the same  general  way as when 
intertemporal comparisons are concerned. 

10.72.  The  need  to  make  international  comparisons  of  prices  and  volumes  between  countries  is 
recognized in the ESA. The main objective is volume comparisons of GDP and its uses and 
the  condition  of  transitivity  must  be  met.  Transitivity  means  that  the  direct  index  for 
country  C based  on  country  A  is equal  to the  indirect  index  obtained  by  multiplying  the 
direct index for  country  B based on country A by the direct  index  for  country  C based on 
country B. 

10.73.  The  approach  adopted  in  the  ESA  to  the  calculation  of  a  set  of  multilateral  volume 
measures  and  PPPs  is  to  start  from  binary  comparisons  between  all  possible  pairs  of 
countries  considered. The Fischer indices used  for this purpose  are not transitive, but it is 
possible  to  derive from them a set of transitive  indices that  resemble  the  original  Fischer 
indices  as  closely  as  possible,  using  the  traditional  criterion  of  least  squares  for  this 
purpose.  Minimising  the  deviations  between  the  original  Fischer  indices  and  the  desired 
transitive indices leads to the so-called EKS formula. 

10.74.  The EKS index utilises all the indirect indices linking country i to country  k as well as the 
direct index between them. Between countries i and k it is the geometric mean of the  direct 
index between  i and k and every possible indirect  index connecting  countries  i and k. The 
direct  index  is  given  twice  the weight  of  each  indirect  index.  Transitivity  is  achieved  by 
involving every other country in the EKS index for any given pair of countries. 

46 

CHAPTER XI 

POPULATION AND LABOUR INPUTS 

- 3 47 

11.01.  Certain  comparisons  between  countries,  or  between  branches  or  sectors  within  the  same 
economy,  become  meaningful  only  when  the  aggregates  in  the  national  accounts  (for 
example, Gross Domestic Product, the final consumption of households, the value added of 
a  branch,  compensation  of  employees)  are  considered  in  relation  to  the  number  of 
inhabitants  and  labour  input  variables.  It  is therefore  necessary  to  have  definitions  of the 
total  population,  employment,  jobs,  total  hours  worked,  full-time  equivalence  and 
employee labour  input at constant compensation, which are closely  linked  to the concepts 
used in the national accounts. 

11.02.  These titles are defined  in the system on the basis of the concepts of economic territory and 

centre of interest. 

11.03.  Labour  inputs  must be classified  on the basis  of the  same  statistical  units  as used  for  the 

analysis of production, namely the local kind-of-activity  unit and the institutional unit. 

11.04.  The aggregates to which the figures for population and labour inputs are related are annual 

totals. Therefore, average population and labour inputs during the year should be used. 

When  inquiries  are  conducted  at  several  times  during  the  course  of  the  year,  the  figure 
taken is the average of the results obtained on these various dates. 

When  a  single  inquiry  is  made,  it  is  important  to  examine  if  the  period  used  is  fully 
representative  ; the  last available information  on variations throughout the year should  be 
used  in  estimating  data  for  the year  as a whole.  For  example, when  estimating  the  mean 
employment,  some allowance should be made for the fact  that certain people do not work 
throughout the whole year (casual and /or seasonal workers). 

TOTAL POPULATION 

11.05.  Definition: 

On  a  given  date,  the  total  population  of  a  country  consists  of  all  persons,  national  or 
foreign,  who are permanently settled in the economic territory of the country, even if they 
are temporarily  absent from it. For some purposes, an annual average  of head  counts will 
provide  an  appropriate  basis  for  estimating  national  accounts  variables  or  for  use  as  a 
denominator in comparisons. 

11.06.  Total population is defined for national accounts according to the concept of residence (see 

units and grouping of units chapter). 

A person who is staying, or intends to stay, on the economic territory of the country  for a 
period of one year or more is regarded as permanently settled there. 

A person is regarded  as being temporarily absent if he or she is permanently  settled  in the 
country  but  is staying, or intends to stay, in the rest of the world  for  a period  of  less than 
one year. 

- 3 48 

All individuals who belong to the same household^1) are resident where the household has a 
centre  of  economic  interest:  this  is  where  the  household  maintains  a  dwelling,  or 
succession  of dwellings, which members of the household treat, and use, as their principal 
residence.  A  member  of  a  resident  household  continues  to  be  a  resident  even  if  that 
individual  makes  frequent  journeys  outside  the  economic  territory,  because  its  centre  of 
economic interest remains in the economy in which the household is resident. 

11.07.  The total population of a country includes: 

nationals settled in the country 

national  civilians  who  are  staying  abroad  for  a  period  of  less  than  one  year 
(frontier  workers, seasonal workers, tourists, patients, etc.) 

foreign  civilians settled in the country for a period of one year or more (including 
the  personnel^2)  of  the  Institutions  of  the  European  Communities  and  of 
international  civilian  organisations  located  within  the  geographic  territory  of  the 
country) 

foreign  military  personnel(2)  working  with  international  military  organisations 
located within the geographic territory of the country, 

foreign  technical  assistance personnel(2)  on  long-term  assignments  who  work  in 
the country and are deemed to be employed by their host government on behalf of 
the  government,  or  international  organisation,  which  is  actually  financing  their 
work. 

By convention,  the total population  also includes the following,  irrespective  of the  length 
of their stay outside the country: 

national students however long they study abroad 

members(2) of the country's armed forces stationed in the rest of the world 

nationals(2)  who  are  on the  staff  of  national  scientific  bases  established  outside 
the geographic territory of the country 

nationals(2) who are on the staff of diplomatic missions abroad 

nationals(2)  who are members of the crews  of fishing boats, other  ships,  aircraft 
and floating platforms operating partly, or wholly, outside the economic territory. 

11.08.  Conversely, the total population of a country does not include: 

foreign  civilians  staying  on  the  territory  for  less  than  a  year  (frontier  workers, 
seasonal workers, tourists, patients, etc.) 

national civilians staying abroad for a period of one year or more 

national military personnel working with international organisations located in the 
rest of the world 

national  technical  assistance  personnel  on  long-term  assignments  who  work 
abroad and are deemed to be employed by their host government  on behalf of the 
government, or international organisation, which is actually financing  their work 

'  ' 
'  ' 

The concept of household  is defined  in the chapter "units and groupings of units". 
Including accompanying members of their households. 

349 

and also, by convention, 

foreign  students however long they study in the country 

members of the armed forces of a foreign country who are stationed in the country 

the foreign personnel of foreign scientific bases located on the geographic territory 
of the country 

members of foreign diplomatic missions stationed in the country. 

11.09.  The definition  given above differs  from the present (or de facto) population, which consists 
of persons actually present on the geographic territory of a country at a given date. 

ECONOMICALLY ACTIVE POPULATION 

11.10  Definition: 

In  accordance  with  the  norms  established  by  the  International  Labour  Office  (thirteenth 
International  Conference  of  Labour  Statisticians),  the  economically  active  population 
comprises  all  persons  of  either  sex,  and  above  a  certain  age,  who  furnish  the  supply  of 
labour  for  the  productive  activities  (falling  in  the  production  boundary  of  the  system), 
during a specified  time-reference  period. 

It  includes  all  persons  who  fulfil  the  requirements  for  inclusion  among  the  employed 
(employees or self employed) or the unemployed. 

The "employees" and "self-employed"  are defined under the title "employment". 

The "unemployed" are defined under the title "unemployment". 

EMPLOYMENT 

11.11.  Definition: 

Employment  covers  all  persons  -both  employees  and  self-employed-  engaged  in  some 
productive activity that falls within the production boundary of the system. 

a) 

EmpIoyeesO) 

11.12.  Definition: 

Employees  are  defined  as  all  persons  who,  by  agreement,  work  for  another  resident 
institutional unit and receive a remuneration (recorded as Dl  compensation of employees). 

The relationship of employer to employee exists when there is an agreement, which may be 
formal  or  informal,  between an enterprise  and  a person, normally  entered  into  voluntarily 
by both parties, whereby the person works for  the enterprise  in return  for  remuneration  in 
cash or in kind. 

Employees  are  classified  here  if  they  are  not  also  in  self-employment  which  constitutes 
their principal activity: in that case they are classified  under b). 

'  ' 

"Employees" corresponds to the International  Labour Office  definition  of "paid  employment" 

3 5 0-

11.13.  The following  categories are included: 

persons (manual and non-manual workers, management personnel, domestic staff, 
people carrying out remunerated productive activity under employment  programs) 
engaged by an employer under a contract of employment 

civil  servants  and  other  government  employees  whose  terms  and  conditions  of 
employment are laid down by public law 

the  armed  forces,  consisting  of  those  who  have  enlisted  for  both  long  and  short 
engagements and also conscripts (including conscripts working for civil purposes) 

ministers  of  religion,  if  they  are  paid  directly  by  general  government  or  a  non 
profit  institution 

owners of corporations and quasi-corporations if they work in these enterprises 

students  who  have  a  formal  commitment  whereby  they  contribute  some  of  their 
own  labour  as  an  input  into  an  enterprise's  process  of  production  in  return  for 
remuneration and (or) education services 

outworkers^) if there is an explicit  agreement  that the outworker  is  remunerated 
on the basis of the work done that is, the amount of labour which is contributed as 
an input into some process of production 

disabled  workers,  provided  the  formal  or  informal  relationship  of  employer  to 
employee exists. 

persons employed  by temporary employment  agencies, who are to be included in 
the  industry  of  the  agency  which  employs  them,  and  not  in  the  industry  of  the 
enterprise  for  which  they  actually  work.  But  for 
input-output  analysis, 
reclassifications  of this people and of all the related  costs can be considered  (see 
paragraph 9.51. "the input-output  framework"). 

11.14.  Persons temporarily  not at work, are also  considered  as employees  provided  they  have a 
formal job  attachment.  This  formal  attachment  should  be  determined  according  to  one or 
more of the following  criteria: 

the continued receipt of wage or salary 

an assurance of return to work following the end of the contingency, or an agreement 
as to the date of return 

the elapsed  duration of absence from the job which, wherever  relevant, may  be that 
duration for which workers can receive compensation benefits  without obligations to 
accept other jobs. 

This  covers  persons  temporarily  not  at  work  because  of  illness  or  injury,  holiday  or 
vacation,  strike  or  lock-out,  educational  or  training  leave,  maternity  or  parental  leave, 
reduction  in  economic  activity,  temporary  disorganisation  or  suspension  of  work  due  to 
such  reasons  as  bad  weather,  mechanical  or  electrical  breakdown,  or  shortage  of  raw 
materials or fuels, or other temporary absence with or without leave. 

^  ' 

An outworker  is a person who agrees to work for a particular enterprise or to supply a certain quantity of goods or services to a 
particular enterprise by prior arrangement or contract with that enterprise, but whose place of work  is not within  it. 

351  -

b) 

Self-employed  persons 

11.15.  Definition 

Self-employed  persons are defined  as persons who are the sole owners, or joint owners, of 
the  unincorporated  enterprises  in  which  they  work,  excluding  those  unincorporated 
enterprises  that  are  classified  as  quasi-corporations.  Self-employed  persons  are  classified 
here if they are not also in a paid employment which constitutes their principal  activity: in 
that latter case they are classified  under a). 

They  may  be temporarily  not at work  during the reference  period  for  any  specific  reason. 
The compensation for self-employment  is mixed income. 

11.16.  Self-employed  persons also include the following categories: 

unpaid  family  workers,  including  those  working  in  unincorporated  enterprises 
engaged wholly or partly in market production 

outworkers  whose  income  is  a  function  of  the  value  of  the  outputs  from  some 
process of production for which they are responsible, however much or little work 
was put in 

their  own  final 

in  production  undertaken  entirely  for 

workers  engaged 
consumption or own capital formation, either individually or collectively. 
Unpaid voluntary workers are included in self-employed  persons if their volunteer 
activities  result  in  goods,  e.g.  the  construction  of  a  dwelling,  church  or  other 
building.  But  if  their  volunteer  activities  result  in  services,  e.g.  care  taking  or 
cleaning  without  payment,  they  are  not  included  in  employment,  because  those 
volunteer services are excluded from production (see 3.08.). 
There  is  no  labour  input  into  the  production  of  the  services  of  owner-occupied 
dwellings; the owner-occupiers  of dwellings  are not, as such, considered  as self-
employed persons. 

c) 

Employment and residence 

11.17.  The results of the activity of producer units can only be compared with employment  if the 
latter  includes  both  the  residents  and  the  non-residents  who  work  for  resident  producer 
units. 

Employment therefore also includes the following categories: 

non-resident  frontier  workers, i.e. persons who cross the border each day to work 
in the economic territory 

non-resident  seasonal  workers, i.e. persons who move into the economic  territory 
and  stay  there  for  less  than  one  year  in  order  to  work  in  industries  which 
periodically require additional labour 

members of the country's armed forces stationed in the rest of the world 

- 3 52 

nationals  who  are  on  the  staff  of  national  scientific  bases  established  outside  the 
geographic territory  of the country 

nationals  who are on the staff  of diplomatic  missions  abroad 

members  of the  crews  of fishing  boats, other  ships, aircraft  and  floating  platforms 
operated  by resident  units 

local  employees  of  general  government  bodies  situated  outside  the  economic 
territory. 

11.18.  On the other hand, the following  are excluded  from  employment: 

residents  who  are  frontier  workers  or  seasonal  workers,  i.e.  who  work  in  another 
economic  territory 

nationals  who  are members  of the  crews  of fishing  boats, other  ships, aircraft  and 
floating  platforms  operated  by non-resident  units 

local  employees  of  foreign  government  agencies  located  on  the  geographic 
territory  of the  country 

the  personnel  of  the  Institutions  of  the  European  Communities  and  international 
civilian  organisations  located  within  the  geographic  territory  of  the  country 
(including  local employees directly  recruited) 

members  of  the  armed  forces  working  with  international  military  organisations 
located on the geographic territory of the  country 

nationals working  in foreign  scientific  bases established  in the economic  territory. 

11.19. 

In  order  to  be  able  to  make  the  transition  to  the  concepts  generally  used  in  labour  force 
statistics  (employment  on a national  basis), the  ESA  provides  for  the  following  items to  be 
shown  separately: 

1) 

2) 

3) 

the  conscripted  forces  (not  included  in  the  labour  force  statistics,  but  included  in  the 
ESA under  general  government  services) 

residents working  for  non-resident  producer  units  (included  in labour  force  statistics  but 
not included  in employment  as defined  in the  ESA) 

non-residents  working  with  resident  producer  units  (not  included  in  labour  force 
statistics but included  in employment  as defined  in the ESA). 

UNEMPLOYMENT 

11.20  Definition: 

In  accordance  with  the  norms  established  by  the  International  Labour  Office  (thirteenth 
International  Conference  of  Labour  Statisticians),  the  "unemployed"  comprise  all  persons 
above  a specified  age who during the reference  period  were: 

a)  "without  work",  i.e. not  in paid employment  or  self-employment 

b)  "currently  available  for  work",  i.e.  were  available  for  paid  employment  or  self-

employment  during the reference  period;  and 

c)  "seeking  work",  i.e.  had  taken  specific  steps  in  a  specified  recent  period  to  seek  paid 

employment or  self-employment. 

The  specific  steps  may  include  registration  at  a public  or  private  employment  exchange; 
application  to  employers;  checking  at  worksites,  farms,  factory  gates,  market  or  other 
assembly  places;  placing  or  answering  newspaper  advertisements;  seeking  assistance  of 
friends  or  relatives;  looking  for  land,  building,  machinery  or  equipment  to  establish  own 
enterprise; arranging for financial  resources; applying for permits and licences, etc... 

11.21  Definition: 

Unemployment  rates  represent  unemployed  persons  as  a  percentage  of  the  economically 
active population. 

They  are usually  calculated  for  sex-age  groups  and  sometimes  further  cross-classified  by 
other demographic variables such as marital status, qualifications  or nationality. 

JOBS 

Definition: 

11.22.  A  job  is  defined  as  an  explicit  or  implicit  contract1)  between  a  person  and  a  resident 
institutional  unit  to  perform  work*2) in return  for  compensation^3) for  a  defined  period  or 
until further notice. 

In  that  definition,  both  employee  and  self-employment  jobs  are  covered:  that  is,  an 
employee job  if  the person  belongs  to another  institutional  unit  than  the  employer  and a 
self-employment job if the person belongs to the same institutional unit as the employer. 

11.23.  The concept of jobs differs  from the concept of employment as defined  above: 

It  includes  second,  third,  etc. jobs  of  the  same  person.  Those  second,  third,  etc. 
jobs  of a person may either successively  follow  one another  within  the  reference 
period  (usually,  a  week)  or,  as  when  someone  has  an  evening job  as  well  as  a 
daytime job, run in parallel. 

On  the  other  hand,  it excludes  persons  temporarily  not  at  work  but  who  have a 
"formal  attachment  to  their job"  in  the  form,  for  instance,  of  "an  assurance  of 
return  to  work  or an agreement  as to  the date  of  return".  Such  an  understanding 
between an employer and a person on lay-off or away on training is not counted as 
a job in the System. 

O) 
'  ) 

'-^ 

The explicit or implicit contract relates to the provision of labour input, not to supplying output of a good or service. 
Work means any activity which contributes to the production of goods or services within the production  boundary. The legality of the 
work and the age the worker are, in principle, irrelevant 
Compensation  must be interpreted  here a wide sense including mixed  income of self-employed  persons. 

354 

Jobs and residence 

11.24.  A job  in the economic territory  of the country  is an explicit or implicit  contract  between a 
person  (who  may  be  resident  in  another  economic  territory)  and  an  institutional  unit 
resident in the country. 

For  measuring  labour  input  into  economic  activity,  only  the  residence  of  the  producer 
institutional unit is relevant, because resident producers alone contribute to gross domestic 
product. 

11.25.  Moreover: 

Jobs are included in the count of jobs in the economic territory when the employees of 
a  resident  producer  are working  temporarily  in  another  economic  territory  and  when 
the  nature  and  duration  of  the  activity  do  not  warrant  its  treatment  as  a  notional 
resident unit of that other territory. 

Jobs are excluded from the count of jobs in the economic territory when performed  for 
non-resident  institutional  units, that  is,  for  units  with  a  centre  of  interest  in  another 
country which have no intention of being active on the domestic territory  for a year or 
more. 

The jobs  of the staff  of international  organisations  and those of locally  recruited  staff 
engaged  by foreign  embassies are excluded  from  the count,  since the employing units 
are not resident. 

TOTAL HOURS WORKED 

11.26.  Definition: 

Total  hours  worked  represent  the  aggregate  number  of  hours  actually  worked  as  an 
employee  or  self-employed  during  the accounting  period,  when  their  output  is within the 
. production boundary. 

Because  of  the  broad  definition  of  employees  which  covers  persons  temporarily  not  at 
work but with a formal  attachment,  and part-time workers, the ESA recommends  that the 
appropriate measure for productivity calculation is not a head count but total hours worked. 

Total hours worked is the preferred measure of labour inputs for the system. 

11.27. 

In  accordance  with  the  norms  established  by  the  International  Labour  Office  (Tenth 
International Conference of Labour Statisticians), total hours actually worked cover: 

a) 

b) 

c) 

hours actually worked during normal working hours 

hours  worked  in  addition  to  those  worked  during  normal  working  hours,  and 
generally paid at higher rates than normal rate (overtime) 

time which is spent at the place of work on tasks such as preparing the site, repair 
and maintenance work, the preparation  and cleaning of tools, and the  making-out 
of receipts, invoices, records of the length of time worked and other reports 

355  -

d) 

idle time spent at the place of work waiting or standing by because, for  example, 
of  temporary  lack  of  work,  the  breakdown  of  machinery  or  accidents,  or  time 
spent at the place of work during which no work is done but for which payment is 
made under a guaranteed employment contract 

e) 

time  corresponding  to  short  periods  of  rest  at  the  work  place,  including 
refreshment  breaks. 

11.28.  On the other hand, hours actually worked do not include: 

a) 

b) 

c) 

hours  which  are  paid  but  not  worked,  such  as  paid  annual  holidays,  public 
holidays, or sick-leave 

breaks for meals 

time  spent  travelling  between  home  and  the  place  of  work,  even  when  paid 
(construction  workers).  However,  such  travel  organized  in  employers'  time  is 
included in hours of work. 

11.29.  Total  hours  worked  is  the  aggregate  number  of  hours  actually  worked  during  the 

accounting period in employee and self-employment jobs within the economic territory 

including  work  outside the economic  territory  for  resident  employer  institutional 
units who have no centre of economic interest there 

excluding  work  for  foreign  employer  institutional  units  who  have  no  centre  of 
economic interest within the economic territory. 

11.30.  Many surveys of enterprises record hours paid not hours worked. 

In  those  cases,  hours  worked  have  to  be  estimated  for  each job  group,  using  whatever 
information  is available about paid leave, etc. 

11.31.  For business  cycle analysis, it may be useful  to  adjust  total  hours worked  by  adopting  a 

standard number of working days per year. 

FULL-TIME  EQUIVALENCE 

11.32.  Definition: 

Full-time equivalent employment, which equals the number of full-time  equivalent jobs, is 
defined  as total  hours  worked  divided  by the  average  annual  number  of  hours  worked  in 
full-time jobs within the economic territory. 

11.33.  This definition  does not necessarily describe how the concept is estimated: since the lengh 
of a full-time job has changed through time and differs  between industries, methods which 
establish the average proportion  and average hours of  less than full-time  jobs  in each job 
group have to be used. A normal full  time week must first be estimated  in each job group. 
If possible, a job group can be defined,  inside an industry, according to sex and (or) kind of 
work  of  people.  Hours  contractually  agreed  upon  constitute,  for  employee  jobs,  the 
appropriate  criteria  for  determining  those  figures.  Full-time  equivalent  is  calculated 
separately in each job group, then summed. 

-  356 -

11.34. 

In spite of the fact  that total hours worked are the best measure of labour inputs, there are 
some  advantages  in  the  full-time  equivalence:  it  can  be  estimated  more  easily  and  this 
facilitates  international  comparisons  with  countries  which  can  only  estimate  full-time 
equivalent employment. 

EMPLOYEE LABOUR INPUT AT CONSTANT COMPENSATION 

11.35.  Definition: 

Employee  labour input at constant compensation  measures current labour inputs valued at 
the levels of compensation of employee jobs ruling during a selected base period. 

11.36.  Compensation of employees at current prices divided by employee labour input at constant 
prices yields an implicit compensation price index comparable with the implicit price index 
of final uses. 

11.37.  The  purpose  of  the  concept  of  employee  labour  input  at  constant  compensation  is  to 
express  the changes  in the composition  of the work  force,  e.g. from lower  paid  to  higher 
paid workers. To be effective, the analysis should be undertaken on an industry basis. 

- 3 5 7-

(23) 

CHAPTER XII 

QUARTERLY ECONOMIC ACCOUNTS 

3 V S- 359 

12.01.  The quarterly  economic  accounts  form  an integral part  of the system  of national  accounts 
and  amongst  other  uses,  are  very  important  for  the  analysis  of  the  current  year  and 
calculation  of  provisional  estimates  for  the  last  year.  The  quarterly  economic  accounts 
constitute a coherent set of transactions, accounts and balancing items, defined  in both non-
financial  and  financial  domain,  recorded  on  a  quarterly  basis.  They  adopt  the  same 
principles,  definitions  and  structure  as 
to  certain 
modifications, due to the period of time covered. 

the  annual  accounts,  subject 

12.02.  The importance  of quarterly economic accounts derives essentially  from  the  consideration 
that  they  are  the  only  coherent  set  of  indicators,  available  with  a  short  time-lag,  able  to 
provide a short term overall picture of both non-financial  and financial  economic activity. 

12.03.  The  period  of  time  to  which  the  quarterly  accounts  relate  and  the  need  to  have  reliable 
information  as  quickly  as  possible  determine  certain  typical  features.  These  specificities 
include  statistical  methods  of  compiling  accounts,  seasonality  and  the  treatment  thereof, 
consistency of quarterly and annual accounts and some account particularities related to the 
reference  period.  These  typical  features  will  be  extensively  analyzed  in  a  handbook  of 
quarterly  account  that  Eurostat  intends  to  publish  before  the  application  of  this 
methodology. 

12.04.  The  statistical  methods  used  for  compiling  quarterly  accounts  may  differ  quite 
considerably  from  those used for the annual accounts. They can be classified  in two major 
categories:  direct  procedures  and  indirect  procedures.  Direct  procedures  are  based  on the 
availability at quarterly intervals, with appropriate simplifications,  of the similar sources as 
used to compile the annual accounts. On the other hand,  indirect procedures  are based on 
time  disaggregation  of  the  annual  accounts  data  in  accordance  with  mathematical  or 
statistical methods using reference indicators which permit the extrapolation for the current 
year. The choice between the different  indirect procedures must above all take into account 
the  minimisation  of  the  forecast  error  for  the  current  year,  in  order  that  the  provisional 
annual estimates correspond as closely as possible to the final figures. The choice between 
these  approaches  depends,  among  other  things,  on  the  information  available  at  quarterly 
level. 

12.05.  The quarterly  accounts  series quite often  show  very  short-term  variations  due to  weather, 
habits, legislation, etc., usually defined  as seasonal fluctuations. Although seasonality is an 
integral  part  of  quarterly  data,  it  is often  an  impediment  to  the  correct  identification  and 
analysis of the cycle-trend component. From this consideration follows the need to compile 
both  raw  and  seasonally  adjusted  accounts.  The  accounting  consistency  of  seasonally 
adjusted  figures  should  be  ensured.  A closely  related  problem  to  seasonal  adjustment,  is 
that of the working days correction, which needs further  consideration to be taken up in the 
Eurostat handbook. 

- 3 6 0-

12.06.  Since  quarterly  accounts  adopt  the  same  framework  of  annual  accounts  they  have  to  be 
consistent over time with them. This implies, in the case of flow variables, that the sum of 
the  quarterly  data  is  equal  to  the  annual  figures  for  each  year.  In  principle  there  are  no 
obstacles  to  this  condition  being  met  for  previous  years.  However,  for  the  current  year 
there  is a problem of time priority between quarterly and annual data as quarterly data are 
normally available earlier than the annual figures. This problem may be solved by agreeing 
that the provisional estimates of annual figures are obtained by the aggregation of quarterly 
figures.  When  new  annual  information  becomes  available  resulting  in  a  revision  of  the 
provisional  figures,  the  quarterly  data  have  to  be  modified  accordingly.  Within  same 
systems, the annual accounts are a by-product of the quarter system and there is no separate 
annual calculation. 

12.07.  The  time  consistency  must  be  ensured  for  raw  data  and,  compatibly  with  the  seasonally 

adjustment  procedures, for adjusted  figures to. 

12.08. 

If,  in principle,  most  of  the  operations  and  balancing  items  are  distributed  with  a certain 
regularity on all the quarters, there are anyway some operations that appear concentrated in 
one or two quarters of the year. This is the case for taxes on income, dividends, interests, 
etc. The treatment of these cases depends essentially on the underlying generation process. 

12.09.  From a theoretical point of view there are not obstacles to the layout used for the quarterly 
accounts  being  the  same as that used  for  the  annual  accounts.  However,  in practice,  it is 
useful  to simplify  and aggregate this scheme in order to obtain reliable quarterly figures as 
quickly  as possible  (see  program  of  tables  and  data  to  be  supplied  in  the  framework  of 
ESA-95). 

361 

CHAPTER XIII 

REGIONAL ACCOUNTS 

-  3  6 ^  - 363 

INTRODUCTION 

13.01.  Regional  accounts  are  a regional  specification  of  the  corresponding  accounts  of the  total 
economy. The regional accounts make use of the concepts used for the accounts of the total 
economy unless indicated otherwise in this section. 

13.02.  A  full  set  of  accounts  at  the  regional  level  implies  treating  each  region  as  a  separate 
economic entity. In this context, transactions with other regions become a kind of external 
transactions.  External  transactions  of  the  region  should  of  course,  be  distinguished 
according to transactions with other regions of the country and transactions with the rest of 
the world. 

13.03.  Conceptual  difficulties  (see par.  13.10. -  13.14.) partly  explain  why  regional  accounts are 
limited to recording production activities by industry and to accounts for some institutional 
sectors like households. 

REGIONAL TERRITORY 

13.04.  The regional  economy  of a country  is part of the total  economy  o that  country.  The total 
economy  is defined  in terms of institutional  units. It consists  of all  the  institutional  units 
which  have acentre  of  interest  in the economic  territory  of a country  (see par.2.04.). The 
economic  territory,  although  consisting  essentially  of  the  geographic  territory,  does  not 
coincide exactly  (see par. 2.05.). The economic territory  of a country  can be divided  into 
regional territories and the extra-regio territory. 

13.05.  The regional territory includes : 

a. 

the region that is part of the geographic territory of a country; 

b.  any free zones, including  bonded  warehouses  and  factories  under  customs  control  in 

the region. 

13.06.  . The extra-regio  territory is made up of parts of the economic territory  of a country which 

cannot be attached directly to a single region. It consists  of: 

a. 

b. 

the national air-space, territorial waters and the continental shelf lying in international 
waters over which the country enjoys exclusive rights; 

territorial enclaves (i.e. geographic territories situated in the rest of the world and used, 
under  international  treaties  or  agreements  between  States,  by  general  government 
agencies of the country (embassies, consulates, military bases, scientific bases etc.)); 

c.  deposits of oil, natural gas etc. in international  waters, outside the continental shelf of 

the country, worked by resident units. 

13.07.  The  nomenclature  of  territorial  units  for  statistics  (NUTS)  provides  a  single,  uniform 
breakdown  of the  economic territory  of the  European  Union.  The NUTS  is the  territorial 
classification  for the compilation of regional accounts 

- 3 64 

UNITS AND  RESIDENCE 

13.08.  Two types  of units  are distinguished.  First  of all the local  KAU  for  the analysis  of flows 
occurring  in the process of production  and in the use of goods and  services. Secondly the 
institutional unit to analyse flows affecting  income, capital and financial  transactions, other 
flows and balance sheets 

13.09.  The local KAU is the part of a KAU which corresponds to a local unit. The local unit is an 
institutional unit producing goods and services or a part thereof situated in a geographically 
identified  place  (see par  2.106.).  Therefore,  in principle  the  regional  residence  of  a local 
KAU can be unambiguously determinated. 

Regarding the transactions in relation to the production activities, it is necessary  to record 
flows between local KAUs, which belong to the same institutional  unit and are located in 
different  regions. The  ESA  recommends  including  deliveries  between  local  KAUs  in the 
definition  of output and this is especially important in regional accounts 

13.10. 

In  case  of  institutional  units  two types  of  institutional  units  have  to  be  considered  in the 
context  of  regional  accounts.  First  of  all,  there  are  uni-regional  units,  the  centre  of 
economic  interest of which  is in one region and most of their  activities  take place  in this 
region.  Among uni-regional  units are households, corporations  whose  local  KAUs  are all 
located in the same region, local and state governments, at least part of social security and 
many NPIs serving households. 

Secondly,  there  are  multi-regional  units,  the  centre  of  economic  interest  of  which  is  in 
more than one region. Many corporations and a number of NPIs are in this situation. To a 
greater  extent,  this  is also  the case for  institutional  units  whose  activities  span  the  whole 
country  such  as  central  government  and  a  small  number  of  corporations,  generally  in  a 
monopolistic  or quasi-monopolistic  situation,  like the  national  railway  corporation  or the 
national electricity corporation. 

13.11.  All transactions  of the uni-regional  institutional  units are allocated  to the region  in which 
they have their centre of economic interest. Regarding households, the centre of economic 
interest  i*s the region where they  live, not the region where they  work.  Other  uni-regional 
units have their centre of economic interest in the region where they are located. 

13.12.  Part  of the transactions  of multi-regional  units  is not,  strictly  speaking,  regionalizable,  in 
concept.  This  is  the  case  for  most  distributive  and  financial  transactions.  Consequently, 
balancing  items of multi-regional units may not be unambiguously  defined  at the regional 
level for multi-regional units 

13.13.  One  may  think  of  allocating  all  transactions  of  multi-regional  units  between  regions 
according  to  some  rules  of  thumb.  However,  this  should  not  be  considered  simply  as  a 
practical  approximation.  It implies a conceptual  adaptation  of  the  ESA,  since the  reasons 
which prevent including a full sequence of accounts for localKAUs/industries  in the central 
framework  also forbid,  in principle, completely distributing all institutional  units and their 
accounts  between  regions;  for  this  would  mean,  in  principle,  building  up  a  full  set  of 
accounts for local KAUs. 

365 

13.14.  Due to the above-mentioned considerations, the system of regional accounts is limited to: 

regional industry aggregates on production activities: 

gross value added, 

Compensation of employees 

employment, 

employees 

gross fixed capital  formation 

gross domestic product per region (GDPR); 

regional household accounts 

METHODS OF  REGIONALIZATION 

13.15.  Regional  accounts  are  based  on  the  transactions  of  units  that  are  resident  in  a  regional 
territory. In general the regionalization can be done by using bottom-up methods, top-down 
methods or mixed methods. The methods may be described as follows: 

a.  Bottom-up methods 

The  bottom-up  method  of  estimation  involves  the  use  of  information  on  units  that  are 
resident in the region, and ascending by addition until the regional value of the aggregate is 
established. The regional values must add up to the corresponding national value. 

b.  Top-down methods 

The top-down method involves the distribution of a national figure among regions, without 
attempting  to  single  out  resident  units, by  means  of  a  distribution  key  which  reflects  as 
closely as possible the feature to be estimated. The method is called top-down because the 
aggregate is allocated to a region and not to a single unit. However, the notion of a resident 
unit is needed in order to have a correct regional coverage of the key to be used. 

c.  Mixed methods 

The  bottom-up  method  is rarely  encountered  in  its  pure  form.  Therefore  mixed  methods 
may also be considered. For example it happens that a variable or an aggregate of variables 
can  only  be  regionalized  with the help of the  bottom-up  method  at  level  NUTS-1.  For a 
further  regionalization at level NUTS-2 or NUTS-3 a top-down method has to be used. 

13.16. 

In  principle,  the  advantage  of  the bottom-up  method  is  that  it  directly  employs  relevant 
sources  at  the  regional  level.  An  advantage  of  top-down  methods  is  the  guarantied 
numerical  consistency  between national and regional accounts. A disadvantage  is that the 
estimates  are  not  produced  with  direct  data  but  with  a  key  that  is  supposedly  correlated 
with the phenomenon to be measured. 

13.17.  Whenever possible regional values which directly correspond  in concept  with the national 
values  should  be  estimated  directly  by  means  of  the  bottom-up  method.  The  top-down 
procedure  does  not  lead  to  a  solid,  reliable  data  basis  for  judging  the  accuracy  of  the 
estimated  values,  whereas  in  the  bottom-up  method  attention  is  drawn  to  a  possible 
divergence with the national totals. 

- 366 -

AGGREGATES BY INDUSTRY 

13.18.  An industry for a region consists of a group of local KAUs engaged in the same, or similar, 
kind  of activity  (see par.  2.108.). The local  KAU  is the unit  on  which  the  data  related  to 
production activities (output, intermediate consumption, etc.) are based. 

13.19.  As a general principle, aggregates on production activities should be allocated to the region 
where the unit carrying out the relevant transactions is resident. The residence of the local 
KAU is an essential criterion for the allocation of these aggregates to a particular region. 

13.20.  The  general  principle  of  allocating  gross  fixed  capital  formation  by  region  is  ownership 
just as in the accounts of the total economy (see par. 2.05., footnote  1). Fixed assets owned 
by a multi-regional unit are allocated to the local KAUs where they are used. As in national 
accounts fixed assets obtained through operational  leasing are recorded in the region of the 
owner and those obtained through financial leasing, in the region of the user 

13.21. 

In practice, it may be that information  is only available at the level of units which contain 
several  local  KAUs  engaged  in  different  activities  and/or  regions.  In  this  case,  available 
indicators  (e.g. compensation  of employees  or employment  per region) have to be used to 
regionalize the figures by industry. 

13.22.  When defining a local KAU three situations can be distinguished: 

a.  A  production  activity  with  significantO)  labour  input  at  a  fixed  location  raises  no 
problems.  However,  in  some  cases  further  clarification  is  needed  (see  par.  13.24. -
13.27.). 

b.  A  production  activity  without  significant  labour  input  at  a  fixed  location  is  not 
considered as a separate local KAU and the production should be attributed to the local 
unit that is responsible for managing this production. 

c.  For  a  production  activity  without  a  fixed  location  the  concept  of  residence  at  the 

national level should be applied 

13.23.  Ancillary activities are not isolated to form distinct entities or separated from  the principal 
or  secondary  activities  or  entities  they  serve  (see  par.  2.104.).  Accordingly,  ancillary 
activities should be integrated with the local KAUs they serve. 

Ancillary activities may be carried out in separate locations, located in another region than 
the  local  KAUs  they  serve.  The  strict  application  of  the  above-mentioned  rule  for  the 
geographical allocation of the ancillary activities would result in the underestimation of the 
aggregates  in the regions where ancillary  activities  are concentrated.  Therefore  according 
to  the principle  of  residence,  they  have  to  be  allocated  to  the  region  where  the  ancillary 
activities are situated; they remain in the same industry as the local KAUs they serve. 

'  ) 

Significant  labour input, in this context, has to be considered as a minimum of the yearly equivalent of one person working half-day 

367 

13.24.  For  some  industries,  the  methods  for  regionalization  need  some  further  clarification.  The 

industries are: 

construction; 

transport storage and communication 

financial intermediation 

13.25.  For the construction  industry, building sites should be treated  as independent  local KAUs 
when  the  activity  is  significant  (see par.  2.09.,  footnote  1). Given  the  mobility  of  some 
equipment,  e.g.  pile-drivers  and  cranes,  between  local  units  of  the  same  KAU  and  the 
absence  of  information  at  site  level,  it  is  recommended  to  allocate  gross  fixed  capital 
formation of such equipment to the headquarters of the KAU. 

13.26.  For transport industries including pipeline transport it is essential to define the local KAUs 
to  which  the  production  and  capital  formation  should  be  attached.  For  land  transport 
industries  (excluding railways) the production and capital formation  should  be attached to 
depots or similar local KAUs where the equipment is based. For water transport  industries 
the  production  and  mobile  equipment  should  be  allocated  to  the  home  base  of  the  unit. 
Pipeline networks should be attached to the local KAU that exploits it. 

For  rail  and  air  transport  industries  top-down  methods,  breaking  down  the  national 
aggregates into regions according to suitable indicators, should be used.  Compensation of 
employees  should  be  allocated  to  the region  where  the  people  are  employed.  The  gross 
operating  surplus should be allocated to the regions according to indicators relating to the 
activity of the train or air routes. 

Regarding  communication  industries, telephone boxes, telephone sets,  telecommunication 
lines, etc. perform  only a supporting role.Therefore,  they do not form  distinct  entities and 
should  be  attributed  to the local KAU responsible  for  managing  them. The  investment  in 
infrastructure  should also be allocated to these local units. 

13.27.  For  financial  intermediation  industries, value  added  should  be  allocated  according  to the 
income  approach.  Compensation  of  employees  should  be  allocated  to  the  local  KAUs 
where  the  people  are  employed.  Gross  operating  surplus  of  credit  institutions  should  be 
distributed  between local KAUs in proportion to the sum of loans and deposits, and gross 
operating  surplus  of  insurance  institutions  in proportion  to  the premiums  received.  Gross 
fixed capital formation  mainly consists of buildings; therefore, it should be allocated to the 
region where they are situated. 

368 

13.28.  Output  is  to  be  valued  at  basic  prices  (see  par.  3.37.).  Products  used  for  intermediate 
consumption  are  to  be  valued  at  purchasers'  prices  at  the  time  they  enter  the  process  of 
production  (see par.  3.62.). As a consequence  gross value added  per  industry  is valued  at 
basic prices. 

Gross fixed capital formation  is valued  at purchasers' prices  including  installation  charges 
and other costs of ownership transfer.  When produced on own-account it is valued at basic 
prices of similar fixed assets or at costs of production if such prices are not available (see 
par. 3103). 

13.29.  The  regional  equivalent  of  GDP  is GDPR  (gross  domestic  product  per  region).  GDPR  is 
valued  at  marked  prices  by  adding  the  regionalized  taxes  less  subsidies  on  products  and 
imports to values added per region at basic prices. The sum of GDPR at market prices per 
region, including GDPR of the extra-regio territory, equals GDP at market prices. 

HOUSEHOLD ACCOUNTS 

13.30.  Gross  domestic  product  per  region  is  the  result  of  the  productive  activities  of  the  local 
KAUs  resident  in  a  region.  The  processes  of  distribution  and  redistribution  of  income 
result in other meaningful  balancing items, namely primary income and disposable income. 
Due to the considerations  mentioned  in  13.10. -  13.14., in regional accounts these income 
concepts are limited to households 

13.31.  Regional accounts of households are a regional specification  of the corresponding accounts 

at the national level. For practical reasons the accounts are limited to: 

allocation of primary income account; 

secondary distribution of income account; 

In  general  terms,  they  aim  at  measuring  primary  income  and  disposable  income  of 
households which are resident in a region. 

13.32.  The regional household accounts are based on the households that are resident in a regional 
territory. For the definition  of households as institutional units and for the definition  of the 
institutional  sector households, is referred  to par. 2.13., 2.16., 2.75. and 2.76.. The number 
of  persons  that  are  member  of  the  resident  households  add  up  to  the  total  resident 
population of the region. 

13.33. 

In general the rules for  determining  the residence  of households at the  national  level  also 
apply  to  the  regional  accounts  of  households.  However,  concerning  the  residence  of 
students and  long-term patients an exception  is made when the host  region  is in the same 
country.  In  regional  accounts, they  are treated  as  resident  of  the  host  region  if  they  stay 
there more than one year 

13.34. 

In  the  regional  accounts  of  households,  two  considerations  have  to  be  made  regarding 
households owning an unincorporated  enterprise,land  and/or a second  dwelling  in another 
region. 

- 369 

A household owning an unincorporated  enterprise (not viewed  as a  quasi-corporation 
at the national level) in another region. 

The  unincorporated  enterprise  is  considered  to  be  a  resident  (notional  unit)  in  the  host 
region. As a consequence, mixed  income resulting  from  the compilation  of aggregates by 
industry  is  part  of  the  mixed  income  of  the  host  region.  However  mixed  income  as 
registered  in the allocation  of  primary  income  account  of  households  per  region  is  to be 
equal to total mixed income received by households resident in a region, irrespective of the 
region in which this income is generated. 

A household owning land and/or a second dwelling in another region. 

Here, the land and/or the second dwelling are also considered to be notional units resident 
in the host  region. Consequently, the rents and rentals  payable  by the tenants  of the land 
and/or  the  dwelling  are  paid  to  the  notional  unit.  If  the  second  dwelling  is  used  by  the 
owner for own final consumption, the rental value should be registered as an inter-regional 
export from the region where the dwelling is located to the region where the owner resides. 
The latter region thus imports this service and uses it for final consumption expenditure of 
households.  As  in  the  case  of  mixed  income,  the  operating  surplus  resulting  from  t1 
production  process  will  differ  from  the  operating  surplus  in  the  allocation  of  primary 
income accounts of households; for the total economy, both are equal. 

370 -

ANNEX 

37 

ANNEX 1 

FINANCIAL INTERMEDIATION  SERVICES 

INDIRECTLY MEASURED 

(FISIM) 

-  "1 Z.  -  37' 

Changes to be made in the ESA chapters 
if FISIM is to be allocated 

3 7 4-

(24) 

Delete 

Add and replace 

1.13.  "Recording  the  use  of  financial  services  Replace  by:  "Allocating  the  use  of  financial 
indirectly  measured 
indirectly 
consumption of a nominal sector (industry)" 

intermediation  services 
(FISIM) to user sectors/industries" 

intermediate 

measured 

as 

Add at  1.25.  "Some of the major  differences  in 
concept are:" 
"- The  use  of  financial  intermediation  services 
indirectly measured (FISIM) is now allocated to 
user  sectors/industries  instead  of  to  a  nominal 
sector  (industry).  As  a consequence,  the  use of 
FISIM  is  not  anymore  by  convention  recorded 
entirely  as  intermediate  consumption,  but  can 
also  be 
imports  and 
exports." 

final  consumption, 

3.60.J) "only  for  the total economy: all financial  Replace by: "the use of financial  intermediation 
intermediation  services 
resident 
(FISIM) provided by resident producers " 

indirectly  measured  services 

indirectly  measured  by 

producers" 

Add  to  3.66.e)  "financial  services  directly 
charged": 
intermediation 
"and 
services  indirectly  measured  used  for  final 
consumption purposes by households" 

the  part  of  financial 

the  amount  of 

immediately  after  3.132.  "-Financial 
the  explicit 

Add 
services  by 
commissions and fees": 
"- The part  of financial  intermediation  services 
indirectly measured used by non-residents" 

3 7 5-

4.51.  second part 

4.51.  second part 

"The  value  of  the  services  provided  by 
financial  intermediaries  being  allocated 
among  different  customers,  the  actual 
payments or receips of interest to or  from 
to  be 
intermédiaires  need 
financial 
adjusted  to  eliminate  the  margins  that 
represent  the  implicit  charges  made  by 
financial intermediaries.  The  amounts  of 
interest  paid  by  borrowers  to  financial 
intermediaries  must  be  reduced  by  the 
estimated  values  of  the  charges  payable, 
while  the  amounts  of  interest  receivable 
by depositors must be similarly increased. 
The  values  of  the  charges  are  treated  as 
payments 
rendered  by 
services 
for 
their 
intermediaries 
financial 
customers  and  not  as  payments  of 
interest." 

to 

8.14.  "As  financial 

intermediation  services 
indirectly measured (FISIM) are allocated 
to  user  sectors,  certain  parts  of  interest 
payments  are reclassified  as payments of 
services.  This  reclassification  has  conse 
quences  for  the  values  of  output  and 
intermediate  consumption  (as well  as  for 
the  values  of  imports,  exports  and final 
consumption)." 

not 

intermediaries 

"The  value  of  the  services  provided  by 
being 
financial 
allocated  among  different  customers,  the 
actual  payments  or  receipts  of  interest  to 
or  from  financial  intermediaries  are  not 
adjusted  to  eliminate  the  margins  that 
represent  the  implicit  charges  made  by 
financial 
intermediaries.  An  adjustment 
item is needed in the allocation of primary 
income account of financial  intermediaries 
and  of  a  nominal  industry  to  which,  by 
convention,  the  whole  output  of  financial 
intermediaries  is allocated  as  intermediate 
consumption." 

8.14.  "As 

intermediation 

services 
financial 
indirectly  measured 
(FISIM)  are  not 
allocated  to  user  sectors, the whole of the 
value of the output  of FISIM is treated  as 
the 
intermediate  consumption  of  a 
nominal  sector  with  zero  output  and 
negative  value  added  equal  in  size  but 
opposite 
intermediate 
consumption. In this way, the value added 
of  all  sectors  and  industries  together  is 
reduced in total by this amount. To lighten 
the presentation of accounts, it is possible 
not  to  insert  a  supplementary  column  for 
the nominal sector, but instead to take into 
account  the  corresponding  figure  in  the 
column total economy." 

sign 

to 

in 

376 

8.24.  "As  financial 

in 

intermediation  services 
(FISIM) are allocated  to user  sectors, the 
item  "interest" 
the  allocation  of 
primary  income  account  corresponds  to 
interest  payable  and  receivable  after 
FISIM  has  been  deducted  from  actual 
payables  by  borrowers  and  added  to 
actual receivables by lenders." 

.24.  "As 

intermediation 

financial 
services 
(FISIM)  are  not 
indirectly  measured 
allocated to user sectors, the entries shown 
for  interest  are  those  for  actual  interest 
payable  and  receivable.  An  adjustment  is 
made to resources  in the column financial 
corporations  (with a negative sign) and  in 
the column nominal sector (with a positive 
the  presentation  of 
sign).  To 
accounts,  it  is  possible  not  to  insert  a 
supplementary  column  for  the  nominal 
the 
sector,  but 
corresponding  figure  in  the  column  total 
economy." 

to  present 

instead 

lighten 

Add tables  1  and 2 to show the consequences of 
allocation of FISIM on figures  presented  in the 
chapter  8  sequence  of  accounts  (numerical 
example). 

- 3 77 

Table  1 

Effect  of allocating  FISIM to institutional  sectors, including  changes  for  non-market  producers 

Uses 

Accounts 

Total 

S M B S M M M B l i l B H Ba 

I. 
Production/ 
external 
account 
TOT 
' 
Generation 
of income 
account 
11.1.2. 
Allocation 
of primary 
income 
account 
II.2. 
Secondary 
distribution 
of 
income 
account 
I U.  Use 
of income 
account 

2 
4 

27 
30 

30 

230 

22 

22 

28 

00 

1572 

51 

S.15  S.14 

Good 
and 
servie 
(res.) 

Rest 
of 
the 
worid 

Total 
eco 
nomy 

NPIS 

Hous 
holds 

S.13  S.12  S.11 

Gener 
gover 
ment 

Finan 
cial 
corpo 
ration 

Non-
finan-
cial 
corpo-
ration 

Resources 
S.11  S.12  S.13  S.14 
Non-
finan- 
cial 
corpo- 
ration 

Finan 
cial 
Gener 
corpo-  gover  Hous 
holds 
ration  ment 

S.15  S.1 

572" 

Total 
eco 
nomy 

Rest 
of 
the 
world 

Good 
and 
servie 
(uses)  Total 

NPIS 

Accounts 

Transactions  and  balancing  ite 

Imports of services 
P.72 
P.62  Exports of services 
P.1 
P.2 
B.1 

Output 
Intermediate consumption 
Value added/external balance 

48 

48 

- 18 

0 
48 

18 
- 18 

57 

30 

30 

4  Production/ 
57  external 
account 

30  11.1.1. 

Generation 
of income 
account 

30  11.1.2. 

4 

-2 

27 
30 

30 

48 

- 1Î 

B.2 

Operating surplus 

- 18 

48 

13 

217 

22 

14 

35 

35 

21 

106 

56 

D.41 

Interest 

33 

106 

14 

48 

- 41 

B.5 

Balance of primary incomes 

- 41 

48 

- 21 

49 

35 

209 

21 

22 

22 

28 
-6 

35 

- 21 

48 

- 41 

B.6 

Disposable income 

- 41 

48 

- 21 

35 

22 

19 
16 

6 
- 27 

48 

- 41 

P.3 
B.8 

Final consumption expenditure 
Saving,  net/external balance 

230 

22 

Allocation 
of primary 
income 
account 
II.2. 
Secondary 
distribution 
of income 
account 
II.4.  Use 
22  of income 

account 

Table 2 

Effect  of  allocating  F I S IM  to  nominal  sector  only 

Uses 

Accounts 

Tot 

I. Production 
account 

48 

S^ 

S7Î 

~57f5 

S7Ï 

S7Î3 

S7Ï2 

Good 
and 
servie 
(res.) 

Res 
of 
the 
worl  nomy 

Total 
eco-

Gener 
Hou  gover 
hoi  ment 

NPIS 

48 

Resources 

S7Î2 

S7Ï3 

STÏ4 

S7Ï5 

S7i 

572" 

Finan 
cial 
Gener 
corpo-  gover  Hous 
holds 
ration  ment 

NPIS 

Res 
of 
the 
worl 

Good 
and 
servie 
(uses) 

Total  Accounts 

Tot 
eco 
no 

48 

48 
48 

48 

37TT" 
Non-
finan-
cial 

Finan- 
cial 
corpo-  corpc-
ration 

Non-
finan- 
cial 
corpo- 
ration  Nominal  Transactions and balancing Items  Nominal  ration 

48 

48 
77 

48 
- 48 

P.l  Output 
P.2 
B.l  Value added/external balance 

Intermediate consumption 

__. 

- 48 

•48 

B.2  Operating surplus 
D.41  Interest 

66 

Adjustment  for  FISIM 

- 48 

48 

25 

48 

48 

48 
125 

- 48 

222 

16 

206 

17 

39 

12 

33 

5  200 

22 

222 

6 

-2 

16 

- 27 

48 

- 41 

B.5  Balance of primary incomes 

- 41 

48 

•27 

16 

-2 

-6 

-6 

-6 

6 

-2 

16 

- 27 

48 

- 41 

B.6  Disposable income 

- 41 

48 

•27 

16 

-2 

-6 

-2 

16 

- 27 

48 

- 41 

B.8n  Saving, net/external balance 

I. 
Production 
account 
II.l.l. 
Generation 
of income 
account 
II.1.2. 
Allocation 
of primary 
income 
account 
11.2. 
Secondary 
distribution 
of income 
account 
II.4.  Use 
of income 
account 

II.l.l. 
Generation 
of income 
account 
II.1.2. 
Allocation 
of primary 
income 
account 
II.2. 
Secondary 
distribution 
of income 
account 
II.4.  Use 
of income 
account 

-si 
o 

9.25.  "the  intermediate  consumption  by  industry 
intermediation 
includes  the  use  of  financial 
services  indirectly  measured  that are recorded  in 
a nominal industry (see para 9.33.)" 

9.25.  "minus  the  use  of  financial  intermediation 
services 
in  a 
nominal industry, see para 9.33.)" 

indirectly  measured  (recorded 

9.33.  "Throughout  the supply and use tables, the 
NACE.Rev. 1  industry  classification 
...  As  a 
consequence,  its total  gross value added  is equal 
to its (negative) net operating surplus" 

380 

ANNEX2 

LEASING AND fflRE PURCHASE 

OF DURABLE GOODS 

381 

I. 

DEFINITIONS 

In  addition  to  purchasing  durable  goods  outright,  institutional  units  can  obtain  the  use  of 
them  in  the  following  ways:  operating  leasing,  financial  leasing  and  hire  purchase.  In  all 
three  cases  the  institutional  unit  in  question  acquires  the  right  to  use  a  durable  good, 
although  the good  legally  remains the property of another  unit. 

Leasing 

When  one  institutional  unit A  owns  a durable  good  and  transfers  the  right  to  use this  good 
to another  unit  B, A  is said  to be the  "lessor"  and  B  the  "lessee". Payments  from  B to A  in 
exchange  for  the  transfer  of  user  rights  are  called  "rental  payments".  The  lessor  may  be 
identical  with,  or  a  subsidiary  of,  the producer  or  seller  of the  durable  good,  but  the  lessor 
may  also  be  a  completely  independent  unit  with  no  ties  to  the  producer  or  seller.  All  sorts 
of produced  durable goods, from  buildings  and  structures to consumer  durables, may  be the 
subject  of  leasing,  and  any  kind  of  institutional  unit  may  use  leasing  to  obtain  user  rights 
over  durable  goods.  The  two  types  of  leasing,  operating  and  financial  leasing,  are  treated 
quite differently  in the  system. 

Operating 

leasing 

3. 

The  lessee acquires  the right to use a durable  good  for  a certain period  of time, which  may 
be  long  or  short  and  not  necessarily  settled  in  advance.  When  the  leasing  period  expires, 
the  lessor expects  to  receive  his  good  back  in  more  or  less  the  same  condition  as  when  he 
hired  it out, apart  from  normal  wear  and  tear.  The  lessor  is then  likely  to  hire  out the  good 
to  another  lessee  or  to  use  it  otherwise.  Thus,  the  leasing  period  does  not  cover  all,  or  a 
predominant part of,  the good's economic  lifetime. 

Units  engaged  in  operating  leasing  possess  expert  knowledge  about  the  kinds  of  durable 
goods they hire out. They keep stocks of these goods to be able to hire them  out on  demand 
or  at  short  notice.  Usually  they  offer  a variety  of  models  to  choose  from.  In  order  to  keep 
their  durable  goods  in  good  working  order,  lessors  must  carry  out  maintenance  and  repair 
services  on  goods  awaiting  hire.  Lessors  also  normally  assume  responsibility  for  repairs 
and  maintenance  of a good, as well as replacement  in case of a breakdown,  while the  good 
is hired out to a lessee. 

Operating  leasing  does  not  cover  situations  where  the  owner  of  equipment  also  provides 
staff  to  operate  the  equipment,  or the hiring  of non-produced  assets, as these  activities  are 
classified  elsewhere  (see para. 7.). 

Financial 

leasing 

4. 

The  lessee  acquires  the  right to use  a durable  good  in exchange  for  rental  payments  over  a 
predetermined  and  protracted  term.  If  all  risks  and  rewards  of  ownership  are,  de  facto 
though  not de jure, transferred  from  lessor to lessee, the lease is a financial  one. In  financial 
leasing,  the  leasing  period  covers  all,  or  most  of,  the  economic  lifetime  of  the  durable 
good.  At  the  end  of  the  leasing  period  the  lessee  often  has  the  option  to  buy  the  good  at  a 
nominal  price.  The  lessor  does  not  need  to  possess  any  expertise  about  the  good  in 
question.  He offers  no  repair, maintenance  or  replacement  services  to the  lessee.  Normally, 
the good  is chosen by the lessee and delivered  directly  to him by the producer  or seller.  The 
lessor's  role  is thus purely  financial. 

382 

The  ESA  recognizes  the  economic  reality  behind  financial  leasing  by  recording  it  as 
follows:  The  lessor  provides  the  lessee  with  a  loan  enabling  the  lessee  to  purchase  a 
durable good, of which the lessee becomes the de facto  owner. Thus, the system treats the 
durable  good as if owned by the lessee  from  the beginning  of the  leasing  period.  Rentals 
actually paid  by the lessee to the lessor have to be subdivided into repayments of principal 
and interest payments related to the imputed loan. 

Hire purchase 

5. 

A durable good is sold to a purchaser in return for agreed future payments. The buyer takes 
possession of the good immediately, though in law it remains the property  of the seller or 
financier  as collateral/guarantee  until all agreed  payments have been made. Hire purchase 
is usually restricted to consumer durables, and most purchasers are households. Financiers 
of  hire  purchase  contracts  typically  are  separate  institutional  units  operating  in  close 
cooperation with sellers of durable goods. 

II. 

TREATMENT IN THE ACCOUNTS 

Operating leasing 

6. 

7. 

A durable good purchased by a lessor for the purpose of leasing is part of the lessor's gross 
fixed capital formation  (P.51) and is shown as a tangible fixed asset (AN.III) in the lessor's 
balance  sheet  during  its  entire  economic  life.  Subsequent  capital  consumption  (K.1) in 
respect of the durable good is recorded in the lessor's accounts. 

Rental payments  received  by a lessor are shown in his production account as output (P.l) 
of leasing services. If the lessee is a producer, rental payments are part of his  intermediate 
consumption  (P.2).  When  the  lessee  is  a  household  acting  as  a  final  consumer,  rental 
payments are part of his final consumption expenditure (P.3). 

In NACE Rev.  1, operating leasing of real estate is classified  in class 70.20 'Letting of own 
property'. Operating  leasing of other durable goods is classified  in division  71 'Renting of 
machinery  and  equipment  without  operator  and  of  personal  and  household  goods'. 
Operating leasing does not comprise the renting of machinery or equipment with operating 
staff, which is classified  according to the services provided by the equipment and staff. For 
example, the hiring out of a lorry with driver is classified  in class 60.24  'Freight  transport 
by road'.  Institutionally,  operating  leasing  corporations  are classified  in sector  S.ll  'Non-
financial corporations', but operating lessors may also be found in sector S.14 'Households'. 

If  the  lessor  is  resident  while  the  lessee  is  non-resident,  rental  payments  are  shown  as 
exports of services  (P.62). As the leased  good  remains  on the balance  sheet  of a resident 
unit (the lessor), the good does not appear in any of the rest of the world  accounts. If the 
lessor is non-resident while the lessee is resident, rental payments are recorded as imports 
of  services  (P.72).  In  this  case  the  good  itself  is  not  considered  to  enter  the  economic 
territory  (only  its  services  are). Thus  the  leased  good  appears  neither  in  the rest  of the 
world accounts nor in any other account. 

383 

Financial leasing 

8. 

9. 

10. 

11. 

If  the  lessee  is  a  producer,  the  durable  good  is  shown  as  gross  fixed  capital  formation 
(P.51) for the lessee at the beginning of the leasing  period. Throughout  the leasing period 
(unless  the  lessee  defaults  on the rental payments)  the  good  is shown  as a tangible fixed 
asset  (AN.III)  in the balance sheet of the lessee. Subsequent  capital  consumption  (K.l)  is 
shown  in the accounts of the lessee. At the end  of the leasing  period,  either  (i) the  lessee 
buys the good  at  its residual  value when  it remains  on his balance  sheet,  or  (ii)  the good 
reverts  to  the  lessor,  when  it  is  shown  as  negative  gross  fixed  capital  formation  for  the 
lessee  and  thus  leaves the  lessee's  balance  sheet,  and  may  enter  the  balance  sheet  of  the 
lessor or that of a third party, to whom the lessor has sold on. 

If the.lessee  is  a  household  acting  as  a  final  consumer,  the  durable  good  is  treated  as  if 
bought  by the  lessee  for  the purpose  of final consumption  at the beginning  of the  leasing 
period. This means that the purchaser's price of the leased good is part of the lessee's final 
consumption  expenditure  (P.3)  at  the  beginning  of  the  leasing  period  and  that  the  good 
appears only as a consumer durable in the memorandum item to his balance sheet. 

A loan (F.4) is imputed  from  lessor to lessee. The principal  of this loan is the  purchaser's 
price of the leased good plus transfer costs (if any). The outstanding imputed loan (AF.4) is 
shown  in  the  lessor's  and  lessee's  balance  sheets  as  a  financial  asset  and  liability, 
respectively.  Payments  of  rental  are  considered  to  comprise two  elements,  repayment  of 
principal  (F.4)  and  interest  (D.41),  with  the  final  repayment  coinciding  with  the 
termination of the financial lease. 

The  interest  rate  on  the  imputed  loan  is  implicitly  determined  so  that  accumulated 
repayments  over  the  leasing  period  exactly  equal  the  principal.  When  rental % remains 
constant from period to period, the interest part of rental will decline over time, while the 
repayment  part  will  increase  correspondingly,  as  for  a  loan payable  in equal  instalments. 
When  principal,  rental  and  length  of the  leasing  period  are  known  for  each  contract,  the 
interest  rate,  the  interest  payments  and  the  repayments  can  easily  be  calculated  using 
standard  formulae.  When detailed data on each leasing contract are not available, which is 
often the case in practice, reasonable assumptions must be made in order to carry out these 
calculations.  In  many  countries  business  accounting  treats  financial  leasing  in  a  similar 
way as described here, which facilitates the data situation. 

Financial  lessors'  productive  activity  is  financial  intermediation.  Usually  lessors  do  not 
charge  explicitly  for  their  intermediation  services.  Their  output  is  therefore  mainly  or 
exclusively  financial  intermediation  services  indirectly  measured  (FISIM),  calculated 
similarly to other financial  intermediaries: property income receivable less interest payable, 
excluding any property income receivable from the investment of their own funds*1).  Some 
financial  lessors  incur  liabilities  to  other  independent  units  when  interest  payable  is 
observable  and  the  calculation  of  FISIM  is  straightforward.  Other  financial  lessors  incur 
liabilities only to their parent companies when interest payable may be difficult  to observe. 
In the latter case it may be necessary to estimate the amount of interest payable by using an 
appropriate interest rate. 

O 

Tor further  detail see chapter  III, para. 3.53. 

384 

Financial  leasing  corporations  are  classified  in  the  institutional  subsector  S.123  'Other 
financial  intermediaries  except  insurance  corporations  and  pension  funds'.  The  activity 
classification  is NACE Rev. 1  class 65.21 'Financial leasing'. 

12. 

The  ESA's treatment  of  financial  leasing  implies  that  the  leased  good  does  not  appear  in 
any of the lessor's accounts. Whether or not the lessor is resident or non-resident  is thus of 
no consequence to the treatment of the good itself. If the producer or seller of the good is 
resident  while  the  lessee  is  non-resident,  the  leased  good  is  treated  as  if  exported  (P.61) 
when  the  lessee  takes  possession  of  it,  i.  e.  at the  beginning  of the  leasing  period.  If the 
producer/seller  is  non-resident  while  the  lessee  is  resident,  the  good  is  considered  to  be 
imported (P.71) when the leasing period begins. 

If the lessor is resident while the lessee is not, a loan (F.4/AF.4) is imputed from  a resident 
unit  (the  lessor)  to  a  non-resident  unit  (the  lessee).  If  the  lessor  is  non-resident  and  the 
lessee is resident, a loan is imputed  from  a non-resident  unit (the lessor) to a resident unit 
(the  lessee). As  in the case of leasing  transactions  between  residents, rental  payments are 
broken down into interest (D.41) and repayments of principal (F.4). 

Hire purchase 

13. 

The durable good is recorded as if bought by the purchaser the day he takes possession of it 
at the price the purchaser would have paid in a cash transaction. The purchaser receives an 
imputed loan (F.4/AF.4) of equivalent value. The ESA splits the payments from  purchaser 
to financier into repayments of principal (F.4) and interest payments (D.41), using the same 
method as the one applied for financial leasing. 

The  productive  activity  carried  out  by  financiers  of  hire  purchase  contracts  is  financial 
intermediation.  As  they  do  not  usually  charge  explicitly  for  their  services,  their  entire 
output  is  financial  intermediation  services  indirectly  measured  (FISIM),  calculated  as 
property income receivable less interest payable, excluding any property income receivable 
from own  funds.  As the case of financial  leasing, the amount  of  interest  payable  may  be 
difficult  to observe and must therefore be estimated. 

14. 

In NACE Rev.  1, financiers of hire purchase contracts are classified  in class  65.22 'Other 
credit  granting'.  Hire purchase  corporations  are classified  in  institutional  subsector  S.123 
'Other  financial  intermediaries  except  insurance  corporations  and  pension  funds',  but 
financiers  of hire purchase contracts may also be encountered in sector S.14 'Households'. 

If  the  purchaser  is  non-resident  while  the  financier  is  resident,  the  good  is  treated  as  if 
exported  (P.61)  when  the  purchaser  takes  possession  of  it.  In  this  case,  the  financier 
provides  a non-resident  unit  (the purchaser)  with  a loan  (F.4/AF.4).  If  the  purchaser  is a 
resident  unit  while  the  financier  is  not,  the  good  is  recorded  as  imported  ((P.71)  when 
delivered  to the purchaser,  who at the same time obtains a loan (F.4/AF.4) from  the non 
resident  financier.  Repayments  of principal  (F.4) and  interest payments  (D.41)  are treated 
in the same way as for financial leasing involving non-resident units. 

-  385 -

ANNEX3 

INSURANCE 

- 

3 ? é - 3 8 7-

INTRODUCTION 

1. 

There are two main types of insurance: social insurance and other insurance. 

Social insurance may be subdivided into 

1) 

2) 

3) 

social security schemes of government, 

private funded  social insurance schemes, and 

unfunded  social insurance schemes operated by employers. 

Other insurance may be subdivided into 

1) 
2) 

other life insurance, and 
other non-life insurance. 

Reinsurance  and  insurance  auxiliaries  are  treated  in  separate  sections  of  this  annex.  These  topics 
relate mainly to other insurance, but they may also relate to social insurance. 

1. 

a) 

2. 

3. 

DEFINITIONS 

Social insurance 

Social insurance schemes are schemes in which social contributions are paid by employees 
or  other  individuals,  or  by  employers  on  behalf  of  their  employees,  in  order  to  secure 
entitlement  to  social  insurance  benefits  for  the  employees  or  other  contributors,  their 
dependents  or  survivors.  Social  insurance  schemes  cover  social risks or  needs.O)  Unlike 
social  assistance  benefits,  social  insurance  benefits  are  conditional  on  participation  in  a 
scheme. 

Social insurance schemes are often organised collectively so that those participating do not 
have to  take  out  individual  insurance  policies  in their  own names. However,  some  social 
insurance  schemes  may permit,  or  even  require,  participants  to  take  out  policies  in  their 
own  names.  Individual  policies  are  treated  as  part  of  a  social  insurance  scheme  if  they 
cover social risks or needs and if at least one of the following three conditions is satisfied: 

(i) 

participation  in  the  scheme  is  compulsory  either  by  law  or  by  the  conditions  of 
employment, 

(ii) 

the scheme is operated on behalf of a group and restricted to group members, or 

(iii)  an employer makes a contribution to the scheme on  behalf of an employee. 

^  ' 

See chapter IV, para. 4.83- 4.86., for a definition  of social risks or needs. 

- 3 8 8-

a.l) 

Social security schemes of government 

4. 

These  schemes  are  imposed,  controlled  and  financed  by  government  units  and  cover  the 
entire  community,  or  large  sections  of  the  community.  Social  security  schemes  of 
government  may  be  funded  or  unfunded.  When  separate  funds  can  be  identified,  they 
remain the property  of the government and not of the beneficiaries  of the schemes.  Social 
security  schemes'  receipts  consist  mainly  of  contributions  paid  by  individuals  and  by 
employers  on  behalf  of  their  employees,  but  they  may  also  include  transfers  from  other 
government  units.  Participation  in  social  security  schemes  is  usually,  though  not  always, 
compulsory.  The  benefits  paid  to  individuals  are  not  necessarily  determined  by  the 
amounts previously paid in contributions. 

It  should  be noted  that  social  insurance  schemes  organised  by  government  units  for  their 
own  employees  are  not  classified  as  social  security  schemes,  but  as  private  funded  or 
unfunded  social insurance schemes. 

a.2) 

Private funded social insurance schemes 

5. 

There are two categories of such schemes. The first consists of schemes in which the social 
contributions  are  paid  to  insurance  enterprises  or  autonomous  pension  funds  that  are 
separate  institutional  units  from  both  the  employers  and  the  employees.  The  insurance 
enterprises  or autonomous pension funds  are responsible  for managing the resulting  funds 
and  paying  the  social  benefits.  The  second  category  consists  of  schemes  in  which 
employers maintain special reserves to defray  social benefits. These reserves are segregated 
from  their  other  reserves,  but they  do  not  constitute  separate  institutional  units  from  the 
employers and are referred to as non-autonomous pension  funds. 

a.3) 

Unfunded  social insurance schemes operated by employers 

6. 

b) 

7. 

These  are  schemes  in  which  employers  pay  social  benefits  to  their  employees,  former 
employees or their dependents out of their own resources without creating special reserves 
for the purpose. 

Other insurance 

Other  insurance  provides  individual  institutional  units  exposed  to  certain  risks  with 
financial protection  against  the  consequences  of  the  occurrence  of  specified  events.  It  is 
also  a  form  of  financial  intermediation  in which  funds  are  collected  from  policy  holders 
and invested in financial or other assets which are held as technical reserves to meet  future 
claims arising from the occurrence of the events specified  in the insurance policies. 

Other  insurance  policies  held  by households  may  cover  the  same  risks  or  needs  as  those 
covered  by  social  insurance  schemes.  However,  other  insurance  policies  held  by 
households  are distinguished  from  social insurance policies by the fact  that they  are taken 
out on the individual households' own initiative and for their own benefit,  independently of 
their employers or government. 

189-

b.l) 

Other life insurance 

8. 

Holders  of  other  life  insurance  policies  are  exclusively  households,  resident  or  non 
resident.  The  policy  holder  makes regular  payments  to  an  insurer  in  return  for  which  the 
insurer  guarantees  to  provide  a benefit  at  a given  date  or earlier  if  the policy  holder  dies 
beforehand.  If the policy  holder cancels  the policy  before  the  agreed  expiration  date, the 
policy holder is entitled to a partial benefit  from  the insurer. A benefit  is thus always paid 
to  the  policy  holder  or  his  survivors.  Policies  that  provide  a benefit  in  the  case  of  death 
within a given period but in no other circumstances, usually called  term insurance,  are not 
regarded as other life insurance, but as other non-life insurance. 

A life insurance claim may be paid as a lump sum or as an annuity. The claim may be  fixed 
or  may  vary  to  reflect  the  income  earned  from  the  investment  of  premiums  during  the 
period  for  which the policy  operates  ("with-profit"  policies). A special kind  of  with-profit 
policy is a unit-linked policy, where the claim varies according to the value of a segregated 
fund. 

b.2) 

Other non-life  insurance 

9. 

All kinds  of  institutional  units may  be holders  of  other  non-life  insurance  policies.  Other 
non-life  insurance  includes  term  insurance  and  insurance  against  every  risk  other  than 
death, e. g. accidents, sickness or fire. Claims are usually paid as lump sums, but may also 
be paid  as annuities. A claim  is not always paid  in respect  of an other  non-life  insurance 
policy.  Typically  the  number  of  claimants  is  much  smaller  than  the  number  of  policy 
holders. For an individual policy holder there is no relationship between the premiums paid 
and the claims received, even in the long run. 

c.l) 

Reinsurance 

10. 

An insurance enterprise  undertaking  insurance with policy holders often  transfers  some of 
the  risks  incurred  to  other  insurance  enterprises.  These  transactions  between  insurance 
enterprises are called reinsurance. 

Both  life  and  non-life  insurers  are  involved  in  reinsurance  transactions.  Insurance 
enterprises  that  accept  reinsurance  may  engage  in  both  reinsurance  and  insurance  with 
policy holders, or they may be specialist reinsurers. 

c.2) 

Insurance auxiliaries 

11. 

Insurance  auxiliaries  are  units  that  engage  primarily  in  activities  closely  related  to 
insurance  but  which  do  not  themselves  incur  risks.  Insurance  auxiliaries  include  in 
particular: 

insurance brokers, 

private non-profit  institutions serving insurance enterprises and pension  funds, 

units whose main activity is to act as supervisory  authorities  of insurance enterprises 
and pension funds  and of insurance markets. 

590  -

(25) 

11. 

12. 

TREATMENT IN THE ACCOUNTS 

For  ease  of  exposition,  the  following  description  of  the  different  types  of  insurance 
concentrates  on  cases where only  resident  units  are  involved.  At  the  end  of  each  section, 
special features  for cases involving non-resident units are considered. 

a) 

Social insurance 

a.l) 

Social security schemes of government 

13. 

The output produced by those employed in managing these schemes is part of government 
output,  valued  at the cost of production.  Consequently,  no service  charge  is calculated  for 
social security schemes of government. 

Employers'  contributions  to  social  security  schemes  of government  (D  121) aie treated as 
part  of  compensation  of  employees,  shown  as  payable  by  the  employer's  sector  in  the 
generation  of  income  account  and  receivable  by  the household  sector  in  the  allocation  of 
primary  income  account.  Employers'  contributions  reappear  in  the  secondary  distribution 
of  income  account  as part of employers' actual  social  contributions  (D.6111),  payable by 
the  household  sector  and  receivable  by  government.  Employees'  contributions  (D  6112) 
and contributions by self-employed  and non-employed  persons (D 6113) are also recorded 
in  the  secondary  distribution  of  income  account  as  payable  by  the  household  sector  and 
receivable  by  government.  Social  security  benefits  in  cash  (D.62Î)  are  shown  in  the 
secondary  distribution  of  income  account  as  payable  by  government  and  receivable  by 
households, while  social  security benefits  in kind  are  shown  as item  D.6311  and  D.6312, 
payable  by  government  and  receivable  by  households  in  the  redistribution  of  income  in 
kind account. 

14. 

The  units  managing  social  security  schemes  of  government  are  classified  in  sub-sector 
S.1314  'Social  security  funds'.  The  activity  classification  according  to  NACE  Rev.  1 is 
class 75.30 'Compulsory social security activities'. 

When  a  resident  works  for  a  non-resident  employer,  the  employer's  contributions  are 
shown as payable by the rest of the world in the external  account of primary  incomes and 
current transfers. If the employee also participates in a social security scheme run by a non 
resident  government,  all  receivables  and  payables  normally  concerning  the  government 
sector are receivable or payable by the rest of the world, recorded in the external account of 
primary incomes and current transfers.  However, in the ESA social transfers  in kind  occur 
only  between  resident  units.  Any  benefits  from  non-resident  social  security  schemes  to 
residents  are therefore  by  definition  social  benefits  other  than  social  transfers  in  kind  (D 
62). 

When  a  non-resident  works  for  a  resident  employer,  the  employer's  contributions  are 
recorded  as receivable by the rest of the world in the extemal  account  of primary  incomes 
and current transfers.  If the non-resident  employee  is covered  by a resident  social  security 
scheme, the transactions between the employee and the government  sector  are recorded  in 
the external  account  of primary  incomes and  current transfers.  By definition,  any  benefits 
to non-resident employees are social benefits other than social  transfers  in kind (D 62). 

An example of the flows recorded  for  social  security  schemes  of government  is shown in 
table AI. 1. 

a.2) 

Private funded  social insurance schemes 

15. 

Schemes financed by autonomous  funds  are treated  differently  from  schemes  financed  by 
non-autonomous funds. For autonomous funds, a service charge is calculated as 

total actual contributions earned 

plus  total contribution supplements 

less  benefits due 

less 

increases (plus decreases) in pension fund reserves. 

(A) 

16. 

17. 

18. 

All  four  items  are  recorded  exclusive  of  holding  gains  or  losses.  Total  contribution 
supplements are identical to property income attributed to policy holders, which is income 
earned by private social insurance funds  by investing their technical and pension reserves. 
The ESA regards these reserves as owned by the policy holders, who therefore  receive the 
income generated by these reserves. The service charge is recorded  as output  (P.l)  for the 
autonomous funds and as final consumption expenditure (P.3) for the household sector. 

For  non-autonomous  funds  no  service  charge  is  calculated.  The  costs  of  managing  these 
funds are included with the other elements of costs in the employers' production account. 

The  remaining  transactions  apply  to  both  autonomous  and  non-autonomous  funds. 
Employers' actual contributions  (D  121) are shown as part of compensation  of employees, 
payable  by  the  employer's  sector  in the  generation  of  income  account  and  receivable  by 
employee  households  in the allocation of primary  income account.  The employer's  sector 
may  be  any  institutional  sector,  including  general  government  and  households  (as 
employers).  Property  income  attributed  to  policy  holders  (part  of  D.4)  is  shown  in  the 
allocation of primary income account as payable by the fund's  sector and  receivable by the 
household  sector. Resident autonomous funds  are located  in the insurance enterprises  and 
pension  funds  sub-sector  (S.125). Non-autonomous  funds  obviously  belong  to  the  same 
sector as the employer in question. NACE Rev.  1  classifies the activity of pension funds  in 
class 66.02 'Pension funding'. 

Employers' actual contributions are recorded again in the secondary distribution of income 
account  as  part  of  D.6111,  payable  by  households  and  receivable  by  the  fund's  sector. 
Employees' contributions  (D 6112) and contributions by self-employed  and non-employed 
persons  (D  6113)  are  also  recorded  in  the  secondary  distribution  of  income  account  as 
payable  by  the  household  sector  and  receivable  by  the  fund's  sector.  The  contributions 
made  by  employees  and  by  self-employed  and  non-employed  persons  equal 
the  direct 
payments made plus property income attributed  to policy holders less service charge (this 
last  being  zero  for  non-autonomous  funds).  Private  funded  social  benefits,  including 
pensions, are  shown  in the secondary distribution  of  income account  as payable  by  funds 
and  receivable  by households.  By definition,  all private  funded  social  benefits  are part of 
D.62, social benefits other than social transfers  in kind. 

392 

19. 

The entry in the financial  account contains two elements: 

i) 

ii) 

prepayments  of  premiums  and  reserves  against  outstanding  claims  (F.62),  which 
comprise any difference  between contributions  payable and contributions  earned and 
between benefits due and benefits payable*1). By convention this element is shown as 
a change (negative if necessary) in funds' liabilities and households' assets. 

net equity of households on pension funds'  (F.612), also shown as a change (negative 
if  necessary)  in  funds'  liabilities  and  households'  reserves.  This  element  equals 
employers'  and  employees'  contributions  in  respect  of  pensions,  as  recorded  in  the 
secondary distribution of income account, less pensions payable. 

20. 

As  a  consequence  of  the  entry  in  the  financial  account,  F.612  and  F.62  appear  in  the 
balance sheets of the household sector (as an asset) and the fund's  sector (as a liability). 

In  the  use  of  disposable  income  account,  an  adjustment  for  change  in  net  equity  of 
households on pension funds (D.8) is recorded as receivable by households and payable by 
funds. This entry equals the second element of the entry in the financial  account. 

Employers  and  general  government  occasionally  make  extraordinary  payments  to  private 
social  insurance funds  in order to increase the reserves of these funds.  Such payments are 
recorded in the capital account as other capital transfers  (D 99), payable by  the employer's 
sector  or  the  government  sector  and  receivable  by  the  fund's  sector.  As  social  insurance 
funds'  reserves  are  treated  as  if  owned  by  the  household  sector,  an  accompanying 
adjustment  between the fund's  sector and the household  sector is required. This  adjustment 
is recorded  as other capital transfers  (D99), payable by the fund's  sector and receivable by 
the household sector. 

If  a  resident  employee  works  for  a  non-resident  employer,  the  employer's  actual 
contributions  (D  121) are recorded  as part of compensation  of employees, payable  by the 
rest  of  the  world  and  receivable  by households.  When  the  employer  is  non-resident,  any 
non-autonomous  social  insurance  fund  will  also  be  non-resident,  while  an  autonomous 
fund may be resident or non-resident. If the employee is covered by a non-resident fund, all 
flows  between  the  household  sector  and  the  fund's  sector  are  shown  as  transactions 
between the household  sector and the rest of the world. The service charge (in the case of 
autonomous, non-resident funds)  is shown as imports of services (P.72). The change in net 
equity of insurance technical reserves (F.6) is shown in the financial account of the rest of 
the world, while the remaining flows are shown in the external account of primary incomes 
and current transfers. 

If  a  non-resident  employee  works  for  a  resident  employer,  the  employer's  actual 
contributions  (D  121) are part  of compensation  of  employees,  payable  by  the  employer's 
sector and receivable by the rest of the world. If the non-resident employee is covered by a 
resident social insurance fund,  any service charge is recorded as exports of services (P.62). 
All other flows between fund  and employee are shown as between the fund's  sector and the 
rest of the world. 

21. 

22. 

*  ) 

Actual  contributions earned, which cover risks incurred during the current period, usually differ  from  actual contributions  payable. The 
latter  often  cover  risks  in  both  the  current  and  subsequent  periods.  Similarly,  benefits  due  are  not  always  equal  lo  benefits  payable. 
Benefits  due to an even occurring in one accounting period may not bccoine payable until a later period. 

-  393  -

Especially  when  non-resident  units  are  involved,  all  the  requisite  data  are  not  always 
available.  The calculations  of some of the  items to be recorded  sometimes  have  to  be  based 
on  assumptions. 

An  example  of the  flows  recorded  for  private  funded  social  insurance  schemes  is  shown  in 
table  AI.2. 

a.3) 

Unfunded  social  insurance  schemes  operated  by  employers 

23. 

Similarly  to  schemes  financed  by  non-autonomous  funds,  the  costs  of  managing  unfunded 
social  insurance  schemes  are  included  with  the  other  elements  of  costs  on  the  employer's 
production  account.  Thus, no service charge  is  calculated. 

24. 

25. 

26. 

As  unfunded  social  insurance  schemes  do  not  form  separate  institutional  units  from  the 
employers  operating  them,  all  transactions  are  between  the  employer's  sector  and  the 
household  sector. 

The  ESA  regards  an  employer  operating  an  unfunded  scheme  as  making  an  imputed 
contribution  to the scheme  on behalf of his employees. This  imputed  social contribution  (D 
122) is part  of compensation  of employees  and  is shown  as payable  by the  employer  in  the 
generation  of  income  account  and  receivable  by  households  in  the  allocation  of  primary 
income  account.  The  employer's  imputed  contribution  is  shown  again  in  the  secondary 
distribution  of income  account  as item  D.612, payable  by households  and receivable by  the 
employer.  The  amount  of  this  contribution  should  be  determined  by  reference  to  the 
employer's  future  obligations  to  provide  benefits.  In  practice,  however,  the  contribution  is 
usually  set equal to benefits  payable  in the current  period. 

Actual  contributions  by  employees,  if  any,  are  shown  as  part  of  D.6112,  payable  by 
households  and  receivable  by  the  employer's  sector.  The  secondary  distribution  of  income 
account  also  shows  pensions  and  other  benefits  as  part  of  D.62,  receivable  by  households 
and payable by the  employer. 

Unfunded  social  insurance  schemes obviously  belong to the same institutional  sector  as the 
employer  in question. NACE  Rev.  1 regards them  as an ancillary  activity. 

If  a  resident  works  for  a  non-resident  employer  operating  an  unfunded  social  insurance 
scheme,  all  transactions  are  between  the  household  sector  and  the  rest  of  the  world, 
recorded  in the external  account  of primary  incomes  and  current transfers.  If a  non-resident 
works  for  a  resident  employer  operating  such  a  scheme,  all  transactions  are  between  the 
rest  of  the  world  and  the  employer's  sector,  shown  in  the  external  account  of  primary 
incomes  and current  transfers. 

An  example  of  the  flows  recorded  for  unfunded  social  insurance  schemes  operated  by 
employers  is shown  in table  AI.3. 

?94 

b) 

27. 

Other insurance 

The output of other insurance services, both life and non-life, is calculated as: 

actual premiums earned 

plus  premium  supplements 

less  claims due 

(B) 

less 

increases (plus decreases) in actuarial reserves and reserves for with-profits  insurance 

28. 

Actual  premiums  earned  are the actual  premiums  that  cover  the risks  incurred  during the 
current  period.  Actual  premiums  earned  are  usually  not  equal  to  actual  premiums 
receivable,  as  the  latter  often  cover  risks  incurring  in  both  the  current  and  subsequent 
periods. 

Premium  supplements  are identical to property  income attributed to policy  holders, which 
is the entire income earned by insurance enterprises  by investing their insurance  technical 
reserves, excluding any income from insurance enterprises' own funds.  Insurance technical 
reserves  contain  two  elements:  (i)  prepayments  of  premiums  and  reserves  against 
outstanding  claims,  arising  from  the difference  between  premiums  earned  and  premiums 
receivable  and  between  claims  payable  and  claims  due,  and  (ii)  actuarial  reserves  and 
reserves  for  with-profits  insurance.  The  latter  element  applies  only  to  life  insurance. 
Insurance technical reserves are usually invested  in financial  assets which yield  income in 
the  form  of  interest  or  dividends.  However,  these  reserves  may  also  be  invested  in  real 
estate, for example, in which case income is earned as operating surplus. 

29. 

Claims  due  cover  events  that  occur  within  the  current  period.  Frequently,  claims  do  not 
become  payable  until  a  later  period  than  when  the  event  giving  rise  to  them  occurred. 
Claims due are therefore not equal to claims payable. 

Changes in actuarial reserves and reserves for with-profits  insurance consist of allocations 
to actuarial reserves and reserves for with-profits  insurance policies to build up the capital 
sums guaranteed under these policies. These reserves relate to life insurance only. 

All four items in equation (B) should be measured excluding holding gains and losses. 

b.l) 

Other life insurance 

30. 

Total  output  of other  life  insurance is calculated  according  to  equation  (B) and  shown as 
item  P.l  in  the  production  account  of  the  insurance  enterprises  and  pension  funds  sub-
sector. Unless  consumed  by non-resident  households, the output  of other  life  insurance is 
entirely  used  as  final  consumption  by  resident  households.  The  output  of  life  insurance 
services  should  be  distributed  between  the  household  sector  and  the  rest  of  the  world  in 
proportion  to  premiums  payable  by resident  and  non-resident  households.  Life  insurance 
services  consumed  by  residents  are  shown  as  part  of  households'  final  consumption 
expenditure (P.3), while services consumed by non-residents are part of exports of services 
(P.62). 

395 

31. 

Two  further  transactions  are recorded  for  other  life  insurance. In the allocation  of primary 
income  account,  property  income  attributed  to  policy  holders  (part  of  D.4)  is  shown  as 
payable by the insurance enterprises' sector and receivable  by households. In the  financial 
account, the item net equity of households on life  insurance reserves is shown as a change 
(negative if necessary) in households' assets and  life  insurance enterprises'  liabilities. The 
change in the net equity of households is due to all changes in life insurance reserves, both 
technical  reserves  (F.62)  and  actuarial  reserves  and  reserves  for  with-profits  insurance 
(F.611).  The  change  in net  equity  therefore  equals  actual  premiums  payable  (not  earned) 
plus premium supplements less claims receivable (not due) and less service charge. 

32. 

Because  of  these  entries  in  the  financial  account,  F.611  and  F.62  are  also  shown  in  the 
balance sheets of the household sector (as an asset) and the insurer's sector (as a liability). 

As  with  the  service  charge,  property  income  attributed  to  policy  holders  (=  premium 
supplements) should be distributed  between the household  sector and the rest of the world 
in proportion to premiums. 

Institutionally, life insurance enterprises are classified  in S.125 'Insurance corporations and 
pension  funds'.  The  activity  classification  according  to NACE Rev.  1 is class  66.01  'Life 
insurance'. 

33. 

When a resident life  insurance enterprise provides services to non-resident households, the 
service  charge  is  recorded  as  exports  of  services  (P.62).  Property  income  attributed  to 
policy holders is shown as payable by the insurance sector and receivable by the rest of the 
world  in the external  account of primary  incomes and current transfers.  The change in net 
equity  of  non-resident  households  on  life  insurance  reserves  is  shown  in  the  financial 
account  of  the  rest  of  the  world  as  a  change  in  the  rest  of  the  world's  assets  and  the 
insurance sector's liabilities. 

When resident households purchase cover from  non-resident  life insurers, the procedure is 
in principle  straightforward:  the  service  charge  is recorded  as  imports  of  services  (P.72), 
attributed property income is shown in the external account of primary incomes and current 
transfers  as payable  by the rest of the world  and receivable  by households, and  change in 
net equity is shown as a change in households' assets and the rest of the world's liabilities. 
However, the data required to calculate these items are normally not available; usually only 
premiums  payable  are  known.  Assumptions  are  therefore  necessary,  e.  g.  applying  the 
ratios  of  service  charge  to  premiums  and  attributed  property  income  to  premiums  for 
resident  life  insurers  to  the  premiums  paid  by  resident  households  to  non-resident  life 
insurers. 

An example of the flows recorded for other life insurance is shown in table AI.4. 

b.2) 

Other non-life insurance 

34. 

The output (P.l) of other non-life  insurance enterprises  is calculated  according to equation 
(B)  and  shown  in the  production  account  of  the  insurance  enterprises  and  pension  funds 
sub-sector. Non-life  insurance services may be used as intermediate consumption  (P.2) by 
any  resident  sector,  as  final  consumption  by  the  household  sector  when  they  are  part  of 
households' final consumption  expenditure  (P.3), or as exports  (P.62). Non-life  insurance 
services used as intermediate consumption should be broken down by industry. 

- 3 96 

Equation  (B)  should  be used to  estimate the total  value  of  non-life  insurance  output. The 
output  should then be distributed  among user sectors and industries  in proportion to actual 
premiums payable by each sector. Whereas all resident sectors except households use non-
life  insurance  services for  intermediate consumption  only, the household  sector uses them 
for  both  final  and  intermediate  consumption.  Households'  use  of  non-life  insurance 
services  should  be broken down into  intermediate  and final consumption  in proportion to 
actual  premiums  payable.  Premiums  clearly  associated  with  the  productive  activity  of 
unincorporated  enterprises  should  be  regarded  as  related  to  intermediate  consumption, 
while the remaining premiums paid by households should be considered as being related to 
final consumption. 

In the allocation of primary income account, property income attributed to policy holders is 
recorded as part of D.4, payable by the insurance sector and receivable by the policy holder 
sectors. Ideally, property  income attributed  to policy  holders  should  be distributed  among 
sectors  in  proportion  to  the  reserves  attributed  to  each  policy  holder  sector,  but  this  is 
hardly feasible  in practice. Property income attributed to policy holders should therefore be 
distributed in proportion to actual premiums paid by each policy holder sector. 

In the secondary distribution of income account net premiums earned are shown as payable 
by all  policy  holder  sectors  and  receivable  by the  insurance  sector.  Net  premiums  earned 
are calculated as actual premiums earned plus property income attributed  to policy holders 
less the  value  of  services  consumed.  By equation  (B), net  premiums  earned  equal  claims 
dueOX The secondary distribution of income account also shows claims due as payable by 
the insurance sector and receivable by all policy holder sectors. Both net premiums earned 
and claims due are part of item D.7, Other current transfers. 

Some  claims  arise  because  of  damage  or  injuries  that  the  policy  holder  causes  to  the 
property  or  persons  of 
third  parties.  In  such  cases,  valid  claims  are  recorded  as  being 
payable directly by the insurance enterprise to the injured  parties and not indirectly via the 
policy holder. 

In  the  financial  account,  net  equity  of  policy  holders  on  non-life  insurance  reserves  is 
shown  as  a  change  in  assets  of  policy  holder  sectors  and  a  change  in  liabilities  of  the 
insurance  sector.  The  change  in  net  equity,  classified  as  F.62,  is  due  to  prepayments  of 
premiums  and  reserves  against  outstanding  claims. F.62  also  appears  as  a  liability  in the 
non-life  insurer's balance sheet and an asset in policy holders' balance sheets. 

Non-life  insurance  enterprises  belong  to  NACE  Rev.  1 class  66.03,  'Non-life  insurance'. 
Their institutional sector is S.125, 'Insurance corporations and pension  funds'. 

When non-resident units purchase cover from resident non-life  insurers, the service charge 
is  shown  as exports  of  services  ((P.62). Property  income  attributed  to  policy  holders, net 
premiums  earned  and  claims  due  are  all  recorded  in  the  external  account  of  primary 
incomes  and  current  transfers,  while  net  equity  of  policy  holders  on  non-life  insurance 
reserves  is  shown  in  the  financial  account  of  the  rest  of  the  world.  In  this  case,  the 
calculations for the rest of the world are no more difficult  than those for any resident policy 
holder sector. 

35. 

36. 

37. 

38. 

' 

' 

Claims  due  mean  the  amounts  due to  be transfered  to claimants. Claims  due  are  thus  not  the same  as  "claims  incurred"  in  insurance 
enterprises'  accounts,  as  the  latter  also  include  claims  management  expenses,  which  in  the  national  accounts  are  part  of  either 
intermediate consumption  or compensation of employees. 

3 9 7-

c l) 

39. 

When resident  units  are  insured  by non-resident  non-life  insurers, the data situation  is  far 
more  difficult;  only  data  on  premiums  payable  and  claims  receivable  are  normally 
available. A simplified  method,  ignoring  non-life  insurance  reserves  and  their  subsequent 
property  income,  is  therefore  used:  The  service  charge,  which  is  recorded  as  imports  of 
services (P.72), is calculated as premiums payable less claims receivable*1). Net premiums 
payable  are  calculated  as  premiums  payable  less  service  charge,  thus  equalling  claims 
receivable.  Both  net  premiums  payable  and  claims  receivable  are  shown  in  the  external 
account of primary incomes and current transfers. 

An example of the flows recorded for other non-life  insurance is shown in table AI.5. 

Reinsurance 

The  ESA  records  reinsurance  transactions  in  a  simpler  way  than  direct  insurance 
transactions  (the  latter  meaning  transactions  between  insurance  enterprises  and  ordinary 
policy  holders).  Instead  of  showing  the  flows  involved  (premiums  earned,  claims  due, 
commissions,  etc.)  separately,  reinsurance  transactions  are  simply  shown  as  a  service 
delivered  from  reinsurer  to  direct  insurer.  The  value  of  this  service  is  measured  as  the 
balance of all flows occurring between reinsurer and direct insurer. 

For  resident  life  and  non-life  insurance  enterprises,  reinsurance  services  produced  are 
shown  as  output  (P.l),  while  reinsurance  services  received  are  shown  as  intermediate 
consumption (P.2). Reinsurance services delivered  from  resident reinsurers to non-resident 
insurers are shown as exports of services (P.62), while services delivered from non-resident 
reinsurers to resident insurers are recorded as imports of services (P.72). 

40. 

For  resident  insurance  enterprises  data  on  output  and  intermediate  consumption  of 
reinsurance  services  can  be  obtained  from  insurance  statistics.  Calculating  imports  and 
exports of reinsurance services may be more difficult,  depending mainly on the availability 
and quality of balance of payments statistics. However, the external balance of reinsurance 
services can easily be derived from insurance statistics. 

Reinsurance  transactions  between  resident  insurance  enterprises  are  often  consolidated. 
However,  in  order  to  be  in  accordance  with  the  EC  insurance  directives,  the  ESA 
recommends  reinsurance  services  to  be  recorded  without  consolidation.  Whether  or  not 
reinsurance  services  between  residents  are  consolidated  affects  the  level  of  output  of 
insurance  services, but balancing  items such as value added, operating  surplus  and  saving 
are not  affected. 

c.2) 

Insurance  auxiliaries 

41. 

the  fees  or 
The  output  of  auxiliary  insurance  services  is  valued  on  the  basis  of 
commissions  charged.  In  the  case  of  non-profit 
institutions  operating  as  business 
associations  for  insurance  enterprises  and  pension  funds,  their  output  is  valued  by  the 
amounts  of subscriptions  paid by the members  of the associations.  This output  is used  as 
intermediate consumption by the members of the associations. 

Institutional  units  principally  engaged  in  auxiliary  insurance  activities  are  classified  in 
S.124, 'Financial  auxiliaries'. The activity classification  according to NACE Rev.  1 is class 
67.20, 'Activities auxiliary to insurance and pension  funding'. 

(' ) 

If available, premiums earned  and claims due should  be used rather than  premiums payable and claims receivable. 

3 9 8-

INSURANCE: 

NUMERICAL EXAMPLE 

399-

AM  Social  security  schemes  of  Government 

Uses 

Total 

155 

155 

ST 

"232" 

78 
65 

o 
o 

S.l 

S.15 

S.14 

S.13 

S.12 

S.11 

Corresponding 
entries of  toe 
Goods 
and 
Servie*)* 
account 

Rast 
of the 
worfct 
a&ftihl. ' 

Total 
eco-
nomy 

155 

General 
govern- 
ment 

Flnan- 
cial 
corpo- 
rations 

Non-
finan-
cial 
corpo-
rations 

NPISHs 

House- 
holds 

Transactions and balancing Items 

45 

98 

D.12 

Generation of income account 
Employers, social security  contributions 

Resources 

S.11 

S.12 

S.13 

S.14 

S.15 

S.l 

Non-
finan- 
cial 
corpo- 
ratlons 

Finan 
cial 
corpo- 
rations 

General 
govern- 
ment 

House- 
holds 

NPISHs 

Total 
eco-
nomy 

tprreipOnçKnff 
ertVtesqf.thg 
Attr 
ottllte 
vttxid 
icfcWnJ. 

<$6ods 
ôrW 
««fates. 
accoudt 

Total 

D.12 

Distribution of primary  income account 
Employers' social security  contributions 

155 

155 

0 

H 

155 

mm^ 

.•••••,„,^.l 

^ 

/ f c U H n m im 

IT 

™T 

SST 

•HlH)«M*H»H 

' 

78 
65 

155 

-75" 

^ST 

"232" 

78 
65 

Secondary distribution of income account 
Employers' social security  contributions 

tmployees" social security  contributions 

D.6113  social contributions  by self-employed and 

non-employed persons 

D.621 

social security  benefits in cash 

Hedistnbution of income in kind account 
D.6311  Social security  benefits in kind,  reimbursements 
D.6312  Other social security  benefits in kind 

155 

~ST 

m i n i m um 

-u* 

155 

7T 

0 
T • i t . H i j . l i. 

++• 

155 

155 

— 3T 

l i l l l i > » W I I'  +**4 

ST 

T3T  ™$ 

1111111 111 11  w 

"232" 

78 
65 

78 
65 

"532" 

78 
65 

Al.2 Private funded  social  insurance  schemes 

Uses 

Resources 

S.1 

S.15 

S.14 

S.13 

S.12 

S.11 

S.11 

S.12 

S.13 

S.14 

S,1 

CMr*i{J6rtcfint} 
«rate* off!» 
Goods 

ftMt 

3WJ 

of the- 

çerviceç 

wçrtrf 

Total 

eco-

Finan- 

General 

cial 

Non-

finan-

cial 

House- 

govern- 

corpo- 

corpo-

Total 

aCûôurtt 

SctHJurrt 

nomy 

NPISHs 

holds 

ment 

rations 

rations 

Transactions  and balancing  items 

Non-
finan- 

cial 

corpo- 

rations 

Finan 

cial 

corpo- 

rations 

General 

govern- 

House-

ment 

holds 

NPISHs 

Total 
eco- 
nomy 

GàùVt 
fteat 
«nd 
«rtftB 
services-
vyprfa 
à&àtitib  &&àm 

Total 

Çttrétyéhdlty 

External account 
Exports of goods and services 

P.6 

P.7 

Imports of goods and services 

Production account 
Output 

P.l 

Generation of income account 
Employers' actual social contributions to 

0 

14 

private funded  schemes 

O 
_ .* 
I 

28 

im 

n 

A/location of primary income account 
Employers' actual social contributions to 

private funded  schemes 

D.44 

Property income attributable to insurance 

policyholders 

Secondary distribution of income account 
Employers' actual social contributions to 

private funded schemes 

Employees' net social contributions in 
Private funded benefits 

* 

Use of disposable income account 
Final consumption expenditure 
Adjustment  for the change in net equity of 

P.3 
D.8 

households in pension funds 

Financial account 

F.612  Net equity of households in pension fund 

reserves 

F.62 

Prepayments of premiums and reserves 
against outstansing claims 

0 
0 

0 
0 
29 

AI.3 Unfunded schemes  operated by employers 

Uses 

Resources 

S.1 

S.15 

S.14 

S.13 

S.12 

S.11 

S.11 

S.12 

S.13 

S.14 

S.15 

S.1 

Corr es ponding 
entries of the 
Goods 
and 
sérvfctH 
account 

Rast 
of thé 
world 
account. 

Total 
eco 
nomy 

NPISHs 

House-
holds 

General 

govem 
ment 

Finan-
cial 
corpo 
rations 

Non-
finan 
cial 
corpo 
rations 

Transactions and balancing Items 

Non-
fman- 
cial 
corpo- 
rations 

Finan 
cial 
corpo 
rations 

General 
govern- 
ment 

House-
holds 

Total 
eco-
nomy 

NPISHs 

torraspôfidtng 

ertoeSpith* 
Rest 
«fths 
viotia 
aûeount 

Goods 
ahtt 
*aiVicéS 
accdunt 

Total 

19 

19 

12 

D.122 

Generation of income account 
Employers, imputed social contributions 

D.122 

Distribution of primary income account 
Employers, imputed social contributions 

19 

is~ 

llES 

19 

13" 

19 

"IT 

D.612 

Secondary distribution of income account 
Imputed social contributions 

12 

1 

5 

T" 

T2~ 

D.623  Unfunded employee social benefits 

19 

19 

wvtviVii^v^'i'iïM'i'i'i'i't'H'fo'i 

0 

w 

1 

19 

w  fiii1ifir:i:':fi[i[fiif:,:[ifri':':i:':':':'i':':t 

19 

19 

15" 

o 

Ai.4  Other  life  i n s u r a n ce 

S.15 

S.14 

S.13 

S.12 

S.11 

S.11 

S.12 

S.13 

S.14 

S.15 

S.l 

Resources 

Uses 

Total 

3 

Correspond trt^ 
entries of-fta 

SôOtfs 
and 
Services- 
account 

Rest 
otthe 
wOrltt 
àctîôunt 

Total 
eco-
nomy 

NPISHs 

House- 
holds 

General 

govern- 
ment 

Finan- 
cial 

corpo- 
rations 

Nort-
finan-
cial 

corpo-
rations 

Transactions and balancing items 

External account 
Exports of goods and services 

P.6 

P.7 

Imports of goods and services 

Production account 
Output 

P. I 

D.44 

Distribution of primary  income account 
Property  income attributable to insurance 
policyholders 

Use of disposable  income account 
Final consumption expenditure 

P.3 

Financial account 

F.611  Net equity of households in life insurance 

>;;$& 

22 

reserves 

22 

Non-
finan-
cial 
corpo-

rations 

Finan 
cial 
corpo- 
rations 

General 
govern-  House-
holds 
ment 

Total 
eco-
nomy 

NPISHs 

Çofrespan&hg 
entries gfthg 

Rfctt 
Wtttt 
vttxfa 
account 

Goods 

«HVitéa 
*ct!6oh( 

Total 

'J.1.1.1.1.' " . i nn  I :•:•: 11 mi  in 1111 

.' •l.l.l.'.|.1.1 .'•'•'•' .'.'.w.'.'.'.'.'.'.'.'.'.' 
iMlCM|iff(i'uii::::i'i'''i'iti'i'i'M' 

^aata^iimiii&ii^iaMm^S&saBBaama 

Resources 

Non-

tinan- 

cial 

corpo- 

rations 

Finan 

cial 

corpo 

rations 

S.13 

S.14 

S.15 

S.l 

General 

govern- 

House 

man! 

holds 

Total 
eco 
nomy 

CorrtapcwWlfig: 

fl«« 

ofttw 

<JiN>d* 

and 

account 

accourt 

Total 

fl 

A I .5  O t h er  n o n - l i fe 

I n s u r a n ce 

Uses 

Coroj»pondfnp; 

frmng$  of <hg 

S.l 

S.15 

S.14 

S.13 

S.12 

S.11 

H*tt 

of <he 

vvomf 

Total 

«co-

Finan- 

Qeneral 

cial 

Non-

flnan-

cial 

House- 

govern- 

corpo- 

corpo-

Oot>d> 

and 

M M CM 

account 

Total 

I 

o 

I 

account 

nomy 

NPISHs 

holds 

ment 

rations 

rations 

Transactiont  and balancing Items 

External account 
Exports of goods and services 

P.6 

P.7 

Imports of goods and services 

Production account 

P. I 

Output 

P.2 

Intermediate consumption 

D.44 

Distribution of primary income account 
Property income attributable to insurance 
policyholders 

Secondary distribution of income account 
Net non-life insurance premiums 

D.7t 

D.72  Non-life insurance claims 

Use  of disposable Income account 
Final consumption expenditure 

P.3 

F.62 

Financial account 
Prepayment of premiums and reserves 
against outstanding claims 

ANNEX 4 

CLASSIFICATIONS AND ACCOUNTS 

405 

PART I. 
CLASSIFICATIONS 

A. 

S.l 
S.ll 

Classification  of institutional sectors (S) 

Total economy 
Non-financial  corporations 

S.11001 
S.l 1002 
S.l 1003 

Public non-financial  corporations 
National private non-financial  corporations 
Foreign controlled non-financial  corporations 

S.12 

Financial  corporations 

S.121 

The central bank 

S.122 
S.12201 
S.l 2202 
S. 12203 

S.123 
S.12301 
S.12302 
S.12303 

S.124 
S.l 2401 
S.12402 
S.l 2403 

S.125 
S.1250Ï 
S.12502 
S.12503 

Other monetary financial  institutions 
Public 
National private 
Foreign controlled 

Other financial  intermediaries, except insurance corporations and pension  funds 
Public 
National private 
Foreign controlled 

Financial auxiliaries 
Public 
National private 
Foreign controlled 

Insurance corporations and pension  funds 
Public 
National private 
Foreign controlled 

S.13 

General government 

S.1311 
S.1312 
S.1313 
S.1314 

Central government 
State government 
Local government 
Social security  funds 

Vo£ 

407 

5.14 

Households 

S.141 + S.l42 Employers (including own-account workers) 
S.143 
S. 144 
S. 1441 
S. 1442 
S. 1443 
S. 145 

Employees 
Recipients of property and transfer  incomes 
Recipients of property income 
Recipients of pensions 
Recipients of other transfer incomes 
Other households 

5.15 

S.2 

S. 21 
S .211 
S .212 
S.22 

Non-profit institutions serving households 

Rest of the world 

The European Union 
The member countries of the EU 
The institutions of the EU 
Third countries and international organizations 

-408 

B. 

1. 

P.l 

P. 11 
P.l 19 
P. 12 
P. 13 

P.2 

P.3 

P.31 

P.32 

P.4 

P.41 

P.42 

P.5 

P.51 
P.511 
P.5 111 
P.5112 
P.5113 
P.512 
P.5121 
P.5122 
P.5123 
P.513 
P.5131 
P.5132 

P.52 

P.53 

P.6 

P.61 
P.62 

Classification  of transactions and other flows 

Transactions in goods and services (products) (P) 

Output 

Market output 
Adjustment  FISIM 
Output for own final use 
Other non-market output 

Intermediate consumption 

Final consumption expenditure 

Individual consumption expenditure 

Collective consumption expenditure 

Actual final consumption 

Actual individual consumption 

Actual collective consumption 

Gross capital formation 

Gross fixed capital  formation 
Acquisitions less disposals of tangible fixed  assets 
Acquisitions of new tangible fixed assets 
Acquisitions of existing tangible fixed assets 
Disposals of existing tangible fixed assets 
Acquisitions less disposals of intangible fixed assets 
Acquisitions of new  intangible fixed  assets 
Acquisitions of existing  intangible fixed assets 
Disposals of existing intangible fixed  assets 
Addition to the value of non-financial  non-produced assets 
Major improvements to non-financial  non-produced assets 
Costs of ownership transfer on non-financial  non-produced assets 

Changes in inventories 

Acquisitions less disposals of valuables 

Exports of goods and services 

Exports of goods 
Exports of services 

-409 

P.7 

P.71 

P.72 

2. 

D.1 

Imports  of goods  and  services 

Imports  of  goods 

Imports  of  services 

Distributive  transactions  (D) 

Compensation  of  employees 

D. 11 

Wages and  salaries 

D. 12 
D.121 

D.122 

Employers' social  contributions 
Employers' actual  social  contributions 

Employers' imputed  social  contributions 

D.2 

Taxes  on  production  and  imports 

D.21 
D.211 
D.212 
D.2121 
D.2122 
D.214 

D.29 

D.3 

D.31 
D. 311 

D.319 

D.39 

D.4 

D.41 
D.42 
D.421 
D.422 

D.43 

D.44 

D.45 

D.5 

D.51 

D.59 

Taxes  on  products 
Value added type taxes  (VAT) 
Taxes and duties on imports excluding  VAT 
Import  duties 
Taxes on imports  excluding  VAT and  import  duties 
Taxes on products, except VAT and  import  taxes 

Other taxes on  production 

Subsidies 

Subsidies on  products 
Import  subsidies 

Other  subsidies on  products 

Other  subsidies  on  production 

Property  income 

Interest 
Distributed  income of  corporations 
Dividends 
Withdrawals  from  income of  quasi-corporations 

Reinvested  earnings on direct  foreign  investment 

Property  income  attributed to insurance policy  holders 

Rents 

Current  taxes  on  income, wealth,  etc, 

Taxes on  income 

Other current  taxes 

4 1 0 

D.6 

Social  contributions and  benefits 

D.61 
D.611 
D.6111 
D.61111 
D.61112 
D.6112 
D.61121 
D.61122 
D.6113 
D.61131 
D.61132 
D.612 

D.62 
D.621 
D.622 
D.623 
D.624 

D.63 
D.631 
D.6311 
D.6312 
D.6313 
D.632 

D.7 

D.71 
D.72 
D.73 
D.74 
D.75 

D.8 

D.9 

D.91 
D.92 
D.99 

Social  contributions 
Actual social  contributions 
Employers' actual social  contributions 
Compulsory employers' actual social contributions 
Voluntary employers' actual social  contributions 
Employees' social contributions 
Compulsory employees' social  contributions 
Voluntary employees' social contributions 
Social contributions by self- and non-employed  persons 
Compulsory  social contributions by self- and non-employed persons 
Voluntary social contributions by self- and non-employed persons 
Imputed social contributions 

Social benefits  other than social transfers  in kind 
Social security benefits  in cash 
Private funded  social  benefits 
Unfunded  employee social  benefits 
Social assistance benefits  in cash 

Social transfers in kind 
Social benefits in kind 
Social security benefits, reimbursements 
Other social security benefits in kind 
Social assistance benefits in kind 
Transfers  of individual non-market goods and services 

Other current  transfers 

Net non-life  insurance premiums 
Non-life  insurance claims 
Current transfers  within general government 
Current international cooperation 
Miscellaneous current  transfers 

Adjustment for the change in net equity of households in pension  funds 

Capital  transfers 

Capital  taxes 
Investment grants 
Other capital  transfers 

-41 

3. 

Transactions in financial instruments (F) 

F.l 

F.ll 

F.12 

F.2 

F.21 

F.22 

F.29 

F.3 

F.33 
F.331 
F.332 

F.34 

F.4 

F.41 
F.42 

F.5 

F.51 
F.511 
F.512 
F.513 

F.52 

F.6 

F.61 
F.611 
F.612 

F.62 

F.7 

F.71 

F.79 

(Net acquisition of financial assets/net incurrence of liabilities) 

Monetary gold and special drawing rights (SDRs) 

Monetary gold 

Special drawing rights (SDRs) 

Currency and deposits 

Currency 

Transferable  deposits 

Other deposits 

Securities other than shares 

Securities other than shares, excluding financial  derivatives 
Short-term - Securities other than shares, excluding financial derivatives 
Long-term - Securities other than shares, excluding financial  derivatives 

Financial derivatives 

Loansa 

Short-term - Loans 
Long-term - Loans 

Shares and other equitya 

Shares and other equity, excluding mutual funds  shares 
Quoted shares, excluding mutual funds shares 
Unquoted shares, excluding mutual funds  shares 
Other equity 

Mutual funds  shares 

Insurance technical reserves 

Net equity of households in life insurance reserves and in pension funds  reserves 
Net equity of households in life insurance reserves 
Net equity of households in pension funds reserves 

Prepayment of insurance premiums and reserves for outstanding claims 

Other accounts receivable/payable3 

Trade credits and advances 

Other accounts receivable/payable, except trade credits and advances 

Memo item: F.m Direct foreign  investment 

412 

4. 

K.l 

K.2 

K.21 
K.211 
K.212 

K.22 
K.221 
K.222 

K.3 

K.4 

K.5 

K.6 

K.61 

K.62 

K.7 

K.8 

K.9 

K.10 

K.11 

K. 11.1 
K. 11.2 
K.12 

K. 12.1 
K.12.2 
K. 12.21 
K. 12.22 

Other accumulation entries (K) 

Consumption of fixed capital 

Acquisitions less disposals of non-financial  non-produced  assets 

Acquisitions less disposals of land and other tangible non-produced assets 
Acquisitions of land and other tangible non-produced assets 
Disposals of land and other tangible non-produced assets 

Acquisitions less disposals of intangible non-produced assets 
Acquisitions of intangible non-produced assets 
Disposals of intangible non-produced assets 

Economic appearance of non-produced assets 

Economic appearance of produced assets 

Natural growth of non-cultivated biological resources 

Economic disappearance of non-produced assets 

Depletion of natural economic assets 

Other economic disappearance of non-produced assets 

Catastrophic losses 

Uncompensated seizures 

Other volume changes in non-financial  assets n.e.c. 

Other volume changes in financial assets and liabilities n.e.c. 

Nominal holding gains/losses 

Neutral holding gains/losses 
Real holding gains/losses 
Changes in classifications and structure 

Changes in sector classification  and structure 
Changes in classification  of assets and liabilities 
Monetization/demonetization  of gold 
Changes in classification  of assets or liabilities other than 
monetization/demonetization  of gold 

- 4 1 3-

C. 

B.l 

B.2 

B.3 

B.4 

B.5 

B.6 

B.7 

B.8 

B.9 

Classification  of balancing items" (B) 

Value added / B.l  Domestic product 

Operating surplus 

Mixed income 

Entrepreneurial income 

Balance of primary incomes/ B.5  National income 

Disposable income 

Adjusted disposable income 

Saving 

Net lending/net borrowing 

B.10 

Changes in net worth 

B.10.1 
B.10.2 
B.10.3 
B.10.31 
B.10.32 

B.l 1 

B.l2 

B.90 

c d 
Changes in net worth due to saving and capital transfers  ' 
Changes in net worth due to other changes in volume of assets 
Changes in net worth due to nominal holding gains/losses 
Changes in net worth due to neutral holding gains/losses 
Changes in net worth due to real holding gains/losses 

External balance of goods and services 

Current external balance 

Net worth 

BF.90 

Net financial assets 

All  balancing  items can be measured gross or net of consumption  of fixed capital. The code for gross balancing  item  is constituted  of 
the code of the item plus the letter "gH. Similarly, the letter "n" attached to a code indicates net value. 

"Changes  in net worth  due to saving  and capital  transfers"  is not  a balancing  item  in the structure  of the  System.  It is the total  of the 
right-and  side  of  the  capital  account.  However,  as  a  significant  component  of  changes  in  net  worth,  it  is  coded  with  the  other 
components of the latter 

"Changes"  in  net  worth  due  to  saving  and  capital  transfers"  for  the  rest  of  the  world  refers  to  changes  in  net  worth  due  to  current 
external  balance and capital  transfers 

414 

D. 

1. 

Classification  of assets (A) 

Non-financial  assets (AN) 

AN.l. 

Produced assets 

Fixed assets 
Tangible fixed  assets 
Dwellings 
Other buildings and structures 

AN. 11 
AN. 111 
AN.1111 
AN. 1112 
AN. 11121  Non-residential buildings 
AN. 11122 
AN. 1113 
AN. 11131 
AN .11132 
AN. 1114 
AN. 11141 
AN. 11142  Vineyards, orchards and other plantations of trees yielding repeat products 

Other structures 
Machinery and equipment 
Transport equipment 
Other machinery and equipment 
Cultivated assets 
Livestock for breeding, dairy, draught, etc. 

AN. 112 
AN. 1121 
AN. 1122 
AN. 1123 
AN. 1129 

AN. 12 
AN. 121 
AN. 122 
AN. 1221 
AN. 1222 
AN. 123 
AN. 124 

AN.13 
AN. 131 
AN. 132 
AN. 139 

Intangible fixed assets 
Mineral exploration 
Computer  software 
Entertainment, literary or artistic originals 
Other intangible fixed assets 

Inventories 
Materials and supplies 
Work in progress 
Work in progress on cultivated assets 
Other work in progress 
Finished goods 
Goods for resale 

Valuables 
Precious metals and stones 
Antiques and other art objects 
Other valuables 

AN.2. 

Non-produced  assets 

AN.21 
AN.211 
AN.2111 
AN.2112 
AN.2113 
AN.2119 

Tangible non-produced assets 
Land 
Land underlying buildings and structures 
Land under cultivation 
Recreational land and associated surface water 
Other land and associated surface water 

- 4 1 5-

AN.212 
AN.2121 
AN .2122 
AN .2123 

Subsoil assets 
Coal, oil and natural gas reserves 
Metallic mineral reserves 
Non-metallic mineral reserves 

AN .213 

Non-cultivated biological resources 

AN .214 

Water resources 

AN.22 
AN.221 
AN.222 
AN.223 
AN.229 

2. 

AF.l 

Intangible non-produced assets 
Patented entities 
Leases and other transferable contracts 
Purchased goodwill 
Other intangible non-produced assets 

Financial assets/liabilities (AF) 

Monetary gold and drawing rights (SDRs) 

AF. 11 

Monetary gold 

AF. 12 

Special drawing rights (SDRs) 

AF.2 

Currency and deposits 

AF.21 
AF.22 

AF.29 

Currency 
Transferable  deposits 

Other deposits 

AF.3 

Securities other than shares 

AF.33 
AF.331 
AF.332 
AF.34 
AF.4 
AF.41 

Securities other than shares, excluding financial derivatives 
Short-term - Securities other than shares, excluding financial derivatives 
Long-term - Securities other than shares, excluding financial derivatives 
Financial derivatives 
Loanse 
Short-term - Loans 

AF.42 

Long-term - Loans 

AF.5 

Shares and other equitye 

AF.51 
AF.511 
AF.512 
AF .513 
AF.52 

Shares and other equity, excluding mutual funds  shares 
Quoted shares, excluding mutual funds shares 
Unquoted shares, excluding mutual funds  shares 
Other equity 
Mutual funds  shares 

Memorandum item AF.m: direct foreign  investment 

416 

AF.6 

Insurance technical  reserves 

AF.61 
AF.611 
AF.612 

Net equity of households in life insurance reserves and in pension funds  reserves 
Net equity of households in life insurance reserves 
Net equity of households in pension funds  reserves 

AF.62 

Prepayment of insurance premiums and reserves for outstanding claims 

AF.7 

Other accounts  receivable/payable 

AF.71 

Trade credits and advances 

AF.79 

Other accounts receivable/payable, except trade credits and advances 

4 1 7-

E. 

Regrouping and coding of Industries (A), Products (P) and investments 
(Fixed capital formation) (Pi) 

A60 

Code 

Description 

Reference 
NACE Rev.1 

01 
02 
05 

10 
11 

12 
13 
14 
15 
16 
17 
18 
19 

20 

21 
22 
23 
24 
25 
26 
27 
28 

29 
30 
31 
32 

33 

34 
35 
36 
37 
40 
41 
45 
50 

Agriculture, hunting and related service activities 
Forestry, logging and related service activities 
Fishing, operation offish  hatcheries and fish farms; service activities 
incidental to fishing 
Mining of coal and lignite; extraction of peat 
Extraction of crude petroleum and natural gas; service activities 
incidental to oil and gas extraction excluding surveying 
Mining of uranium and thorium ores 
Mining of metal ores 
Other mining and quarrying 
Manufacture of food products and beverages 
Manufacture of tobacco products 
Manufacture of textiles 
Manufacture of wearing apparel; dressing and dyeing of fur 
Tanning and dressing of leather; manufacture  of luggage, handbags, 
saddlery, harness and footwear 
Manufacture  of wood and of products of wood and cork, except 
furniture; manufacture of articles of straw and plaiting materials 
Manufacture of pulp, paper and paper products 
Publishing, printing and reproduction of recorded media 
Manufacture of coke, refined petroleum products and nuclear  fuel 
Manufacture  of chemicals and chemical products 
Manufacture  of rubber and plastic products 
Manufacture of other non-metallic mineral products 
Manufacture  of basic metals 
Manufacture  of fabricated metal products, except machinery and 
equipment 
Manufacture  of machinery and equipment n.E.C. 
Manufacture of office machinery and computers 
Manufacture  of electrical machinery and apparatus n.E.C. 
Manufacture  of radio, television and communication equipment and 
apparatus 
Manufacture  of medical, precision and optical instruments, watches 
and clocks 
Manufacture  of motor vehicles, trailers and semi-trailers 
Manufacture  of other transport equipment 
Manufacture  of furniture; manufacturing n.E.C. 
Recycling 
Electricity, gas, steam and hot water supply 
Collection, purification  and distribution of water 
Construction 
Sale, maintenance and repair of motor vehicles and motorcycles; retail 
sale of automotive  fuel 

01 
02 
05 

10 
11 

12 
13 
14 
15 
16 
17 
18 
19 

20 

21 
22 
23 
24 
25 
26 
27 
28 

29 
30 
31 
32 

33 

34 
35 
36 
37 
40 
41 
45 
50 

-418 

A60 

Code 

Description 

Reference 
NACE Rev.1 

51 

52 

55 
60 
61 
62 
63 

64 
65 
66 
67 
70 
71 

72 
73 
74 
75 
80 
85 
90 
91 
92 
93 
95 
99 

Wholesale trade and commission trade, except of motor vehicles and 
motorcycles 
Retail trade, except of motor vehicles and motorcycles; repair of 
personal and household goods 
Hotels and restaurants 
Land transport; transport via pipelines 
Water transport 
Air transport 
Supporting and auxiliary transport activities; activities of travel 
agencies 
Post and telecommunications 
Financial intermediation, except insurance and pension funding 
Insurance and pension funding, except compulsory social security 
Activities auxiliary to financial  intermediation 
Real estate activities 
Renting of machinery and equipment without operator and of personal 
and household goods 
Computer and related activities 
Research and development 
Other business activities 
Public administration and defence; compulsory social security 
Education 
Health and social work 
Sewage and refuse  disposal, sanitation and similar activities 
Activities of membership organization n.E.C. 
Recreational, cultural and sporting activities 
Other service activities 
Private households with employed persons 
Extra-territorial organizations and bodies 

51 

52 

55 
60 
61 
62 
63 

64 
65 
66 
67 
70 
71 

72 
73 
74 
75 
80 
85 
90 
91 
92 
93 
95 
99 

4 19 

A31 

Code 

Description 

Reference 
NACE Rev.1 

AA 
BB 
CA 
CB 
DA 
DB 
DC 
DD 
DE 
DF 
DG 
DH 
Dl 
DJ 
DK 
DL 
DM 
DN 
EE 
FF 
GG 

HH 
II 
JJ 
KK 
LL 
MM 
NN 
00 
PP 
QQ 

Agriculture, hunting and  forestry 
Fishing 
Mining and quarrying of energy producing materials 
Mining and quarrying except energy producing materials 
Manufacture  of food products ; beverages and tobacco 
Manufacture  of textiles and textile products 
Manufacture  of leather and leather products 
Manufacture  of wood and wood products 
Manufacture  of pulp, paper and paper products; publishing and printing 
Manufacture  of coke, refined  petroleum products and nuclear  fuel 
Manufacture  of chemicals, chemical products and man-made  fibres 
Manufacture  of rubber and plastic products 
Manufacture  of other non-metallic mineral products 
Manufacture  of basic metals and fabricated  metal products 
Manufacture  of machinery and equipment n.E.C. 
Manufacture  of electrical and optical equipment 
Manufacture  of transport equipment 
Manufacturing n.E.C. 
Electricity, gas and water supply 
Construction 
Wholesale and retail trade; repair of motor vehicles, motorcycles and 
personal and household goods 
Hotels and restaurants 
Transport, storage and communication 
Financial intermediation 
Real estate, renting and business activities 
Public administration and defence; compulsory social security 
Education 
Health and social work 
Other community, social and personal service activities 
Private households with employed persons 
Extra-territorial organizations and bodies 

A 
B 
CA 
CB 
DA 
DB 
DC 
DD 
DE 
DF 
DG 
DH 
Dl 
DJ 
DK 
DL 
DM 
DN 
E 
F 
G 

H 
I 
J 
K 
L 
M 
N 
O 
P 
Q 

420 

A17 

Code 

Description 

Reference 
NACE Rev.1 

A 
B 
C 
D 
E 
F 
G 

H 
I 
J 
K 
L 
M 
N 
O 
P 
Q 

Agriculture, hunting and forestry 
Fishing 
Mining and quarrying 
Manufacturing 
Electricity, gas and water supply 
Construction 
Wholesale and retail trade; repair of motor vehicles, motorcycles and 
personal and household goods 
Hotels and restaurants 
Transport, storage and communication 
Financial intermediation 
Real estate, renting and business activities 
Public administration and defence; compulsory social security 
Education 
Health and social work 
Other community, social and personal service activities 
Private households with employed persons 
Extra-territorial organizations and bodies 

A 
B 
C 
D 
E 
F 
G 

H 
I 
J 
K 
L 
M 
N 
O 
P 
Q 

421 

P60 

Code 

Description 

Reference 
CPA 

01 
02 
05 
10 
11 

12 
13 
14 
15 
16 
17 
18 
19 
20 

22 
21 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
40 
41 
45 
50 

Products of agriculture, hunting and related services 
Products of forestry,  logging and related services 
Fish and other fishing products, services incidental to  fishing 
Coal and lignite; peat 
Crude petroleum and natural gas; services incidental to oil and gas 
extraction excluding surveying 
Uranium and thorium ores 
Metal ores 
Other mining and quarrying products 
Food products and beverages 
Tobacco products 
Textiles 
Wearing apparel; furs 
Leather and leather products 
Wood and products of wood and cork (except furniture),  articles of 
straw and plaiting materials 
Printed matter and recorded media 
Pulp, paper and paper products 
Coke, refined petroleum products and nuclear  fuel 
Chemicals, chemical products and man-made  fibres 
Rubber and plastic products 
Other non-metallic mineral products 
Basic metals 
Fabricated metal products, except machinery and equipment 
Machinery and equipment n.e.c. 
Office  machinery and computers 
Electrical machinery and apparatus n.e.c. 
Radio, television and communication equipment and apparatus 
Medical, precision and optical instruments, watches and clocks 
Motor vehicles, trailers and semi-trailers 
Other transport equipment 
Furniture; other manufactured  goods n.e.c. 
Recovered secondary raw materials 
Electrical energy, gas, steam and hot water 
Collected and purified  water, distribution services of water 
Construction work 
Trade, maintenance and repair services of motor vehicles and 
motorcycles; retail trade services of automotive  fuel 

01 
02 
05 
10 
11 

12 
13 
14 
15 
16 
17 
18 
19 
20 

22 
21 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
40 
41 
45 
50 

422 -

(27) 

P60 

Code 

Description 

Reference 
CPA 

51 

52 

55 
60 
61 
62 
63 
64 
65 

66 

67 
70 
71 

72 
73 
74 
75 

80 
85 
90 
91 
92 
93 
95 
99 

, 

Wholesale trade and commission trade services, except of motor 
vehicles and motorcycles 
Retail trade services, except of motor vehicles and motorcycles; repair 
services of personal and household goods 
Hotel and restaurant services 
Land transport and transport via pipeline services 
Water transport services 
Air transport services 
Supporting and auxiliary transport services; travel agency services 
Post and telecommunication services 
Financial intermediation services, except insurance and pension 
funding  services 
Insurance and pension funding  services, except compulsory social 
security services 
Services auxiliary to financial  intermediation 
Real estate services 
Renting services of machinery and equipment without operator and of 
personal and household goods 
Computer and related services 
Research and development services 
Other business services 
Public administration and defence services; compulsory social security 
services 
Education services 
Health and social work services 
Sewage and refuse disposal services, sanitation and similar services 
Membership organization services n.e.c. 
Recreational, cultural and sporting services 
Other services 
Private households with employed persons 
Services provided by extra-territorial organizations and bodies 

51 

52 

55 
60 
61 
62 
63 
64 
65 

66 

67 
70 
71 

72 
73 
74 
75 

80 
85 
90 
91 
92 
93 
95 
99 

4 2 3-

P31 

Code 

Description 

Reference 
CPA 

AA 
BB 
CA 

CB 
DA 
DB 
DC 
DD 
DE 
DF 
DG 
DH 
Dl 
DJ 
DK 
DL 
DM 
DN 
EE 
FF 
GG 

HH 
II 
JJ 
KK 
LL 

MM 
NN 
OO 
PP 
QQ 

Products of agriculture, hunting and forestry 
Fish 
Coal and lignite; peat; crude petroleum and natural gas; uranium and 
thorium 
Metal ores and other mining and quarrying products 
Food products, beverages and tobacco 
Textiles and textile products 
Leather and leather products 
Wood and wood products 
Pulp, paper and paper products; recorded media; printing services 
Coke, refined petroleum products and nuclear fuel 
Chemicals, chemical products and man-made fibres 
Rubber and plastic products 
Other non metallic mineral products 
Basic metals and fabricated  metal products 
Machinery and equipment n.e.c. 
Electrical and optical equipment 
Transport equipment 
Other manufactured  goods n.e.c. 
Electrical energy, gas, steam and hot water 
Construction work 
Wholesale and retail trade services; repair services of motor vehicles, 
motorcycles and personal and household goods 
Hotel and restaurant services 
Transport, storage and communication services 
Financial intermediation services 
Real estate, renting and business services 
Public administration and defence services, compulsory social security 
services 
Education services 
Health and social services 
Other community, social and personal services 
Private households with employed persons 
Services provided by extra-territorial organizations and bodies 

A 
B 
CA 

CB 
DA 
DB 
DC 
DD 
DE 
DF 
DG 
DH 
Dl 
DJ 
DK 
DL 
DM 
DN 
E 
F 
G 

H 
I 
J 
K 
L 

M 
N 
O 
P 
Q 

424 

P17 

Code 

Description 

Reference 
CPA 

A 
B 
C 
D 
E 
F 
G 

H 
I 
J 
K 
L 

M 
N 
O 
P 
Q 

Products of agriculture, hunting and forestry 
Fish 
Products from  mining and quarrying 
Manufactured  products 
Electrical energy, gas, steam and hot water 
Construction work 
Wholesale and retail trade services; repair services of motor vehicles, 
motorcycles and personal and household goods 
Hotel and restaurant services 
Transport, storage and communication services 
Financial intermediation services 
Real estate, renting and business services 
Public administration and defence services, compulsory social security 
services 
Education services 
Health and social services 
Other community, social and personal services 
Private households with employed persons 
Services provided by extra-territorial organisations and bodies 

A 
B 
C 
D 
E 
F 
G 

H 
I 
J 
K 
L 

M 
N 
O 
P 
Q 

- 4 25 

I 

Code 

Description 

A6 

========= 

= 

_ 

Preference 
NACE Rev.1 
A + B 

C + D + E 
F 
G + H + I 

J + K 
L to P 

Preference 
NACE Rev.1 
A + B 

C + D + E + F 
G to P 

1 

2 
3 
4 

5 
6 

Agriculture, hunting and forestry; fishing and operation of 
fish hatcheries and fish farms 
Industry, including energy 
Construction 
Wholesale and retail trade, repair of motor vehicles and 
household goods, hotels and restaurants; transport and 
communications 
Financial, real-estate, renting and business activities 
Other service activities 

I 

Code 

A3 

Description 

1 

2 
3 

Agriculture, hunting and forestry; fishing and operation of 
fish hatcheries and fish farms 
Industry, including energy and construction 
Service activities 

426 

I 

~~ 

Code 

P6 

Description 

1 
2 

3 
4 

5 

6 

Products of agriculture, forestry,  fisheries and aquaculture 
Products from mining and quarrying, manufactured 
products and energy products 
Construction work 
Wholesale and retail trade, repair services, hotel and 
restaurant services, transport and communication services 
Financial intermediation services, real estate, renting and 
business services 
Other services 

Preference 
CPA 
A + B 
C + D + E 

F 
G + H + I 

J + K 

L to P 

r 

Code 

P3 

= = = —-

Description 

1 
2 

3 

Products of agriculture, forestry, fisheries and aquaculture 
Products from mining and quarrying, manufactured 
products, energy products and construction work 
Services 

Preference 
CPA 
A + B 
C + D + E + F 

G to P 

427-

I 

Code 

P i6 

Description 

1 

2 
3 

4 
.  5 
6 

Products of agriculture, forestry, fisheries and aquaculture 
Equipment : 
Metal products and machinery 
Transport equipment 
Construction: 
of which housing 
of which other constructions 
Other products 

I 

Code 

= 

= == 

= == 

Pi3 

Description 

1 
2 
3 

Metal products and machinery, transport equipment 
Construction 
Other products 

I 

Preference 
CPA 
01 +02 + 05 

28 to 33 + 36 
34 + 35 
45 

Remaining 
divisions 

I 

Preference 
CPA 
28 to 36 
45 
Remaining 
divisions 

- 4 2 8-

F. 

Classification  of individual consumption by purpose (COICOP) 

(One- and two-digit  levels) 

1. 

Food, beverages and  tobacco 

1.1  Food 
1.2  Beverages 
1.3  Tobacco 

2. 

Clothing and  footwear 

2.1  Clothing 
2.2  Footwear 

3. 

Housing, water, electricity, gas and other  fuels 

3.1  Gross rents 
3.2  Regular maintenance and repair of dwelling 
3.3  Other services relating to the dwelling 
3.4  Electricity, gas and other fuels 

4. 

Furnishings, household  equipment and  routine maintenance of the house 

4.1  Furniture, furnishings  and decorations, carpets and  other floor coverings and repairs 
4.2  Household textiles 
4.3  Heating and cooking appliances; refrigerators, washing machines similar major 

household appliances, including fittings and repairs 

4.4  Glassware, tableware and household utensils 
4.5  Tools and equipment for the house and garden 
4.6  Goods and services for routine household maintenance 

5. 

Health 

5.1  Medical and pharmaceutical products and therapeutic appliances and equipment 
5.2  Non-hospital medical and paramedical services 
5.3  Hospital services 
5.4  Sickness and accident insurance services 

6. 

Transport 

6.1  Purchase of vehicles 
6.2  Operation of personal transport equipment 
6.3  Transports services 

7. 

Leisure, entertainment  and  culture 

7.1  Equipment and accessories, including repairs 
7.2  Recreational and cultural services 
7.3  Newspapers, books and stationery 

- 4 2 9-

8. 

Education 

8.1  Educational services 
8.2  Educational materials 
8.3  Ancillary educational services 

9. 

Hotels, cafes and restaurants 

9.1  Catering 

9.2  Accommodation services 

10. 

Miscellaneous goods and services 

10.1  Personal care 
10.2  Personal effects n.e.c. 
10.3  Communications 
10.4  Social services 
10.5  Financial services n.e.c. 
10.6  Other services n.e.c. 

430 

G. 

01 

Classification  of the  functions  of the government  (COFOG) 

General  public services 

01.1  Executive and legislative organs, financial and fiscal affairs, extemal affairs  other 

than foreign aid. 
01.2  Foreign economic aid 
01.3  Fundamental research affairs  and services 
01.4  General services 
01.5  General public services n.e.c 

02 

Defence affairs  and services 

02.1  Military and civil defence administration and operation 
02.2  Foreign military aid 
02.3  Defence-related  applied research and experimental development 
02.4  Defence affairs n.e.c. 

03 

Public order  and safety  affairs 

03.1  Police and fire protection 
03.2  Law courts 
03.3  Prison administration and operation 
03.4  Public order and safety affairs n.e.c. 

04 

Education  affairs  and  services 

04.1  Pre-primary and primary education affairs  and services (ISCED Levels 0 and 1) 
04.2  Secondary education affairs  and services (ISCED Levels 2 and 3) 
04.3  Tertiary education affairs  and services (ISCED Levels 5, 6 and 7) 
04.4  Education services not definable by level (ISCED Level 9) 
04.5  Subsidiary services to education 
04.6  Education affairs  and services n.e.c. 

05 

Health affairs  and  services 

05.1  Hospital affairs  and services 
05.2  Clinics, and medical, dental and para-medical practitioners 
05.3  Public health affairs  and services 
05.4  Medicaments, prothèses, medical equipment and appliances or other prescribed 

health-related products 

05.5  Applied research and experimental development related to the health and medical 

delivery system 

05.6  Health affairs  and services n.e.c. 

06 

Social security and  welfare  affairs  and  services 

06.1  Social security affairs  and services 
06.2  Welfare affairs  and services 
06.3  Social security and welfare affairs n.e.c. 

431  -

07 

Housing and community amenity affairs  and services 

07.1  Housing and community development 
07.2  Water supply affairs  and services 
07.3  Sanitary affairs  and services including pollution abatement and control 
07.4  Street lighting affairs  and services 
07.5  Housing and community amenity affairs  and services n.e.c. 

08 

Recreational, cultural and religious affairs and services 

08.0  Recreational, cultural and religious affairs  and services 

09 

Fuel and energy affairs and services 

09.1  Fuel affairs  and services 
09.2  Electricity and other energy sources 
09.3  Fuel and energy affairs  and services n.e.c. 

10 

Agriculture, forestry, fishing and hunting affairs and services 

10.1  Agriculture affairs  and services 
10.2  Forestry affairs  and services 
10.3  Fishing and hunting affairs  and services 
10.4  Agricultural research and experimental development n.e.c. 
10.5  Agriculture, forestry, fishing and hunting affairs  and services n.e.c. 

11 

Mining and mineral resource affairs and services, other than fuels;  manufacturing 
affairs and services; and construction affairs and services 

11.1  Mining and mineral resource affairs  and services, other than  fuels 
11.2  Manufacturing  affairs  and services 
11.3  Construction affairs  and services 
11.4  Mining and mineral resource affairs  and services n.e.c; manufacturing  affairs  and 

services n.e.c; and construction affairs  and services n.e.c. 

12 

Transportation and communication affairs and services 

12.1  Road transport affairs  and services 
12.2  Water transport affairs  and services 
12.3  Railway affairs  and services 
12.4  Air transport affairs  and services 
12.5  Pipeline transport and other transport system affairs  and services 
12.6  Transportation system affairs  and services n.e.c. 
12.7  Communication affairs  and services 
12.8  Transportation and communication affairs  and services n.e.c 

4 3 2-

13 

Other  economic affairs  and  services 

13.1  Distribution trade affairs  and services including storage and warehousing; hotel and 

restaurant affairs  and services 
13.2  Tourism affairs  and services 
13.3  Multipurpose development project affairs  and services 
13.4  General economic and commercial affairs  other than general labour  affairs 
13.5  General labour affairs  and services 
13.6  Other economic affairs and services n.e.c. 

14 

Expenditures  not classified  by major  group 

14.0  Expenditure not classified  by major group 

4 3 3-

PART II. 

ACCOUNTS 

- 

lr/iy 

-435 

Table A.1.  Account 0:  Goods and services account 

Resources 

P.l 
P.l I 
P.12 

Output 

Market output 
Output for own use 

3595 
3048 

171 

Uses 

P.2 

Intermediate consumption 

P.3/P.4  Final consumption expenditure/Actual 

final consumption 

P.13 

Other non-market output 

376 

P.31/P.41 

D. 21 

Taxes on products 

141 

P.32/P.42 

D.31 

Subsidies on products 

P.7 
P.71 
P.72 

Imports of goods and services 

Imports of goods 
Imports of services 

497 
392 
105 

P.51 
P.511 
P.5111 
P.5112 
P.5U3 
P.512 
PJ121 
P.5122 
P.5123 
P.513 

P.5131 

P.5132 

individual consumption expenditure/Actual 
individual consumption 
Collective consumption expenditure/Actual 
collective consumption 

Gross fixed capital formation 

Acquisitions less disposals of tangible fixed assets 

Acquisitions of new tangible fixed assets 
Acquisitions of existing tangible fixed assets 
Disposals of existing tangible fixed assets 

Acquisitions less disposals of intangible fixed assets 

Acquisitions of new intangible fixed assets 
Acquisitions of existing intangible fixed assets 
Disposals of existing intangible fixed assets 

Additions to the value of non-produced 
non-financial assets 

Major improvements to non-produced 
non-financial assets 
Costs of ownership transfer on non-produced 
non-financial assets 

P.52 

Changes in inventories 

P.53 

Acquisitions less disposals of valuables 

P.6 
P.61 
P.62 

Exports of goods and services 

Exports of goods 
Exports of services 

1904 

1371 

1215 

156 

376 
303 

305 

53 

22 

28 

536 
462 
74 

^£ 

-  437  -

Resources 

P.l  Output 
Market output 
P.ll 
Output for own final use 
P.12 
P.13 
Other non-market output 
D.21-D.31  Taxes less subsidies on products 

Resources 

B.1*  Domestic  product 

3048 
171 
376 

133 

1602 

1904 

1824 
222 
1602 

762 
569 
193 
174 
19 

235 
141 
121 

3_ 

94 

44 

-36 

217 
432 

Table  A.2. 

Full sequence of accounts for the total economy 

I:  Production  account 

Uses 

P.2 

Intermediate consuniption 

B.l*g  Gross domestic product 
K_ 1  Consumption of fixed capital 
B.l*n  Net domestic product 

II.  Distribution and use of income  accounts 

11.1 :  Primary distribution of income  account 

//. 1.1:  Generation  of income  account 

Uses 

P. 1  Compensation of employees 
P.ll 
P. 12 
P.12I 
D.122 

Wages and salaries 
Employers' social contributions 

Employers' actual social contributions 
Employers' imputed social contributions 

D.2  Taxes on production and imports 
D.21 
Taxes on products 
D.211 
D.212 
P.2121 
D.2122 
P.214 
D.29 

Other taxes on production 

Value added type taxes (VAT) 
Taxes and duties on imports excluding VAT 

Import duties 
Taxes on imports excluding VAT and duties 

Taxes on products except VAT and import  taxes  " 

Subsidies 

P.3 
P.31 
P.311 
P.319 
D.39  Other subsidies on production 

Subsidies on products 
Import subsidies 
Other subsidies on products 

B.2  Operating surplus 
B.3  Mixed income 

-  438  -

Table A.2. 

Full sequence of accounts for the total economy [cont.] 

//. 1.2:  Allocation  of primary  income account 

Uses 

D.4 

Property  income 

D.41 

D.42 

D.421 

D.422 

D.43 

D.44 

D.45 

Interest 

Ksmbuted  irexanacof cosTxraUons 

Dividends 

Withdrawals from income of quasi-corporations 

Reinvested earnings on direct foreign  investment 

Property income attributed to insurance policyholders 

Rent 

380 

206 
84 

60 

24 

0 

25 

65 

B.5*  National 

income 

1633 

Resources 

B.2 

B.3 

Operating  surplus 

Mixed  income 

D.1 

DU 
D.12 

D.121 

D.122 

D.2 

D.21 

D.2U 

D.212 

D.2121 

D.2122 

D.214 

D.29 

D.3 
D.31 

D.311 

D.319 

D.39 

D.4 
D.41 
P.l 19 

D.42 

D.421 

D.422 

D.43 
D.44 
D.45 

Compensation of  employees 

Wages and salaries 

Employers' social  contributions 

Employers' actual social  contributions 

Employers' imputed social  contributions 

Taxes on production and  imports 

Taxes on products 

Value added type taxes (VAT) 

Taxes and duties on imports excluding  VAT 

Import duties 
Taxes on  imports excluding  VAT and duties 

Taxes on products except  VAT and import taxes 

Other taxes on  production 

Subsidies 

Subsidies on products 

Import subsidies 

Other subsidies on  products 

Other subsidies on production 

Property  income 

Interest 

Adjustment for FISIM 

Distributed  income of  corporations 

Dividends 

Withdrawals from income of quasi-corporations 

Reinvested earnings on direct foreign  investment 

Property income attributed to insurance policyholders 

Rent 

217 
432 

766 
573 
193 
174 

235 
141 
121 

94 

-44 

36 

407 
200 

103 
46 

25 
65 

-  439 

-

Table  A.2. 

Full sequence  of accounts  for the total economy  [cont.] 

11.1.2.1 :  Entrepreneurial  income  account 

Uses 

D.4  Property income 
D.41 
D.44 
D.45 

Interest 
Property income attributed to insurance policyholders 
Rent 

Resources 

B.2 

Operating  surplus 

B.3  Mixed  income 

D.4 

Property income 

217 
147 
25 
45 

D.41 
P. 119 

D.42 

D.421 

P.422 

D.43 

D.44 

D.45 

Interest 

Adjustment for FISIM 

Distributed income of  corporations 

Dividends 

Withdrawals from income of quasi-corporations 

Reinvested earnings on direct foreign investment 

Property income attributed to insurance  policyholders 

Rent 

679 

163 
59 

84 

60 

24 

Resources 

B.4 

Entrepreneurial 

income 

P. 1  Compensation of  employees 

P. 11 

P. 12 

Wages and salaries 

Employers' social  contributions 

B.4 

Entrepreneurial 

income 

11.1.2.2:  Allocation  of other primary income  account 

Property  income 

Interest 

Distributed income of  corporations 

Dividends 

Withdrawals from income of Cjutui-corporauons 

Uses 

D.4 
D.41 

P.42 

D.421 

D.422 

D.43 

D.4S 

Reinvested earnings on direct foreign investment 

0_ 

D.121 

Employers' actual social  contributions 

Rent 

20 

D.122 

Employers' imputed social  contributions 

D.2 

Taxes on production and imports 

D.21 

Taxes on products 

D.211 

D.212 

P.2121 

D.2122 

D.214 

D.29 

Value added type taxes (VAT) 

Taxes and duties on imports excluding  VAT 

Import duties 

Taxes on imports excluding VAT and duties 

Taxes on products except VAT and import taxes 

Other taxes on production 

P.3 

Subsidies 

P. 31 

P.311 

P.319 

Subsidies on products 

Import subsidies 

Other subsidies on products 

D.39 

Other subsidies on production 

D.4 

Property income 

D.41 

D.42 

D.421 

D.422 

D.43 

D.44 

Interest 

Distributed income of  corporations 

Dividends 

Withdrawals from income of quasi-corporations 

Reinvested earnings on direct foreign  investment 

Property income  attributed to insurance  policyholders 

B.5*  National  income 

D.45 

Rent 

1633 

217 

432 

247 

150 

0_ 

37 

37 

0_ 

11 

5_ 

44 

679 

766 

573 

193 

174 

19 

235 

141 

121 

17 

17 

0_ 

3_ 

94 

-36 

160 

50 

66 

9_ 

57 

3_ 

20 

21 

440 

(28) 

T a b le  A . 2. 

Full  sequence  of accounts  for the total  economy  [cont.] 

11.2:  Secondary  distribution  of income  account 

Uses 

D.5 

Current taxes on income, wealth, etc. 

D.51 

D.59 

Taxes on income 

Other current taxes 

D.61 

D.611 

D.6111 

D.61 HI 

D.61112 

D.6112 

D.61121 

D.61122 

D.6113 

Social  contributions 

Actual social  contributions 

Employers' actual social  contributions 

Compulsory employers' actual social contributions 

Voluntary employers' actual social  contributions 

Employees' social  contributions 

Compulsory employees' social  contributions 

Voluntary employees' social  contributions 

Social contributions by self- and 

non-employed  persons 

Resources 

B.5*  National 

income 

212_ 

203 

9 

D.5 

Current taxes on income, wealth, etc. 

322 

303 

174 

160 

14 

97 

85 
12 

D.51 

D.59 

D.61 
D.611 

D.6111 

D.61 HI 

D.61112 

D.6112 

D.61121 

D.61122 

Taxes on income 

Other current taxes 
Social  contributions 

Actual social  contributions 

Employers' actual social  contributions 

Compulsory employers' actual social  contributions 

Voluntary employers' actual social  contributions 

Employees' social  contributions 

Compulsory employers' actual social  contributions 

Voluntary employers' actual 

social  contributions 

D.61131 

Compulsory social contributions by self- and 

D.6113 

Social contributions by self- and 

non-employed persons 

non-employed persons 

D.61132 

Voluntary social contributions by self- and 

D.61131 

Compulsory social contributions  by self- and 

1633 

213 

204 

322 

303 

160 

97 
85 

32 

22 

332 

232 

29 

19 

52 

239 

45 

42 

96 

55 

non-employed persons 

D.61132 

Voluntary social contributions by self- and 

non-employed persons 

D.612 

Imputed social  contributions 

D.62 

D.621 

D.622 

D.623 

D.624 

Social benefits other than social transfers  in kind 

Social  security benefits  in cash 

Private funded social  benefits 

Unfunded employee «octal  benefits 

Social  assistance benefits  in cash 

D.7  Other current transfers 

D.71 

D.72 

D.73 

D.74 

D.75 

Net non-life insurance premiums 

Non-life insurance claims 

Current transfers within general  govemment 

Current international  cooperation 

Miscellaneous  current transfers 

Resources 

B.6 

Disposable 

income 

D.63 

D.631 

D.6311 

D.6312 

D.6313 

D.632 

Social transfers in kind 

Social benefits  in kind 

Social  security benefits,  reimbursements 

Other social security benefits  in kind 

Social  assistance benefits  in kind 

Transfers of individual non-market goods and services 

219 
162 

78 
65 

57 

non-employed persons 

D.612 

Imputed social  contributions 

D.62 

Social  benefits other than 

social transfers in kind 

D.621 

D.622 

D.623 

D.624 

Social security benefits  in cash 

Private funded social  benefits 

Unfunded employee social  benefits 

Social  assistance benefits  in cash 

D.7  Other current transfers 

D.7I 

D.72 

D. 73 

D.74 

D.75 

Net non-life  insurance premiums 

Non-life insurance claims 

Current transfers within general  govemment 

Current international  cooperation 

Miscellaneous current transfers 

B.6 

Disposable 

income 

11.3:  Redistribution  of income  in kind  account 

Uses 

D.63 

D.631 

D.6311 

D.6312 

D.6313 

D.632 

Social transfers in kind 

Social  benefits  in kind 

Social security benefits,  reimbursements 

Other social  security benefits in kind 

Social assistance  benefits  in kind 

Transfers of individual  non-market goods and services 

B.7 

Adjusted  disposable 

income 

332 

232 

19 
52 

269 
43 

45 

96 

54 

1604 

219 
162 
78 
65 
19 
57 

1604 

-  441 

T a b le  A . 2. 

Full  sequence  of  accounts  for  the  total  economy  [ c o n t] 

11.4:  Use  of  income  account 

11.4.1:  Use  of  disposable 

income 

account 

Uses 

P.3 

P.31 

P.32 

Final consumption expenditure 

Individual  consumption  expenditure 

Collective consumption expenditure 

D.8 

Adjustment  for the change in net equity 
of households on pension  funds 

B.8 

Saving 

//. 4.2:  Use  of  adjusted  disposable 

income 

account 

Uses 

P.4 

Actual  final  consumption 

P.41 

P.42 

Actual  individual  consumption 

Actual collective  consumption 

D.8 

Adjustment for the change in net equity 
of households on pension  funds 

B.8 

Saving 

Resources 

B.6 

Disposable 

income 

1604 

D.8 

Adjustment for the change in net equity of  households 
on pension  funds 

Resources 

B.7 

Adjusted  disposable 

income 

1604 

D.8 

Adjustment for the change in net equity 
of households on pension  funds 

1371 

1215 
156 

233 

1371 

1215 
156 

233 

442 

Table A.2. 

Full sequence  of accounts for the total economy [cont.] 

III.  Accumulation  accounts 

111.1 ;  Capital  account 

///. 1.1:  Change  in net worth due to saving  and capital transfers  account 

Changes in assets 
B.10.1  Changes  in net worth  due to saving  and capital  transfers 

C h a n g es  in liabilities  and  net  worth 

230 

B.8n  Saving,  net 

D.9 

Capital transfers, receivable 

D.91 

D.92 

D.99 

Capital taxes 

Investment grants 

Other capital  transfers 

D.9 

Capital transfers, payable 

D.91 

D.92 

Capital taxes 

Investment grants 

D.99 

Other capital  transfers 

///. /. 2:  Acquisition  of non-financial  assets  account 

Changes in assets 

Changes in liabilities and net worth 

233 

62 

23 
37 

• 65 
-2 
-27 

•36 

B. 10.1  Changes  in net worth  due to saving  and capital 

transfers 

230 

P.51 

P.511 

P.5111 

P.5112 

P.5113 

P.512 

P.5121 

P.5122 

P.5123 

P.513 

Gross  fixed  capital  formation 

Acquisitions  less disposals of tangible fixed assets 

Acquisitions of new tangible fixed assets 

Acquisitions of existing tangible fixed assets 

Disposals  of existing tangible fixed assets 

Acquisitions  less disposals of intangible fixed assets 

Acquisitions of new intangible fixed assets 

Acquisitions of existing intangible fixed assets 

Disposals of existing intangible fixed assets 

Additions to the value of non-produced 

non-financial  assets 

P.5131 

Major improvements to non-produced non-financial 

assets 

P.5132 

Costs of ownership transfer on non-produced 

non-financial  assets 

K.1 

Consumption of fixed capital 

P.52  Changes  in inventories 

P.53  Acquisitions  less disposals of valuables 

K.2 

Acquisitions  less disposals of non-produced 

non-financial  assets 

K.21 

Acquisitions  less disposals of land and other 

tangible non-produced  assets 

K.22 

Acquisitions  less disposals of intangible 

non-produced  assets 

376 
303 
305 

-13 

53 

22 

17 

-222 

28 

10 

B.9  Net lending  (+) /Net  borrowing  (-) 

38 

-  443  -

Table A.2.  Full sequence of accounts for the total economy [cont.] 

.2:  Financial account 

Changes in assets 

Net acquisition of  financial  assets 

F.l  Monetary gold and SDRs 

F.2 

Currency and deposits 

F.21 

F.22 

F.29 

Currency 

Transferable  deposits 

Other deposits 

C h a n g es  in liabilities  and  net  worth 

Net  incurrence of  liabilities 

641 

-1 

119 

F.2 

Currency and deposits 

34 

62 

23 

F.21 

F.22 

F.29 

Currency 

Transferable  deposits 

Other deposits 

F.3 

Securities other than shares 

138 

F.3 

Securities other than shares 

F.4 

Loans 

F.41 

F.42 

Short-term 

Long-term 

244 

83 

161 

F.4 

F.41 

F.42 

Loans 

Short-term 

Long-term 

F.5 

Shares and other equity 

44 

F.5 

Shares and other equity 

F.6 

Insurance technical  reserves 

F.61 

Net equity of households on life  insurance 

reserves and on pension funds reserves 

F.611 

F.612 

F.62 

Net equity of households on life insurance reserves 

Net equity of households on pension funds  reserves 

Prepayment of premiums and reserves against 

outstanding claims 

F.7 

Other accounts receivable 

F.71 

F.79 

Trade credits and advances 

Other accounts  receivable,  except trade credits and 
advances 

36 

F.6 

Insurance technical  reserves 

F.61 

Net equity of households on life  insurance 

reserves and on pension  funds 

F.611 

F.612 

F.62 

F.7 

F.71 

F.79 

Net equity of households on life  insurance  reserves 

Net equity of households on pension  funds 

Prepayment of premiums and reserves against 

outstanding claims 

Other accounts payable 

Trade credits and advances 

Other accounts payable, except trade credits and 

advances 

33 
22 

11 

61 

18 

43 

B.9 

Net  lending(+)Met  borrowing(-) 

132 
35 
65 
32 

123 

217 
76 
141 

36 

33 
22 

52 

34 

38 

444 

T a b le  A.2. 

Full  sequence  of  accounts  for  the  total  economy  [cont.] 

111.3:  Other  c h a n g es  in  assets  accounts 

111.3.1:  Other  changes 

in volume  of assets  account 

Changes  in  assets 

C h a n g es  in liabilities  and  net  worth 

AF 

K.7 

K.8 
K.10 

Liabilities 

Catastrophic  losses 

Uncompensated  seizures 

Other volume changes  in financial  assets and net 
liabilities n.e.c. 

K. 12 

Changes in classifications  and structure 

K.12.1 

K.12.2 

K.12.22 

ofwhich: 

AF.2 

AF.3 

AF.4 

AF.S 

AF.6 

AF.7 

Changes in sector classification  and structure 

Changes in classification of assets and liabilities 

Changes  in classification of assets or liabilities 
other than monetization/demonetization  of  gold 

Currency and deposits 

Securities other than shares 

Loans 

Shares and other equity 

Insurance technical  reserves 

Other accounts  payable 

10 

-7 

3 

-9 

0 

1 

-2 

0 

-4 

-1 

-2 

17 

24 

4 

-2 
T 
0 

-2 

0 

0 

0 

-4 

0 

2 

0 

AN 
AN.l 

K.4 

K.7 

Non-financial  assets 

Produced assets 

Economic appearance of produced assets 

Catastrophic  losses 

K.8 

K.9 

K.12 

K.12.1 

K.12.2 

K  12.21 

K.12.22 

of which : 

Uncompensated  seizures 

Other volume changes in non-financial  assets n.e.c. 

Changes  in classifications  and structure 

Changes in sector classification  and structure 

Changes in classification  of assets and  liabilities 

Monetization/demonetization of gold 

Changes  in classification of assets or liabilities 

other than morteùzation/demonetization of gold 

Fixed  assets 

Inventories 

Valuables 

Non-produced assets 

AN.H 

AN.12 

AN.13 
AN.2 

K.3 

K5 

K.6 

K.61 

K.62 

K.7 

K.8 

K.9 

K.12 

K.12.1 

K.12.2 

K.12.22 

ofwhich : 

AN.21 

AN.22 

Economic appearance of  non-produced  assets 

Natural growth of non-cultivated biological  resources 

Economic disappearance of non-produced assets 

Depletion of natural assets 

Other economic disappearance of non-produced  assets 

Catastrophic  losses 

Uncompensated  seizures 

Other volume changes in non-financial  assets n.e.c. 

Changes in classifications  and structure 

Changes in sector classification  and structure 

Changes  in classification  of assets and liabilities 

Changes in classification of assets or liabilities 

other than monetization/demonetization of gold 

Tangible non-produced  assets 

Intangible non-produced  assets 

AF 

K.7 

K.8 

Financial  assets 

Catastrophic  losses 

Uncompensated  seizures 

K.10 

Other volume changes in financial assets and 

liabilities n.e.c. 

K.12 

Changes  in classifications  and structure 

K.12.1 

K.12.2 

K.12.21 

K.12.22 

ofwhich: 

Changes  in sector classification and structure 

Changes  in classification  of assets and  liabilities 

Monetization/demonetization of  gold 

Changes in classification  of assets or liabilities 

other than monetization/demonetization  of gold 

AF.l 

AF.2 

AF.3 

AF.4 

AF.5 

AF.6 

AF.7 

Monetary gold and  SDRs 

Currency and deposits 

Securities other than shares 

Loans 

Shares and other equity 

Insurance technical  reserves 

Other accounts  receivable 

B. 10.2  Changes  in net  worth  due  to  outer 
changes  in volume  of  assets 

445 

Table  A.2. 

Full sequence  of accounts  for the total economy  [cont.] 

ill.3.2:  Revaluation  account 

C h a n g es  in  a s s e ts 

K.11 

Nominal holding gains(+yiosses(-) : 

AN 

Ncrv-financial  assets 

AN.l 

Produced assets 

AN.11 

AN. 12 

AN.13 

Fixed assets 

Inventories 

Valuables 

AN.2 

Non-produced assets 

AN.21 

AN.22 

Tangible non-produced assets 

Intangible non-produced assets 

AF 

Financial  assets 

AF.l 
AF.2 

AF.3 

AF.4 

AF.5 

AF.6 

AF.7 

Monetary gold and SDRs 
Currency and deposits 

Securities other than shares 

Loans 

Shares and other equity 

Insurance technical reserves 

Other accounts receivable 

C h a n g es  in liabilities and  net  worth 

Nominal holding gains(-yiosses(+) : 

Liabilities 

Currency and deposits 

Securities other than shares 

Loans 

Shares and other equity 

Insurance technical  reserves 

Other accounts  payable 

K.11 

AF 
AF.2 

AF.3 
AF.4 

AF.5 

AF.6 

AF.7 

280 
126 
111 

8 
154 
152 

12 

40 

76 

42 

34 

B. 10.3 Changes  in net  worth  due  to nominal  holding  gains/losses 

288 

-  446 

-

Table A.2. 

Full sequence of accounts for the total economy [cont.] 

111.3.2.1:  Neutral holding gains/losses account 

Changes in assets 
K.11.1 

Neutral holding gains (-f-Vlosses (-) : 

AN 

AN.l 
AN.11 
AN. 12 

AN.13 
AN.2 
AN.21 
AN.22 

AF 
AF. 1 

AF.2 
AF.3 

AF.4 
AF.5 

AF.6 
AF.7 

Non-financial  assets 
Produced assets 
Fixed assets 
Inventories 
Valuables 

Non-produced assets 

Tangible non-produced assets 
Intangible non-produced assets 

Financial  assets 

Monetary gold and SDRs 

Currency and deposits 
Securities other than shares 

Loans 
Shares and other equity 

Insurance technical reserves 
Other accounts receivable 

Changes  in  liabilities and  net  worth 

Neutral holding gains (-)/losscs (+) : 

Liabilities 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical  reserves 
Other accounts payable 

126 
29 
26 
29 
28 

KHI.i 

AF 
AF.2 
AF.3 
AF.4 

AF.5 
AF.6 
AF.7 

198 
121 
111 

78 
76 

136 

30 
25 
28 
26 

B.10.31  Changes  in net  worth  due  to neutral  holding  gains/losses 

208 

111.3.2.2:  Real holding gains/losses account 

Changes in assets 
K. 11.2 

Real holding gains(+yiosscs(-) : 

Changes in liabilities and net worth 
K.11.2 

Real holding gains(-yiosses(+) : 

AN 
AN.l 
AN.l I 

AN. 12 
AN.13 

Non-financial  assets 
Produced assets 
Fixed assets 
Inventories 

Valuables 

AN.2 

Non-produced assets 

AN.21 
AN.22 

Tangible non-produced assets 
Intangible ison-produccd assets 

AF 
AF. 1 
AF.2 
AFJ 
AF.4 

AF.5 
AF.6 
AF.7 

Financial assets 

Monetary gold and SDRs 
Currency and deposits 
Securities other than shares 
Loans 

Shares and other equity 
Insurance technical  reserves 
Other accounts receivable 

AF 
AF.2 
AF.3 
AF.4 

AF.5 

AF.6 
AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 

Loans 
Shares and other equity 

Insurance technical reserves 
Other accounts payable 

•50 
-29 

-29 

-7 

B. 10.32  Changes  in net  worth  due  to  real  holding  gains/losses 

80 

81 

77 

76 

-52 
-3 
30 

-28 

-7 
-5 

447 

-

T a b le  A . 2. 

Full  sequence  of  accounts  for  the  total  e c o n o my  [cont.] 

IV:  Balance  sheets 

I V . 1:  Opening  balance  sheet 

Assets 

AN 

Non-financial  assets 

AN.l 

Produced  assets 

AN.11 

AN.12 

AN.13 

Fixed  assets 

Inventories 

Valuables 

AN.2 

Non-produced assets 

AN.21 

AN.22 

Tangible non-produced assets 

Intangible non-produced assets 

AF 

Financial  assets 

AF.l 

AF.2 

AF.3 

AF.4 

AF.S 

AF.6 

AF.7 

Monetary gold and  SDRs 

Currency and  deposits 

Securities other than shares 

Loans 
Shares and other equity 

Insurance technical  reserves 

Other accounts  receivable 

IV.2:  Changes  in  balance  sheet 

Assets 

Total changes in assets 

AN 
AN.l 

AN.11 

AN.12 

AN.13 

Non-financial  assets 

Produced  assets 

Fixed  assets 

Inventories 

Valuables 

AN.2 

Non-produced assets 

AN.21 

AN.22 

Tangible non-produced  assets 

Intangible non-produced  assets 

AF 

Financial  assets 

AF. 1 

Monetary gold and  SDRs 

AF.2 

AF.3 

AF.4 

AF.5 

AF.6 

AF.7 

Currency and deposits 

Securities other than shares 

Loans 

Shares and other equity 

Insurance technical  reserves 

Other accounts  receivable 

Liabilities 
and  net  worth 

AF 

Liabilities 

AF.2 

AF.3 

AF.4 
AF.5 

AF.6 

AF.7 

Currency and deposits 

Securities other than shares 

Loans 

Shares and other equity 

Insurance technical  reserves 

Other accounts  payable 

6  298 

1471 

1311 

1437 

1406 

371 

302 

B.90  Net  worth 

10416 

Liabilities 
and  net  worth 

Total changes  in  liabilities 

AF 

Liabilities 

AF.2 

AF.3 

AF.4 

AF.5 

AF.6 

AF.7 

Currency and deposits 

Securities other than shares 

Loans 

Shares and other equity 

Insurance technical  reserves 

Other accounts  payable 

B. 10  Changes  in net  worth,  total 

due to: 

B.10.1 

Saving  and  capital 

transfers 

B. 10 2  Other  changes  in volume  of  assets 

B.10.3  Nominal  holding  gains/losses 

B.10.31 

B.10.32 

Neutral  holding gains/losses 

Real holding gains/losses 

677 

132 

165 

213 

38 

52 

535 

230 

288 
208 

80 

9 9 22 
6  047 

5  544 

231 

272 

3  875 

3 809 

66 

6  792 
770 

1263 

1384 

1296 
370 

227 

482 

289 

239 

34 

16 

193 

191 

2 

730 

18 

119 

178 

240 

75 

38 

61 

-  448 

-

Table  A.2. 

Full sequence  of accounts  for the total economy  [cont.] 

IV.3:  Closing  balance  sheet 

Assets 

AN 

Non-financial  assets 

AN.l 

AN.11 

AN.12 

AN.13 

Produced  assets 

Fixed assets 

Inventories 

Valuables 

AN.2 

Non-produced assets 

AN.21 

AN.22 

Tangible non-produced assets 

Intangible non-produced  assets 

AF 

Financial assets 

AF. 1 

Monetary gold and SDRs 

AF.2 

AF.3 

AF.4 

AF.5 

AF.6 

AF.7 

Currency and deposits 

Securities other than shares 

Loans 

Shares and other equity 

Insurance technical  reserves 

Other accounts receivable 

Liabilities 
and  net  worth 

10 404 

AF 

Liabilities 

6 3 36 
S 783 

265 
288 

4 0 68 
4 000 
68 

7 5 22 
788 
1601 

1441 

1624 

1371 
408 

288 

AF.2 
A FJ 

AF.4 
AF.5 

AF.6 

AF.7 

Currency and deposits 
Securities other than shares 

Loans 

Shares and other equity 

Insurance technical reserves 

Other accounts payable 

1603 
476 
1650 

1483 
409 
354 

B.90  Net  worth 

10 951 

-  449 

-

Table A.3. 

Full sequence of accounts for non-financial corporations 

I:  Production account 

Uses 

P.2 

Intermediate  consumption 

B.l g  Value added,  gross 

K. 1  Consumption of fixed capital 
B . ln  Value added,  net 

II.  Distribution and use of income accounts 

11.1 :  Primary distribution of income account 

//. 1.1:  Generation  of income  account 

Uses 

D. 1  Compensation of  employees 
P. 11 

Wages and salaries 

D. 12 
P. 121 
D.122 

D.29 

D.39 

Employers' social  contributions 

Employers' actual social  contributions 
Employers' imputed social  contributions 

Other taxes on production 

Other subsidies on production 

B.2  Operating  surplus 

Resources 

881 

P.l 

Output 

P.ll 
P.12 

Market output 
Output for own final use 

872 

137 

735 

Resources 

545  B . ln 

Value added  net 

421 
124 

112 

12 

86 
-35 

139 

1753 
1722 

735 

-  450  -

T a b le  A . 3. 

Full  sequence  of  accounts  for  non-financial  corporations  [cont.] 

//. 1.2:  Allocation  of  primary 

income 

account 

Uses 

D.4 
D.41 
D.42 
D.421 
D.422 
D.43 
D.45 

Property income 

Interest 
Distributed income of corporations 

Dividends 
Withdrawals from income of quasi-corporations 

Reinvested earnings on direct foreign investment 
Rent 

B.5 

Balance  of primary  incomes 

11.1.2.1:  Entrepreneurial  income  account 

Uses 

D.4 
D.41 
D.45 

Property income 

Interest 
Rent 

B.4 

Entrepreneurial  income 

11.1.2.2:. Allocation of other primary income account 

Uses 

D.4 
D.42 
D.421 
D.422 
D.43 

Property income 

Distributed  income of corporations 

Dividends 
Withdrawals from income of quasi-corporations 

Reinvested earnings on direct foreign investment 

B.5 

Balance  of primary  incomes 

Resources 

B.2  Operating  surplus 

D.4 
D.41 
D.42 
D.421 
D.422 
D.43 
D.44 
D.45 

Property income 

Interest 
Distributed income of corporations 

Dividends 
Withdrawals from income of quasi-corporations 

Reinvested earnings on direct foreign  investment 
Property income attributed to insurance policyholders 
Rent 

Resources 
B.2  Operating  surplus 

D.4 
D.41 
D.42 
D.421 
D.422 
D.43 
D.44 
D.45 

Property income 

Interest 
Distributed income of corporations 

Dividends 
Withdrawals from income of quasi-corporations 

Reinvested earnings on direct foreign investment 
Property income attributed to insurance policyholders 
Rent 

Resources 

B.4 

Entrepreneurial  income 

139 

78 
25 
3 
3 
0 
4 
5 
41 

139 

120 

145 
66 

48 
24 
24 
0 

72 

97 
66 

120 

48 
48 
24 
24 
0 

72 

-  451  -

Table A.3. 

Full sequence of accounts for non-financial corporations  [cont.] 

11.2:  Secondary distribution of income account 

Uses 

D.5  Current taxes on income, wealth, etc. 
D.51 
D.59 

Taxes on income 
Other current taxes 

D.62 
D.622 
D.623 

Social benefits other than social transfers in kind 

Private funded social benefits 
Unfunded employee social benefits 

D.7  Other current transfers 
D.71 
D.75  Miscellaneous current transfers 

Net non-life insurance premiums 

B.6  Disposable income 

11.4:  Use of income account 

11.4.1:  Use  of disposable  income  account 

Uses 
D.8  Adjustment for the change in net equity 
of households on pension funds 

B.8  Saving 

Resources 
B.5  Balance of primary incomes 

20_ 
4 

D.61 
D.611 
D.6111 
D.61111 
D.61112 
D.6112 
D.61121 
D.61122 
D.612 

Social contributions 

Actual social contributions 

Employers' actual social contributions 

Compulsory employers' actual social contributions 
Voluntary employers' actual social contributions 

Employees social contributions 

Compulsory employees' social contributions 
Voluntary employees' social contributions 

Imputed social contributions 

D.7  Other current transfers 
D.72 
D.75  Miscellaneous current transfers 

Non-life insurance claims 

Resources 

B.6  Disposable income 

72 

48 

-  452 

-

Table A.3. 

Full sequence of accounts for non-financial corporations [cont.J 

III.  Accumulation  accounts 

111.1:  Capital  account 

///. 1.1:  Change  in net worth  due to saving  and capital  transfers  account 

Changes in assets 
B.10.1 Changes in net worth due to saving 

and capital transfers 

///. 1.2:  Acquisition  of non-financial  assets  account 

Changes in assets 

P.51 
P.511 
P.5111 
P.5112 
P.5113 
P.512 
P.5121 
P.5122 
P.5123 
P.513 

P.513I 

P.5132 

Gross fixed capital formation 

Acquisitions less disposals of tangible fixed assets 

Acquisitions of new tangible fixed assets 
Acquisitions of existing tangible fixed assets 
Disposals of existing tangible fixed assets 

Acquisitions less disposals of intangible fixed assets 

Acquisitions of new intangible fixed assets 
Acquisitions of existing intangible fixed assets 
Disposals of existing intangible fixed assets 

Additions to the value of non-produced 
non-financial assets 

Major improvements to non-produced 
non-financial assets 
Costs of ownership transfer on non-produced 
non-financial assets 

K. 1  Consumption of fixed capital 

P.52  Changes in inventories 

P.53  Acquisitions less disposals of valuables 

K.2  Acquisitions less disposals of non-produced 

non-financial assets 

K.21 

K.22 

Acquisitions less disposals of land and other 
tangible non-produced assets 
Acquisitions less disposals of intangible 
non-produced assets 

B.9  Net lending (+)/net  borrowing (-) 

Changes in liabilities and net worth 

B.8n 

Saving, net 

65 

D.9 
D.92 
D.99 

D.9 
D.91 
D.99 

Capital transfers, receivable 

Investment grants 
Other capital transfers 

Capital transfers, payable 

Capital taxes 
Other capital transfers 

Changes  in liabilities and  net worth 

250  B. 10.1  Changes in net worth due to saving 
and capital transfers 
209 
211 

48 

33 
23 
10 

65 

-6 

-1 

20 

137 

~26" 

2 

-7 

-6 

^69 

453 

Table A.3.  Full sequence of accounts for non-financial corporations [cont.; 

111.2:  Financial account 

Changes in assets 

F 

Net acquisition of  financial  assets 

F.2 
F.21 
F.22 
F.29 

Currency and deposits 

Currency 
Transferable deposits 
Other deposits 

F.3 

Securities other than shares 

F.4 

Loans 

F.41 

F.42 

Short-term 

Long-term 

F.5 

Shares and other equity 

F.6 

Insurance technical  reserves 

Prepayment of premiums and reserves against 
outstanding claims 

F.62 

F.7 
F.71 

F.79 

Changes in liabilities and net worth 

Net  incurrence of  liabilities 

F.2 

F.22 
F.29 

F.3 

F.4 
F.41 

F.42 

10 

27 
16 

Currency and deposits 

Transferable  deposits 
Other deposits 

Securities other than shares 

Loans 

Short-term 

Long-term 

F.5 

Shares and other equity 

F.6 
F.61 

Insurance technical  reserves 

Net equity of households on  life  insurance 
reserves and on pension funds 

F.612 

Net equity of households on pension  funds 

Cther accounts  receivable 

Trade credits and advances 

Other accounts receivable, except trade credits and 
advances 

7 

F.7 

F.71 
F.79 

Other accounts payable 

Trade credits and advances 
Other accounts payable, except trade credits and 
advances 

B.9 

Net  lending(+)/het  borowing(-) 

37 

29 

- 69 

-  454 

Table  A.3. 

Full sequence  of accounts  for non-financial  corporations  [cont.] 

111.3:  Other changes  in assets  accounts 

111.3.1: Other  changes 

in  volume  of assets  account 

C h a n g es  in  a s s e ts 

C h a n g es  in liabilities and  net  worth 

Liabilities 

Catastrophic  losses 
Uncompensated seizures 
Other volume changes in financial  assets 
and liabilities  n . cc 
Changes in classifications and structure 

Changes in sector classification and structure 

Changes  in classification of assets and  liabilities 

Changes in classification of assets or liabilities 
other than moi»ctizatioiVdcmonetizauon of gold 

AF 
K.7 
K.8 
K.10 

K.12 

K.12.1 

K.12.2 

K.1Z22 

ofwhich: 

AF.2 

Currency and deposits 

AF.3 

AF.4 
AF.5 

AF.6 

AF.7 

Securities other than shares 

Loans 
Shares and other equity 

Insurance technical  reserves 

Other accounts payable 

12 
-_2_ 
0 

-5 

-1 
I 
3 
3 

-1 
-1 
0 
14 
24 

0 
-7 

-6 
-1 
0 
-4 
0 
1 
1 
0 

AN 
AN.l 
K.4 
K.7 

K.8 
K.9 
K.12 

Non-financial  assets 

Produced  assets 

Economic appearance of produced  assets 
Catastrophic  losses 

Uncompensated  seizures 
Other volume changes in non-financial assets  ae.c. 

Changes in classifications and structure 

K.12.1 

Changes in sector classification  and structure 

K.1X2 

K.12.22 

ofwhich: 
AN.11 
AN.12 

AN.13 
AN.2 
K.3 
K.5 
K.6 
K.61 

K.62 
K.7 
K.8 
K.9 
K.12 
K.12.1 

K.12.2 

K.1Z22 

ofwhich: 

AN.21 

AN.22 

Changes in classification of assets and liabilities 

Changes in classification  of assets or liabilities 

other than ttKXtCuzatkiiVdcnvxvctization of gold 

Fixed  assets 

Inventories 
Valuables 

Non-produced assets 

Economkappeanu>ceofrK)i>f>rpduccd  assets 

Natural growth of non-cultivated biological  resources 

Economic disappearance of non-produced assets 

Depletion of natural  assets 
Other economic disappearance of non-produced assets 

Catastrophic  losses 
Uncompensated  seizures 

Other volume changes in non-financial  assets n.e.c. 
Changes in classifications  and structure 

Changes in sector classification  and structure 
Changes in classification  of assets and liabilities 

Changes in classification of assets or liabilities 
other than ti>oocuzaUoiVdcrnonetizalion of gold 

Tangible non-produced assets 

Intangible non-produced assets 

AF 

K.7 

K.8 
K.10 

Financial  assets 

Catastrophic  losses 

Uncompensated  seizures 

Other volume changes in financial assets and 

liabilities n.e.c. 

K.12 

Changes in classifications and structure 

K.12.1 
K. 12.2 
K. 1 2 22 

ofwhich: 
AF.2 

AF.3 
AF.4 

AF.5 

AF.6 

AF.7 

Changes in sector classification and structure 
Changes in classification of assets and liabilities 
Changes  in classification of assets or liabilities 
other than roor>ctizau'on/dentonctization of gold 

Currency and deposits 

Securities other than shares 

Loans 

Shares and other equity 

Insurance technical  reserves 

Other accounts  receivable 

B. 10.2 Changes  in net  worth  due  to  other 
changes  in volume  of  assets 

-  4 55 

Table  A.3. 

Full sequence  of  accounts for non-financial  corporations  [cont.] 

111.3.2:  Revaluation 

account 

Changes  in a s s e ts 

K.11 

Nominal  holding gains(+)/losscs(-): 

AN 
AN.l 
AN.11 

AN.12 

AN.13 

Non-financial  assets 

Produced  assets 
Fixed  assets 

Inventories 

Valuables 

AN.2 

Non-produced assets 

AN.21 

AN.22 

Tangible non-produced assets 
Intangible non-produced assets 

AF 
AF. 2 

AF.3 

AF.S 

AF.6 

AF.7 

Financial  assets 

Currency and deposits 

Securities other than shares 

Loans 
Shares and other equity 

Insurance  technical  reserves 

Other accounts  receivable 

Changes m liabilities and net worth 

K.11 

AF 
AF.2 

AF.3 

AF.4 
AF.5 
AF.6 

AF.7 

144 

63 
58 

80 

Nominal  holding gainsQ/losscsf.-*-): 

Liabilities 

Currency and deposits 

Securities other than shares 

Loans 
Shares and other equity 
Insurance technical  reserves 

Other accounts payable 

JL 

B. 10.3 Changes  in net  worth  due  to nominal  holding  gainsAosses 

134 

-  456  " 

( 2 9) 

Table A.3. 

Full sequence of accounts for non-financial corporations [cont.] 

111.3.2.1:  Neutral holding gains/losses  account 

Changes in assets 

Changes in liabilities and net worth 

K.11.1 

Neutral holding gains (+yiosses (-): 

K.11.1 

Neutral holding gains (-Vlosses  (+): 

AN 
AN.l 
A N . ll 

AN.12 
AN.13 

Non-financial  assets 
Produced assets 

Fixed assets 
Inventories 
Valuables 

AN.2 

Non-produced assets 

AN.21 

AN.22 

Tangible non-produced assets 

Intangible non-produced  assets 

AF 

Financial assets 

AF.2 

AF.3 

AF.4 
AF.S 

AF.6 

AF.7 

Currency and deposits 

Securities other than shares 
Loans 

Shares and other equity 

Insurance technical  reserves 

Other accounts receivable 

111.3.2.2:  Real  holding  gains/losses  account 

Changes in assets 

K.11.2 

Real holding gains(+yiosses(-): 

AN 

Non-financial  assets 

AN.l 
A N . ll 

AN.12 
AN.13 
AN.2 

AN.21 

AN.22 

Produced assets 

Fixed assets 

Inventories 
Valuables 

Non-produced assets 

Tangible non-produced assets 

Intangible non-produced assets 

AF 

Financial  assets 

AF.2 

AF.3 

AF.4 
AF.S 

AF.6 
AF.7 

Currency and deposits 

Securities other than shares 
Loans 

Shares and other equity 

Insurance technical  reserves 
Other accounts  receivable 

101  AF 

Liabilities 

36 

AF.2 

60 
58  AF.3 
AF.4 
AF.S 

1 

Currency and deposits 
Securities other than shares 

Loans 
Shares and other equity 

41  AF.6 
AF.7 

40 

Insurance technical  reserves 

Other accounts  payable 

B.10.31  Changes  in net worth  due to  neutral  holding  gains/losses 

82 

Changes in liabilities and net worth 

K.11.2 

Real holding gains(-yiosses(+): 

43  AF 

Liabilities 

3 

AF.2 

AF3 
AF.4 
0  AF.S 

40  AF.6 
40  AF.7 

Currency and  deposits 
Securities other than shares 

Loans 

•  Snares and other equity 

Insurance technical reserves 

Other accounts payable 

-18 

-1 

B. 10.32  Changes  in net worth  due  to real  holding  gainsAosses 

0 

-10 

-1 

-1 

457  -

T a b le  A . 3. 

Full  s e q u e n ce  of  a c c o u n ts  for  non-financial  corporations  [cont.] 

IV:  B a l a n ce  s h e e ts 

IV. 1:  O p e n i ng  b a l a n ce  s h e et 

A s s e ts 

AN 
AN.l 

AN.ll 
AN.12 
AN.13 
AN.2 

AN.21 
AN.22 

Non-financial  assets 

Produced assets 
Fixed  assets 

Inventories 
Valuables 

Non-produced  assets 

Tangible non-produced assets 
Intangible non-produced assets 

AF 

Financial  assets 

AF.2 

AF.3 

AF.4 

AF.5 

AF.6 

AF. 7 

Currency and deposits 

Securities other than shares 

Loans 
Shares and other equity 

Insurance technical  reserves 

Other accounts receivable 

IV.2:  C h a n g es  in  b a l a n ce  s h e et 

Liabilities 
and  net  worth 

5 041 

3 001 
2  878 
85 
38 

2040 

1989 

AF 
AF.2 
AF.3 
AF.4 

AF.5 
AF.6 

AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 

Loans 
Shares and other equity 
Insurance technical  reserves 

Other accounts  payable 

181*7 

897 
687 

137 

897 
382 
90 
50 
200 

25 
150 

B.90  Net  worth 

4  121 

155 

68 

37 

216 

65 

134 

Total changes  in assets 

Total  changes in liabilities 

Liabilities 
and  net  worth 

AN 
AN.l 

Non-financial  assets 
Produced assets 

AN.ll 

AN.12 

AN.13 
AN.2 

AN.21 

AN.22 

Fixed  assets 
Inventories 

Valuables 

Non-produced assets 

Tangible non-produced assets 

Intangible non-produced  assets 

AF 

Financial  assets 

AF.2 

AF.3 

AF.4 

AF.5 

AF.6 

AF.7 

Currency and deposits 

Securities other than shares 

Loans 

Shares and other equity 

Insurance technical  reserves 

Other accounts  receivable 

290 
182 
ISO 
29 

3_ 
108 

108 

0 

81 
17 

21 
27 

9 
0 

7 

AF 
AF.2 
AF.3 

AF.4 

AF.5 

AF.6 

AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 

Loans 

Shares and other equity 

Insurance technical  reserves 

Other accounts payable 

B. 10  Changes  in net  worth,  total 

due to: 

B.10.1 
B. 10.2  Other  changes  in volume  of  assets 

Saving  and  capital 

transfers 

B. 10.3  Nominal  holding  gainsAosses 

B.10.31 

B.10.32 

Neutral holding gains/losses 

Real holding gains/losses 

458 

-

Table  A.3. 

Full sequence  of accounts for non-financial corporations  [cont.] 

I V . 3.  Closing  balance  sheet 

A s s e ts 

AN 

Non-financial  assets 

AN.l 

Produced  assets 

A N . ll 
AN.12 

AN.13 
AN.2 

AN.21 
AN.22 

Fixed  assets 

Inventories 

Valuables 

Non-produced assets 

Tangible non-produced assets 
Intangible non-produced  assets 

AF 

Financial  assets 

AF.2 
AF.3 

AF.4 

AF.5 
AF.6 
AF.7 

Currency and deposits 
Securities other than shares 

Loans 

Shares and other equity 
Insurance technical reserves 
Other accounts receivable 

5  331 

3  183 

3 028 

41 
2  148 

2  097 

978 
399 
111 

209 
25 
157 

Liabilities 
and  net  worth 

AF 
AF.2 

AF.3 

AF.4 
AF.S 

AF.6 

AF.7 

Liabilities 

Currency and deposits 

Securities other than shares 

Loans 
Shares and other equity 

Insurance technical reserves 

Other accounts  payable 

1972 

965 
729 

174 

B.90  Nef  worth 

4 337 

-  459 

-

Resources 

P.l  Output 
P.ll 
P.12 

Market output 
Output for own final use 

102 
102 
0 

Resources 

B.ln  Value added, net 

Table A.4. 

Full sequence of accounts for financial corporations 

I:  Production account 

Uses 

P.2 

Intermediate consumption 

B ig  Value added,  gross 

K.1  Coraumption of fixed capital 

B.ln  Value added,  net 

II.  Distribution and use of income accounts 

11.1:  Primary distribution of income account 

11.1.1: Generation  of income account 

Uses 

D. 1  Compensation of employee» 
P . ll 
D.12 

Wage» and salaries 
Employer»1 social contribution» 

D.121 
D.122 

Employers' actual social contributions 
Employer»' imputed social contributions 

D.29 
D.39 

Other taxe» on production 
Other »ub»idie» on production 

B.2 

Operating  surplus 

29 

73 

10 

63 

IS 
10 
S 

4 
1 

45 

460 

Table  A.4. 

Full  sequence  of accounts for financial  corporations  [cont.] 

11.1.2:  Allegation  of primary  income  account 

Uses 

D.4 

Property income 

D.42 
D.421 

D.422 
D.43 
D.44 
D.45 

Interest 
Distributed  income of corporation» 

Dividends 

Withdrawal» from income of quasi-coiporation» 

Reinvested earning» on direct foreign investment 
Property income attributed to insurance policyholder» 
Rent 

B.5 

Balance  of primary 

incomes 

Resources 
B.2 

Operating  surplus 

D.4 
D.41 
P.l 19 
D.42 

D.421 
D.422 
D.43 
D.44 

D.45 

Property income 

Adjmtment for FISIM 

Distributed income of corporation» 

Dividends 
Withdrawal» from income of quasi-corporations 

Reinvested earnings on direct foreign investment 
Property income attributed to insurance policyholders 

Rent 

138 

36 
36 

25 

19 

11.1.2.1 :  Entrepreneurial  income  account 

Uses 

D.4 
D.41 
D.44 
D.45 

Property  income 

Interest 

Property income attributed to insurance policyholder» 
Rent 

Resources 
B.2 

Operating  surplus 

102 

25 

D.4 

Property  income 

P. 119 

D.42 
D.421 
D.422 
D.43 
D.44 

Adjustment  for FISIM 

Distributed  income of corporations 

Dividends 
Withdrawal» from income of quasi-corporation» 

Reinvested earning» on direct foreign inve»tment 
Property income attributed to insurance policyholders; 

D.45 

Rent 

B.4 

Entrepreneurial 

income 

11.1.2.2:  Allocation of other primary income  account 

Uses 

D.4 
D.42 
D.421 
D.422 
D.43 

Property  income 

Distributed  income of corporation» 

Dividends 
Withdrawal» from income of quasi-corporation» 

Reinvested earning? on direct foreign  investment 

B.5 

Balance  of primary 

incomes 

19 

Resources 
B.4 

Entrepreneurial 

income 

160 
125  ' 
-48 
25 
25 
0_ 
7_ 
0_ 
3 

160 
125 
-48 
25 
25 

0_ 
7_ 
0_ 
3 

-  461 

Table A.4.  Full sequence of accounts for financial corporations [cont.] 

11.2:  Secondary distribution of income account 

Uses 

D.5 
D.51 
D.59 

D.62 
D.622 

D.623 

Current taxes on income, wealth, etc. 

10 

B.5 

Balance  of primary 

incomes 

19 

Resources 

Taxes on  income 

Other current taxes 

Social benefits  other than social transfer» in kind 

Private funded social  benefits 
Unfunded employee social  benefits 

Other current transfers 

Net non-life  insurance premiums 
Non-life insurance claims 

Miscellaneous current transfer» 

D.61 
D.611 
D.6111 

D.61111 
D.61112 
D.6112 
D.61121 
D.61122 

D.612 

Social  contributions 

Actual social  contributions 

Employers' actual social contributions 

Compulsory employer»' actual social  contributions 
Voluntary employer»' actual «ocial contribution» 

Employees' social  contribution» 

Compulsory employee»' «ocial contributions 
Voluntary employee»' «ocial  contribution» 

Imputed «ocial contributions 

D.7 

D.71 
D.72 
D.75 

Other current transfer» 

Net non-life insurance premium» 
Non-life  insurance claims 
Miscellaneous current transfers 

B.6 

Disposable 

income 

11.4:  Use of income account 

//. 4.1:  Use of Disposable income account 

Uses 

D.8 

Adjustment for the change in net equity 
of household» on pension funds 

B.8 

Saving 

Resources 

B.6 

Disposable 

income 

462  -

Table A.4.  Full sequence of accounts for financial corporations [cont.] 

III. Accumulation accounts 

111.1 :  Capital account 

///. 1.1.:  Change in net worth due to saving and capital transfers account 

Changes in liabilities and net worth 
B.8n 

Saving,  net ' 

D.9 

D.92 

D.9 
D.91 
D.99 

Capital transfer», receivable 

Investment grants 
Other capital  transfer» 

Capital transfer», payable 

Capital taxe» 
Other capital  transfer» 

Changes in liabilities and net worth 

B. 10.1  Changes  in net worth  due  to  saving 

and  capital  transfers 

-7 
0 
-7 

Changes in assets 

B.10.1  Changes  in net worth due to  saving 

and  capital  transfers 

///. 1.2.:  Acquisition of non-financial assets  account 

Changes in assets 
P.51 
P.511 

Gross fixed capital  formation 

Acquisitons les» disposal» of tangible fixed assets 

P.5111 
P.5112 
P.5113 
P.512 
P.5121 
P.5122 

P.5123 
P.513 

Aoqukitibn» of new tangible fixed asset» 
Acquisitions of existing tangible fixed asset» 
Disposals of existing tangible fixed assets 

Acquisitions  lew disposai» of intangible fixed assets 

Acquisition» of new intangible fixed asset» 
Acquisitions of existing intangible fixed asset» 
Disposal» of existing intangible fixed asset» 

Addition» to the value of non-produced 
non-financial  assets 

Major improvements to non-produced 
non-financial  assets 

P.5132 

Costs of ownership transfer on non-produced 
non-financial  assets 

K.1 

Consumption of fixed capital 

- 10 

P.52 

Change»  in inventorie» 

P.53 

Acquisition»  le»» disposal» of valuables 

K.2 

K.21 

K.22 

Acquisitions  less disposals of non-produced 
non-financial  assets 

Acquisitions les» disposals of land and other 
tangible non-produced asset» 
Acquisitions less disposals of intangible 
non-produced assets 

B.9 

Net  lending  (+)  /  net borrowing  (-) 

-  463  -

Table A.4.  Full sequence of accounts for financial corporations [cont.] 

111.2:  Financial account 

Changes in assets 

F 

Net acquniuon of financial asset» 

F. 1 

Monetary gold and SDR» 

F.2 
F.21 

F.29 

Currency and deposit» 

Currency 
Transferable deposit» 
Othcrdepo.it» 

Changes  in liabilities  and  net  worth 

Net  incurrence of  liabilities 

15 

F.2 

F.21 
F.22 

F.29 

Currency and deposit» 

Currency 
Transferable  deposit» 
Other deposits 

F.3 

Securities other than «hare» 

53 

F.3 

Securities other than ihares 

Loans 

F.41 
F.42 

Short-term 
Long-term 

63 
104 

F.41 
F.42 

Short-term 
Long-term 

F.5 

Shares and other equjty_ 

3 

F.S 

Shares and other equity 

F.6 
F.62 

F.7 
F.71 

F.79 

Insurance technical  reserve» 

Prepayment of premiums and reserves «gainst 
outstanding claim» 

Other «00x1111» receivable 

Trade credits and advances 

Other account» receivable, except trade credit» and 
advances 

F.6 

Insurance technical  reserves 

Net equity of households on life  insurance 
reserve» and on pension fund» 

Net equity of households on life  insurance reserve» 
Net equity of households on pension  funds 
Prepayment of premiums and reserves against 
outstanding claims 

Other account»  payable 

Trade credits and advances 
Other account» payable, except trade credit» and 
advance* 

F.611 
F.612 
F.62 

F.7 
F.71 

F.79 

B.9 

Net  lending(+)/net 

borrowing^) 

232 

130 
35 
63 
32 

53 

36 

33 
22 

-  464  -

Liabilities 

Changes in liabilities and net worth 
AF 
K.7 
K.8 
K.10 

Catastrophic losses 
Uncompensated i 
Other volume changes in financial asset» and 
liabilities n.e.c. 
Change» in classifications  and «tructure 

K.12 
K.12.1 

K.12.2 

K.12.22 

ofwhich: 
AF.2 

Changes in sector classification  and structure 
Changes in classification of assets and  liabilities 

Changes in classification of assets or liabilities 
other than inoiTetizatiori/demonctization of gold 

Currency and deposits 

AF.3 

Securities other than shares 

AF.4 
AF.5 
AF.6 
AF.7 

Loans 
Shares and other equity 
Insurance technical  reserves 
Other account» payable 

-3 

B. 10.2  Changes  in net worth  due  to  other 

changes  in  volume of  assets 

Table A.4.  Full sequence of accounts for financial corporations [cont.] 

111.3:  Other changes in assets accounts 

111.3.1:  Other changes  in volume of assets account 

Changes in assets 
AN 
AN.l 
K.4 
K.7 

Non-financial  assets 
Produced assets 

Economic appearance of produced assets 
Catastrophic  losses 

Uricompensated seizures 
Other volume change» in non-financial  assets n_e.c. 
Changes in classifications and structure 

Changes in sector classification  and structure 

Changes in classification  of assets and liabilities 

Monetizatic^demonetization of gold 
Changes  in classification  of assets or liabilities 
other than nionetization/dcmorietizauon of gold 

Fixed assets 

Inventories 
Valuable» 

Non-produced asset» 

Economic appearance of non-produced assets 
Natural growth of non-cultivated biological resources 
Economic disappearance of non-produced asset» 

Depletion of natural asset» 
Other economic disappearance of non-produced asset» 

Catastrophic  losses 
Uncompensated seizure» 
Other volume changes in non-financial  asset» ne.c. 
Change» in classifications and «tructure 

Change» in sector classification  and «tructure 
Change» in classification of assets and liabilities 

Changes in classification  of assets or liabilities 
other than nionetization/dcTOCMctization of gold 

Tangible non-produced asset» 
Intangible non-produced asset» 

K.12 
K.12.1 

K.12.2 
K.12.21 

K.12.22 

ofwhich: 
AN.ll 
AN.12 
AN.13 
AN.2 

K.3 
K.5 

K.6 

K.62 
K.7 
K.8 
K.9 
K.12 
K.12.1 

K.12.2 
K.12.22 

ofwhich: 
AN.21 
AN.22 

Financial  assets 

K.7 
K.8 
K.10 

K.12 
K.12.1 
K.12.2 
K.12.21 

K.12.22 

ofwhich: 
AF.l 

AF.2 

AF.4 
AF.5 
AF.6 
AF.7 

Catastrophic  losses 
Uncompensated  seizures 
Other volume changes in financial assets and 
liabilities n.e.c. 
Changes m classifications  and «tructure 

Change»  in «ector classification and structure 
Changes in classification  of asset» and liabilities 

MortctizaUort/denipnctization of gold 
Changes in classification  of assets or liabilities 
other than moneumtioiVdemonetization of gold 

Monetary gold and SDRs 

Currency and deposits 
Securities other than shares 
Loans 
Share» and other equity 
Insurance technical  reserves 
Other account»  receivable 

-  465 

Table A.4.  Full sequence of accounts for financial corporations [cont] 

W/.3.2:  Revaluation  account 

Changes ki assets 

K.11 

Nominal holding gains(+yio»scs{-): 

AN 

AN.l 
AN.ll 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

AF 
AF. I 
AF.2 
AF.3 

AF.4 
AF.S 
AF.6 

AF.7 

Non-financial  assets 
Produced assets 
Fixed assets 

Inventories 
Valuables 

Non-produced assets 

Tangible nco-produced asset» 
Intangible non-produced asset» 

Financial  assets 

Monetary gold and SDRs 
Currency and deposits 

Securities other than share» 
Loans 
Shares and other equity 
Insurance technical reserves 

Other accounts receivable 

Changes in liabilities and  net worth 

K ll 

Nominal holding gains(-yiosses(-t-): 

Liabilities 

2  AF.2 

AF.3 
AF.4 
AF.S 

AF.7 

Currency and deposits 
Securities other than shares 
Loans 
Shares and ether equity 
Insurance technical  reserves 
Other account» payable 

57 

30 

16 

B.10.3  Changes  in net worth  due lo nominal  holding  gainsAosses 

10 

466  -

Table A.4.  Full sequence of accounts for financial corporations  [cont] 

111.3.2.1:  Neutral holding gains/losses account 

Changes in assets 
K.11.1 

Neutral holding gains (+yiosscs (-): 

Changes in liabilities and net worth 
K.11.1 

Neutral holding gains (-yiosses (+): 

AN 
AN.l 
AN.ll 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

Non-financial  assets 
Produced assets 
Fixed assets 

Inventories 
Valuables 

Ncn-produoed asset» 

Tangible non-produced assets 
Intangible non-produced assets 

AF 

Financial  assets 

AF. 1 
AF.2 
AF.3 
AF.4 
AF.S 

AF.6 

AF.7 

Monetary gold and SDRs 
Currency and deposit» 
Securities other than snares 
Loans 
Shares and other equity 
Insurance technical reserves 

Other accounts receivable 

AF 
AF.2 

2 

AF.4 
AF.S 

AF.6 
1  AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 
Loans 
Share» and other equity 
Insurance technical  reserves 
Other accounts payable 

70 

14 

19 
24 

B.10.31  Changes  in net worth  due to neutral  holding  gainsAosses 

111.3.2.2:  Real holding gains/losses account 

Changes in assets 
K.11.2 

Real holding gains(+yiosses<-): 

Changes in liabilities and net worth 

K.11.2 

Real holding gains(-yiosses(+): 

AN 
AN.l 
A N . ll 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

AF 
AF.l 
AF.2 
AF.3 
AF.4 
AF.S 
AF.6 
AF.7 

Non-financial  assets 
Produced assets 
Fixed assets 
Inventories 
Valuables 

Non-produced assets 

Tangible non-produced asset» 
Intangible non-produced assets 

Financial  assets 

Monetary gold and  S D RT 
Currency and deposits 
Securities other than shares 
Loans 
Share» and other equity 
Insurance technical  reserves 
Other accounts receivable 

1  AF 

Liabilities 

AF.2 

Currency and deposits 

AF.3 
AF.4 
AF.S 
AF.6 
1  AF.7 

Securities other than shares 
Loans 
Share» and other equity 
Insurance technical reserves 

Other account» payable 

B.10.32 Changes  in net worth  due to real  holding  gainsAosses 

- 13 

•24 

-1 

467 

Table A.4.  Full sequence of accounts for financial corporations [cont] 

IV:  Balance sheets 

IV. 1 :  Opening balance sheet 

Assets 

AN 
AN.l 

AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

AF 
AF. 1 
AF.2 
AF.3 
AF.4 
AF.S 
AF.6 

AF.7 

Non-financial  assets 

Produced assets 
Fixed assets 
Inventories 
Valuables 

Non-produced  assets 

Tangible non-produced assets 
Intangible non-produced assets 

Financial  assets 

Monetary gold and SDRs 
Currency and deposits 
Securities other than «hares 

Shares and other equity 
Insurance technical  reserves 

Other accounts receivable 

IV.2:  Changes in balance sheet 

Total changes in «met» 

Non-financial  assets 
Produced  assets 
Fixed assets 
Inventories 
Valuables 

Non-produced assets 

Tangible non-produced assets 
Intangible non-produced  assets 

AN 
AN.l 
AN.ll 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

AF 

Financial  assets 

AF. 1 
AF.2 
AF.3 

AF.4 
AF.S 

Monetary gold and SDRs 
Currency and deposits 
Securities other than shares 
Loans 

Shares and other equity 
Insurance technical  reserves 
Other accounts receivable 

3  384 

1053 

285 
130 
87 

0_ 
30 
38 
0 

Liabilities 
and net worth 

99 

AF 
AF.2 
AF.3 

AF.4 
AF.S 

Liabilities 

Currency and deposits 
Securities other than shares 

Loans 
Shares and other equity 
Insurance technical  reserves 

37 

AF.7 

Other accounts  payable 

B.90  Net  worth 

Liabilities 
and net worth 

Total changes in liabilities 

AF 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical  reserves 
Other account»  payable 

B. 10  Changes  in net worth,  total 

due to: 

transfers 

Saving  and  capital 

B.10.1 
B. 10.2  Other  changes  in volume  of  assets 
B. 10.3  Nominal  holding  gainsAosses 
Neutral  holding gains/losses 
B.10.31 
Real  holding gains/losses 
B. 10.32 

3508 

1  187 
651 

1 
-1 
1 
0 
-2 
2 
1 
0 

294 
17 
15 
80 
163 
19 
0_ 
0 

468  -

Table  A.4. 

Full  sequence  of accounts  for financial  corporations  [cont] 

IV.3.  Closing  balance  sheet 

AN 
AN.l 
AN.ll 
AN.12 

Non-financial  assets 
Produced assets 
Fixed assets 
Inventories 

AN.13 
AN.2 
AN.21 
AN.22 

AF 
AF.l 
AF.2 
AF.3 

AF.4 
AF.S 

AF.6 
AF.7 

Valuables 

Non-produced  assets 

Tangible non-produced  assets 
Intangible non-produced  assets 

Financial  assets 

Monetary gold and  SDRs 
Currency and deposits 
Se<«rities other than shares 

Loans 
Shares and other equity 

Insurance technical  reserves 

Other accounts  receivable 

Liabilities 
and  net worth 

AF 
AF.2 
AF.3 

AF.4 
AF.S 

AF.6 
AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 

Loans 
Shares and other equity 

Insurance technical  reserves 
Other accounts payable 

100 

3 

38 

3  669 

1  350 
670 
30 

B.90  Net  worth 

469  -

Table A.5.  Full sequence of accounts for general government 

I:  Production account 

Uses 

P.2 

Intermediate consumption 

246 

Resources 

P.I 
P.ll 
P.12 
P.l 3 

Output 

Market output 
Output for own final use 
Other non-market output 

. 

434 
74 

B. 1 g  Value added,  gross 

K1 

Consumption of fixed capital 

B.ln  Value added, net 

II.  Distribution and use of income accounts 

II. 1 :  Primary distribution of income account 

//. 1.1:  Generation of income  account 

Uses 

Compensation of employee» 

P.l 
P.l 1  Wage» and salaries 
D.12 
D. 121 
D.122 

Employers' «ocial contributions 

Employers' actual «ocial corrtributions 
Employers' imputed social contributions 

D.29 
D.39 

Other taxes on production 
Other «ubsidie» on production 

B.2  Operating  surplus 

Resources 

140 

B.ln  Value added, net 

87 

S3 
48 
S 

2 

-  470 

Table A.5.  Full sequence of accounts for general government [cont.] 

//. 1.2:  Allocation of primary income account 

Uses 

D.42 
D.422 
D.43 
D.45 

Property i 
Interest 

Distributed income of corporations 

Withdrawal» from income of quasi-ccrporations 

Reinvested earnings on direct foreign investment 
Rent 

46 

39 
0 
0 
0 
7 

B.5 

Balance  of primary 

incomes 

191 

Resources 

B.2 

Operating  surplus 

D.2 
D.21 

D.212 
D.2121 
D.2122 
D.214 
D.29 

D.3 
D.31 

D.311 
D.319 
D.39 

D.4 
D.41 
D.42 

D.421 
D.422 
D.43 
D.44 
D.45 

Taxes on production and imports 

Taxes on product» 

Value added type taxes (VAT) 
Taxes and duties on imports excluding  VAT 

Import duties 
Taxes on import» excluding VAT and duties 
Taxes on products except VAT and import taxes 

Other taxes on  production 

Subsidies 

Subsidies on products 

Import subsidies 
Other subsidies on products 
Other subsidies on production 

Property income 

Interest 
Distributed income of corporation» 

Dividends 
Withdrawal» from income of quasi-corporation» 

Reinvested earnings on direct foreign investment 
Property income attributed to insurance  policyholders 
Rent 

30 
12 

-  471 

Table  A.5. 

Full sequence  of accounts for general government [cont-] 

11.1.2.1 :  Entrepreneurial  income  account 

Uses 

D.4 
D.41 
D.45 

Piupqty income 

Interest 
Rent 

B.4 

Entrepreneurial 

income 

Resources 

B.2 

Operating  surplus 

D.4 

Property  income 

D.41 
D.42 

D.421 
D.422 
D.43 
D.44 
D.45 

Interest 
Distributed  income of corporations 

Dividends 
Withdrawal» from income of quasi-corporations 

Reinvested earnings on direct foreign investment 
Property income attributed to insurance policyholders 
Rent 

11.1.2.2:  Allocation of other primary income account 

Uses 

D.4 
D.41 

Property income 

Interest 

Resources 

B.4  Entrepreneurial 

income 

37 

37 

D.2 
D.21 

Taxes on production and import» 

Taxe» on product» 

D.211 
D.212 
D.2121 

D.2122 
D.214 
D.29 

Value added type taxes (VAT) 
Taxes and duties on imports excluding VAT 

Import duties 

Taxes on imports excluding VAT and duties 
Taxes on product» except VAT and import taxe» 

Other taxe» on production 

D.3 
D.3I 
D.311 
D.319 
D.39 

D.4 
D.41 
D.42 

D.421 
D.422 

Subsidies 

Subsidies on products 
Import subsidies 
Other subsidies on products 

Other subsidies on production 

Property income 

Interest 
Distributed  income of corporations 

Dividends 
Withdrawals from income of quasi-corporations 

B.5 

Balance  of primary 

incomes 

191 

16 

235 

141 

-  472  -

(30) 

Table A.5.  Full sequence of accounts for general government [cont.] 

11.2:  Secondary distribution of income account 

Uses 

D.S  Current taxes on income, wealth, etc. 
D.59 

Other current taxes 

D.62 
D.621 
D.622 
D.623 
D.624 

Social  benefits other than social transfers  m kind 

Social security benefit»  in cash 
Private funded social  benefit» 
Unfunded employee social  benefits 
Social assistance benefits  in cash 

D.7  Other current transfers 
D.71 
D.73 
D.74 

Net non-life  insurance premiums 
Current transfer» within general  government 
Current jnternational cooperation 

D.75 

Miscellaneous current transfers 

B.6  Disposable 

income 

11.3:  Redistribution of income in kind account 

Uses 
D.63 

D.631 

D.6311 

D.6312 

D.6313 

D.632 

Social transfer» in kind 

Social benefits in kind 

Social security benefits, reimbursements 

Other social security benefits  in kind 

Social assistance benefits  in kind 

Transfen of individual non-market goods and 

B.7 

Adjusted  disposable 

income 

Resources 

B.5 

Balance  of primary  incomes 

D.5  Current taxes on income, wealth, etc. 

D.S1 
D.59 

Taxes on income 
Other current taxes 

D.61 
D.611 
D.6111 

D.61111 
D.61112 
D.6112 
D.61121 

D.61122 
D.6H3 

D.61131 

Social  contributions 

Actual social  contributions 

Employer»' actual «ocial  contributions 

Compulsory employers' actual social  contributions 
Voluntary employer»' actual social  contributions 

Employees' social  contributions 

Compulsory employees' social  contributions 
Voluntary employees' social  contributions 

Social contributions by self- and 
non-employed persons 

Compulsory social  contributions by self- and 
non-employed persons 
Voluntary social contributions by self- and 
non-employed person» 

D.612 

Imputed «ocial  contributions 

D.7  Other current transfers 
D.72 
D.73 

Non-life  insurance claims 
Current transfers within general  government 

D.74 
D.75 

Current international  corporations 
Miscellaneous current transfers 

Resources 

B.6  Disposable 

income 

191 

213 
204 
9 

268 
263 
155 
144 
11 
76 
69 
7 

108 

1_ 

96 
1 
10 

352 

~ô~ 
0 

289 
232 

0_ 
5_ 
52 

139 
4_ 

96 
31 
8 

206 

162 

78 

65 

19 

146 

-  473 

Table A.5.  Full sequence of accounts for general government [cont.] 

11.4:  Use of income account 

//. 4.1:  Use of disposable income account 

Uses 

P.3 
P.31 
P.32 

Final consumption expenditure 

Individual consumption expenditure 
Collective consumption expenditure 

D.8  Adjustment for the change in net equity 
of households on pension funds 

B.8  Saving 

Resources 
B.6  Disposable 

income 

362 
206 
1S6 

II. 4.2:  Use of adjusted disposable income account 

Uses 

P.4 
P.42 

Actual final consumption 

Actual collective  consumption 

Resources 
B.7 

Adjusted  disposable 

income 

156 
1S6 

D.8  Adjustment for the change in net equity of households 

on pension funds 

B.8 

Saving 

352 

146 

474  -

Table A.5.  Full sequence of accounts for general govemment [cont.] 

III. Accumulation accounts 

111.1: Capital account 

///. 1.1:  Change in net worth due  to saving and capital transfers account 

Changes in assets 

B. 10.1  Changes  in net  worth  due  to  saving 

and  capital  transfers 

III.1.2:  Acquisition of non-financial assets  account 

Changes in assets 
P.51 
P.511 
P.5111 
P.5112 
P.5113 

Gross fixed capital  formation 

Acquisitions less disposals of tangible fixed assets 

Acquisitions of new tangible fixed assets 
Acquisition» of existing tangible fixed asset» 
Disposals of existing tangible fixed assets 

P.512 
P.S121 
P.S122 
P.5123 
P.513 

P.5131 

P.5132 

Acquisitions le»» disposal» of intangible fixed assets 

Acquisitions of new intangible fixed assets 
Acquisitions of existing intangible fixed assets 
Disposal» of existing intangible fixed assets 

Additions to the value of non-produced 
non-financial  assets 

Major improvement» to non-produced 
non-financial  assets 

Costs of ownership transfer on non-produced 
non-financial  assets 

Changes m liabilities and net worth 
B.8n 

Saving  net 

D.9 

D.91 

D.92 
D.99 

D.9 
D.91 

D.92 

Capital transfers, receivable 

Capital taxes 

Investment grants 
Other capital  transfers 

Capital transfers, payable 

Capital taxes 

Investment grants 

D.99 

Other capital  transfers 

Changes in liabilities and net worth 
B. 10.1  Changes  in net worth  due to  saving 

and  capital  transfers 

24 

-2 

K.I 

Consumption of fixed capital 

•30 

P.52 

Changes in inventories 

P.53 

Acquisitions less disposals of valuables 

K.2 

K.21 

K.22 

Acquisitions less disposals of non-produced 
non-financial  assets 

Acquisitions less disposals of land and other 
tangible non-produced assets 
Acquisitions  less disposals of intangible 
non-produced assets 

B.9 

AW lending  (+)  /net  borrowing  (-) 

-  4 75 

Table A.5.  Full sequence of accounts for general government [cont] 

1112:  Financial  account 

Changes in assets 

F 

Net acquisition of financial assets 

F.l 

Monetary gold and SDR» 

F.2 
F.21 
F.22 
F.29 

Currency and deposits 

Currency 
Transferable deposits 
Other deposits 

F.3 

Securities other than shares 

F.4 
F.41 
F.42 

Loans 

Short-term 
Long-term 

Changes in liabilities and net worth 

120 

Net incurrence of liabilities 

4 

45 

F.2 

F.21 
F.22 
F.29 

Currency and deposit» 

Currency 
Transferable  deposits 
Other deposit» 

Securities other than shares 

F.4 
F.41 
F.42 

Loans 

Long-term 

F.S 

Share» and other equity 

36 

F.S 

Shares and other equity 

F.6 
F.62 

F.7 
F.71 
F.79 

Insurance technical reserves 

Prepayment of premium» and reserves against 
outstanding claims 

Other accounts receivable 

Trade credit» and advances 
Other accounts receivable, except trade credits and 
advances 

F.6 
F.61 

Insurance technical  reserves 

Net equity of households on life  insurance 
reserves and on pension funds 

F.612 

Net equity of households on pension funds 

F.7 

F.71 

Other accounts payable 

Trade credits and advances 

Other accounts payable, except trade credits and 
advances 

B.9 

Net  tending(+)/net  borrowingf-) 

4_ 

T5Ô~ 

476 

Changes in liabilities and net worth 

Liabilities 

Catastrophic  losses 
Uncompensated i 
Other volume changes in financial asset» and 
liabilities n.e.c. 
Change» m classifications  and structure 

Changes in sector classification and structure 
Changes in classification  of asset» and liabilities 
Changes in classification  of assets or liabilities 
other than nwnetizatkin/demonetization of gold 

Currency and deposit» 
Securities other than shares 

K.8 
K.10 

K.12 

K.12.1 
K.12.2 

K.12.22 

ofwhich: 
AF.2 

AF.3 

AF.4 
AF.S 

AF.6 
AF.7 

Loans 
Share» and other equity 
Insurance technical  reserves 
Other account» payable 

Table A.5.  Full sequence of accounts for general govemment [cont.] 

111.3:  Other changes in assets accounts 

Ul. 3.1:  Other changes  in volume of assets account 

Changes in assets 
AN 
AN.l 
K.4 
K.7 

Non-financial  asset» 
Produced assets 

Economic appearance of produced assets 
Catastrophic  losses 

K.8 
K.9 
K.12 
K.12.1 

K.12.2 
K.12.21 

K.12.22 

ofwhich: 
AN.ll 
AN.12 
AN.13 
AN.2 
K.3 
K.5 
K.6 
K.61 
K.62 
K.7 
K.8 
K.9 
K.12 
K.12.1 

K.12.2 
K.12.22 

ofwhich: 

AN.21 
AN.22 

Uncompensated  seizures 
Other volume changes in non-financial  asset» ne.c. 
Changes in classifications  and structure 

Changes in sector classification  and structure 

Changes in classification  of assets and liabilities 

Monetization/demonetization of gold 
Changes in classification of assets or liabilities 
other than mooetjjation/demonetization of gold 

Fixed assets 
Inventorie» 
Valuables 

Non-produced assets 

Economic appearance of non-produced assets 
Natural growth of non-cultivated biological resources 
Economic disappearance of non-produced assets 

Depletion of natural asset» 
Other economic disappearance of non-produced assets 

Catastrophic  losses 
Uncompensated  seizures 
Other volume changes in non-financial  assets n.ec. 
Change» in classifications  and structure 

Change» in sector classification  and structure 
Change» in classification  of asset» and liabilities 
Changes in classification of assets or liabilitie» 

other than monetization/dertionetiTation of gold 

Tangible non-produced assets 
Intangible non-produced assets 

AF 
K.7 

K.8 
K.10 

K.12 
K.12.1 
K.12.2 

K.12.21 
K.12.22 

ofwhich: 
AF. 1 
AF.2 
AF.3 
AF.4 
AF.S 
AF.6 

Financial  assets 

Catastrophic  losses 
Uncompensated i 
Other volume changes  in financial assets and 
liabilities n_e.c. 
Changes in classifications  and structure 

Changes in sector classification and structure 
Change» in classification  of assets and liabilities 

Monetizatiori/denionetization of gold 
Changes in classification of asset» or liabilities 
other than monctization/dciiXMietization of gold 

-2 

Monetary gold and SDR» 
Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical  reserves 

Other accounts  receivable 

B. 10.2  Changes  in net worth  due  to  other 
changes  in volume  of  assets 

477 

Table A.5.  Full sequence of accounts for general govemment [cont.] 

///. 3.2:  Revaluation  account 

Changes in assets 

K.11 

Nominal  holding gairts(+yios»cs(-): 

AN 

Non-financial  assets 

AN.l 
AN.ll 
AN.12 
AN.13 
AN.2 

AN.22 

AF 

AF. 1 
AF.2 

AF.4 
AF.5 
AF.6 

AF.7 

Produced assets 
Fixed assets 

Valuables 

Non-produced assets 

Tangible non-produced assets 
Intangible non-produced  assets 

Financial assets 

Monetary gold and SDRs 
Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical reserves 

Other account» receivable 

Changes in liabilities and net worth 

Nominal  holding gains(-yiosses(4-): 

AF 
AF.2 

AF.3 
AF.4 
AF.5 

AF.6 
AF.7 

44 
20 
18 
1 
1 
23 
23 
0 

Liabilities 

Currency and deposit» 
Securities other than shares 
Loans 
Share» and other equity 
Insurance technical  reserves 
Other accounts payable 

B.10 J  Changes  in net worth  due to nominal  holding  gainsAosses 

38 

III.32.1 :  Neutral holding gains/losses account 

Changes in assets 

Changes in liabilities and net worth 

K.11.1 

Neutral holding gains (+yiosscs (-). 

K.11.1 

Neutral holding gains (-)/losses (+): 

AF 
AF.2 

AF.3 

AF.4 
AF.5 

AF.6 
AF.7 

Liabilities 

Currency and deposits 

Securities other than «hares 
Loans 
Shares and other equity 
Insurance technical reserves 

Other accounts payable 

AN 
AN.l 

AN.ll 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

AF. 1 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 

AF.7 

Non-financial  assets 
Produced assets 

Fixed assets 
Inventories 
Valuables 

Non-produced assets 

Tangible non-produced asset» 
Intangible non-produced assets 

Financial  assets 

Monetary gold and SDRs 
Currency and deposit» 
Securities other than shares 
Loans 
Share» and other equity 
Insurance technical  reserves 

Other accounts  receivable 

B.10.31  Changes  in net worth  due to neutral  holding  gainsAosses 

26 

478  -

Table A.5.  Full sequence of accounts for general government [cont.] 

111.3.2.2: Real holding gains/losses account 

Changes in assets 

K. 11.2 

Real holding g»ins(^yiosse«(-): 

Changes in liabilities and net worth 
K. 11.2 

Real holding gains(-)/losscs(+): 

AN 
AN.l 
AN.ll 
AN.12 
AN.13 
AN.2 

AN.21 
AN.22 

AF 
AF.l 

AF.2 

AF.3 
AF.4 
AF.S 
AF.6 
AF.7 

Non-financial  assets 
Produced assets 

Fixed assets 
Inventories 
Valuables 

Non-produced asset» 

Tariff pie non-produced assets 
Intangible non-produced asset» 

Financial  assets 

Monetary gold and SDR» 

Currency and deposit» 
Securities other than «hares 

Loans 
Share» and other equity 
Insurance technical  reserves 
Other accounts receivable 

AF 
AF.2 

AF.3 
AF.4 
AF.S 
AF.6 
AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 

Loans 
Shares and other equity 
Insurance technical reserves 
Other account» payable 

12 

12 

-6 

-3 

-2 

-0 

B.10.32 Changes  in net worth  due  to  real  holding  gainsAosses 

12 

-  479  -

Table A.5.  Full sequence of accounts for general government [cont.] 

IV: Balance sheets 

IV. 1 :  Opening balance sheet 

Assets 

Produced assets 

AN  Non-financial  asset» 
AN.l 
AN.U 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

Fixed  assets 
Inventories 
Valuables 

Non-produced assets 

Tangible non-produced assets 
Intangible non-produced  assets 

AF 
AF.l 

AF.2 
AF.3 
AF.4 

AF.5 
AF.6 
AF.7 

Financial  assets 

Monetary gold and SDRs 

Currency and deposits 
Securities other than shares 
Loans 

Shares and other equity 
Insurance technical  reserves 
Other account»  receivable 

IV.2: Changes in balance sheet 

Assets 

Total change» in asset» 

AN  Non-financial  assets 
AN.l 
AN.ll 
AN.12 

Produced asset» 

Fixed 
Inventories 
-  Valuables 

AN.13 
AN.2 
AN.21 
AN.22 

AF 
AF. I 
AF.2 
AF.3 
AF.4 
AF.S 
AF.6 
AF.7 

Non-produced asset» 

Tangible non-produced assets 
Intangible non-produced  assets 

Financial  assets 

Monetary gold and SDRs 
Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical  reserves 
Other accounts receivable 

1  S91 

913 

S90 
578 

12 

396 
80 
ISO 

115 
12 
20 
19 

56 
25 
20 
1 
4 

30 
30 
0 

123 
1_ 
7_ 

29 
45 
34 

0_ 
6 

Liabilities 
and net worth 
AF 
Liabilities 
AF.2 
AF.3 

Currency and deposits 
Securities other than shares 

AF.4 
AF.S 
AF.6 
AF.7 

Loans 
Shares and other equity 
Insurance technical  reserves 
Other accounts payable 

B.90  Net  worth 

Liabilities 
and net worth 

Total change» in liabilities 

AF 
AF.2 
AF.3 

AF.4 
AF.5 
AF.6 
AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 

Loans 

Share» and other equity 
Insurance technical  reserves 
Other accounts payable 

B.10  Changes  in net  worth,  total 

due to*. 

Saving  and  capital 

B.10.1 
B.l 0.2  Other  changes  in  volume  of  assets 
B.I 0.3  Nominal  holding  gainsAosses 
Neutral holding gains/losses 
B. 10.31 

transfers 

B. 10.32 

Real holding gains/losses 

-  480  -

687 

19 
22 

176 

93 

10 

• 38 

26 

Table A.5.  Full sequence of accounts for general govemment [cont.] 

IV.3.  Closing  balance  sheet 

Assets 

AN 
AN.l 
AN.ll 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

AF 
AF. 1 
AF.2 
AF.3 
AF.4 
AF.S 

AF.6 
AF.7 

Non-financial  assets 
Produced asset» 
Fixed assets 
Inventories 
Valuables 

Non-produced asset» 

Tangible non-produced  assets 
Intangible non-produced assets 

Financial  assets 

Monetary gold and SDRs 
Currency and deposits 
Securities other than shares 

Loans 

Shares and other equity 
Insurance technical  reserves 
Other accounts  receivable 

Liabilities 
and net worth 

1647 
1026 

45 
620 
608 
12 

AF 
AF.2 

AF.4 
AF.S 
AF.6 
AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 

Shares and other equity 
Insurance technical  reserve» 
Other account»  payable 

19 

20 

25 

B.90  Net  worth 

1302 

-  481 

Resources 
P.I 
P.ll 
P.12 

Output 

Market output 
Output for own final use 

Resources 
B. 1 n  Value added,  net 

1 269 
1 129 
140 

533 

Table A.6.  Full sequence of accounts for households 

I: Production account 

Uses 
P.2 

• 

Intermediate oomumption 

B.l g  Value added,  gross 

K.1  Consumption of fixed capital 
B in  Value added,  net 

II.  Distribution and use of income accounts 

II. 1 :  Primary distribution of income account 

11.1.1:  Generation of income account 

Uses 
P. 1  Compensation of employees 
P . ll 
D.12 
P.l 21 
D.122 

Wages and salaries 
Employer»' social contributions 

Employer»' actual «ocial contribution» 
Employers' imputed social contributions 

D.29 
D.39 

Other taxes on production 
Other subsidies on production 

Operating  surplus 

B.2 
B.3  Mixed  Income 

694 

S7S 

42 
533 

39 
39_ 
0 

-1 

60 
432 

482  -

Table A.6 

Full sequence of accounts for households [cont.J 

//. 1.2:  A/location  of primary  income  account 

Uses 

D.4 
D.41 

Property i 
Interest 
Rent 

Resources 

B.2  Operating  surplus 
B.3  Mixed  income 

44 
17 
27 

P. 1  Compensation of employee» 

766 

D. 11 
D. 12 
D.121 
D.122 

D.4 
D.41 
D.42 

D.421 

D.43 
D.44 

D.45 

Wage» and salarie» 
Employer»' social  contributions 

Employers' actual social  contributions 
Employers' imputed social  contributions 

Property income 

Distributed income of corporations 

Dividends 
Withdrawals from income of quasi-corporations 

Reinvested earnings on direct foreign  investment 
Property income attributed to insurance  policyholders 

Rent 

Resources 

B.2  Operating  surplus 
B.3  Mixed  income 

Property i 
Interest 
Distributed income of corporation» 

Dividends 
Withdrawal» from income of quasi-corporations 
Property income attributed to insurance  policyholder» 

D.41 
D.42 
D.421 
D.422 
D.44 

57 
13 

20 

432 

B.5 

Balance  of primary 

incomes 

11.1.2.1 :  Entrepreneurial  income  account 

Uses 

D.4 
D.41 
D.45 

Property  income 

Interest 
Rent 

B.4 

Entrepreneurial 

income 

490 

-  483 

-

Table  A.6 

Full  sequence  of accounts  for households  [cont.] 

11.1.22:  Allocation  of other  primary  income  account 

Uses 

D.4 

Property  income 

Resources 
B.4 

Entrepreneurial 

income 

37 

766 
573 
193 
174 
19 

129 
33 
52 

44 
3 
20 
21 

Wages and salaries 
Employers' social  conuibutions 

P. 1  Compensation of employees 
P. 11 
P.l 2 
P. 121 
D.122 

Employer»' actual «ocial  contributions 
Employers' imputed «ocial  contributions 

P.4 
P.41 
P.42 

D.421 
D.422 
D.43 
P.44 

Property income 

Interest 
Distributed  income of corporations 

Dividends 
Withdrawals from income of quasi-corporations 

Reinvested earnings on direct foreign  investment 
Property income attributed to insurance  policyholders 

D.45 

Rent 

178 
i?6 
2 

322 
303 
174 
160 
14 
97 

85 
12 

Resources 
B.5 

Balance  of primary  incomes 

P.61 
P.611 
P.6111 
P.61111 
P.61112 
P.6112 
P.61121 
P.61122 

P.62 

D.621 

Social  contributions 

Actual social contributions 

Employers' actual social  contributions 

Compulsory employers' actual social  contributions 
Voluntary employers' actual social  contributions 

Employees' social coritributioris 

Compulsory employees' social  contributions 

Voluntary employees' social  contributions 
non-employed persons 

Social benefits other than social transfers in kind 

Social security benefits  in cash 

D.622 

Private funded social  benefits 

D.623 

Unfunded employee social  benefits 

Social assistance benefits  in cash 

D.7  Other current transfers 
P.72 
P.75 

Non-life  insurance claims 
Miscellaneous current transfers 

B.5 

Balance  of primary 

incomes 

11.2:  Secondary  distribution  of income  account 

Uses 

P.5 
P.51 

Current taxes on income, wealth, etc. 

Taxes on income 
Other current taxes 

P.611 
P.6111 
P.61111 
P.61112 

P.61121 
P.61122 

P.6113 

D.61131 

D61132 

D.612 

Social  contributions 

Actual  social  contributions 

Employers' actual social contributions 

Compulsory employers' actual social contributions 
Voluntary employers' actual social contributions 

Employees' social  contributions 

Compulsory employees' social  contributions 
Voluntary employees' social  contributions 

Social contributions by self- and 
non-employed persons 

Compulsory social  contributions by self- and 
non-employed persons 
Voluntary «ocial contributions by self- and 
non-employed persons 
Imputed «ocial contribution» 

Social  benefits  other than social  transfers in kind 

Private funded social  benefits 

P.7  Other current transfers 

Net non-life  insurance premiums 
Miscellaneous current transfers 

B.6  Disposable 

income 

-  484  -

T a b le  A.6 

Full  sequence  of  accounts  for  households  [cont] 

11.3:  Redistribution  of  income  in  kind  account 

Uses 

Resources 

B.6  Disposable 

income 

P.63 

Social transfers in kind 

D.631 
P.6311 
D.6312 

D.632 

Social benefits  in kind 

Social security benefits,  reimbursements 
Other social security benefits  in kind 
Social  assistance benefits  in kind 

Transfers of individual non-market goods and 
services 

B  7 

Adjusted  disposable 

income 

1364 

11.4:  U se  of  income  account 

//. 4.1:  Use  of  disposable 

income 

account 

Uses 

P.3 
P.31 

Final consumption expenditure 

Individual  consumption expenditure 

B.8 

Saving 

U. 4.2:  Use  of  adjusted  disposable 

income 

account 

Uses 

P.4 
P.41 

Actual  final  consumption 

Actual  individual  consumption 

B.8 

Saving 

996 
996 

160 

1215 
1215 

160 

Resources 

B.6  Disposable 

income 

1145 

D.8  Adjustment  for the change in net equity 
of households on pension funds 

Resources 

B.7 

Adjusted  disposable 

income 

D.8  Adjustment for the change in net equity of households 

on pension funds 

>85 

-

Table A.6  Full sequence  of accounts for households  [cont] 

III.  Accumulation  accounts 

III.l r Capital  account 

///. 1.1:  Change  in net  worth  due  to saving  and  capital  transfers  account 

Changes in assets 

B. 10.1  Changes  in net worth  due to  saving 

and  capital  transfers 

Changes in liabilities and net worth 

B.8n 

Saving  net 

D.9 

D.92 
D.99 

D.9 

P.91 
P.99 

Capital transfer», receivable 

Investment grant» 
Other capital  transfers 

Capital trarufer», payable 

Capital taxe» 
Other capital transfer» 

23 
0 
23 

III. 1.2:  Acquisition  of non-financial  assets  account 

Changes in assets 

Changes in liabilities and net worth 

P.S1 
P.511 
P.5111 
P.5112 
P.5113 
P.512 
P.SI21 
P.5122 
P.5123 
P.513 

P.S131 

P.5132 

Pros» fixed capiul formation 

61 

B.10.1  Changes  in net worth  due to  saving 

Acquisition» les» disposals of tangible fixed assets 

and  capital  transfers 

178 

Acquisitions of new tangible fixed assets 
Acquisitions of existing tangible fixed assets 
Disposal» of existing tangible fixed asset» 

Acquisitions lea» disposais of intangible fixed assets 

12 

Acquisition» of new intangible fixed asset» 
Acquisition» of existing intangible fixed assets 
Disposais of existing intangible fixed asset» 

Addition» to the value of non-produced 
non-financial  asset» 

Major improvement» to non-produced 
non-financial  asset» 
Costs of ownership transfer on non-produced 
non-financial  assets 

K.1 

Consumption of fixed capital 

P.52 

Changes in inventorie» 

P. S3 

Acquisitions less disposals of valuables 

K.2 

K.21 

K.22 

Acquisitions  less disposals of non-produced 
non-financial  assets 

Acquittions less disposals of land and other 
tangible non-produced assets 
Acquisitions  les» disposals of intangible 
ixxi-produced asset» 

B.9 

Net  lending  (+) /net  borrowing  (-) 

148 

-  486  -

Table A.6  Full sequence of accounts for households [cont] 

IIIJ2:  Financial account 

Changes in assets 

Net acquisition of financial assets 

F.2 

Currency and deposit» 

F.22 
F.29 

Currency 
Transferable  deposits 
Other deposit» 

F.3 

Securities other than shares 

F.4 
F.41 
F.42 

Loans 

Short-term 
Long-term 

F.S 

Shares and other equity 

F.6 
F.61 

F.611 
F.612 
F.62 

F.7 

F.71 
F.79 

Insurance technical reserves 

Net equity of households on life insurance reserves 
and on pension fund» reserves 

Net equity of households on life  insurance  reserves 
Net equity of households on pension funds réserves 

Prepayment of premium» and reserves against 
outstanding claim» 

Other aooounts receivable 

Trade credits and advances 
Other aooounts receivable, except trade credits and 
advances 

10 

29 

36 

33 

22 

40 

29 

Changes in liabilities and net worth 

Net incurrence of liabilities 

F.2 

F.22 
F.29 

Currency and deposit» 

Transferable deposits 
Other deposit» 

F.3 

Securities other than shares 

F.4 
F.41 
F.42 

F.7 
F.71 

F.79 

Loans 

Short-term 
Long-term 

Other account»  payable 

Trade credits and advances 
Other accounts payable, except trade credits and 
advances 

33 

28 

B.9 

Net lending(+)/net 

borrowing^) 

148 

487  -

Changes in liabilities and net worth 

Liabilities 

K.8 
K.10 

K.12 

K.12.1 
K.12.2 

K.12.22 

ofwhich: 
AF.2 

AF.3 

Catastrophic losses 
Uncompensated i 
Other volume changes in financial assets and 
liabilities n_e.c. 
Change» in clas»ification» and structure 

Changes in sector classification  and «tructure 
Changes in classification of asset» and  liabilities 
Changes in classification of assets or liabilities 
other than monetization/demonetization  of gold 

Currency and deposits 
Securities other than shares 

AF.4 
AF.7 

Loans 
Other accounts payable 

Table A.6  Full sequence of accounts for households [cont.] 

111.3:  Other changes in assets accounts 

111.3.1:  Other changes  in volume of assets account 

Changes in assets 
AN 

Non-financial  assets 
Produced assets 

K.4 
K.7 

K.8 

Economic appearance of produced assets 
Catastrophic  losses 

Ursoornpcnsated i 
Other volume change»  in non-financial assets n.e.c. 
Changes  in classifications  and structure 

K.12.1 

Changes in lector classification  and structure 

K.12.2 
K.12.21 
K.12.22 

ofwhich: 
AN.ll 
AN.12 
AN.13 

AN.2 
K.3 
K.5 
K_6 
K.61 
K.62 

K.12 
K.12.1 
K.12.2 
K.12.22 

ofwhich: 
AN.21 

AN.22 

Changes in classification  of assets and liabilitie» 

Monetization/demonetization  of gold 
Changes in classification of assets or liabilities 
other than monetization/demonetization of gold 

Fixed assets 
Inventories 
Valuables 

Non-produced assets 

Economic appearance of non-produced assets 
Natural growth of non-cultivated biological  resources 
Economie disappearance of non-produced assets 

Depletion of natural assets 
Other economic disappearance of non-produced asset» 

Catastrophic losses 
Uncompensated i 
Other volume changes in non-financial assets rte.c. 
Changes in classifications  and structure 

Change» in sector classification  and structure 
Changes in classification  of assets and liabilities 
Changes in classification of assets or liabilities 

other than iisonetization/demonetization of gold 

Tangible non-produced asset» 
Intangible non-produced assets 

AF 
K.7 
K.8 
K.10 

K.12 
K.12.1 
K.12.2 

Financial  assets 

Catastrophic losses 

Uncompensated I 
Other volume changes  in financial assets and 
liabilities n.e.e. 
Changes m classifications  and structure 

Change»  in «ector classification  and structure 
Changes in classification  of assets and liabilities 
Changes in classification of assets or liabilities 
other than menctization/demonetization of gold 

ofwhich: 
AF.2 

Currency and deposits 

AF.3 

Securities other than shares 

AF.5 

Loans 
Shares and other equity 

Insurance technical  reserves 
Other accounts  receivable 

B. 10.2  Changes  in net worth  due to  other 

changes  in volume  of  assets 

( 3 1) 

Table A.6  Full sequence of accounts for households [cont.] 

Ul.3.2: Revaluation account 

Changes in assets 
K.11 

Nominal holding gams(-t-yiosses(-): 

AN 
AN.1 
AN.ll 
AN.12 
AN.13 
AN.2 

AN.21 
AN.22 

AF 
AF.2 
AF.3 

AF.4 
AF.5 
AF.6 

AF.7 

lNkxi-uMnctu assets 
Produced assets 

Fixed 
uiveotonec 
Valuable» 

Non-produced asset» 

Tangible non-produced asset» 
Intangible non-produced assets 

Financial  assets 

Currency and deposits 
Securities other than shares 

Loan» 
Share» and other equity 
Insurance technical reserves 

Other accounts receivable 

Changes in liabilities and net worth 
K.11 

Nominal holding gama(-yiosses(+): 

AF 
AF.2 
AF.3 
AF.4 
AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 
Loan» 
Other account» payable 

80 
35 
28 

45 
45 

16 

10 

B.10.3  Changes  in net worth  due  lo  nominal  holding  gainsAosses 

96 

-  489  ~ 

Table A.6  FuH sequence of accounts for households [cont] 

I0.2.1 :  Neutral holding gains/losses account 

Changes in assets 
K.11.1 

Neutral holding gain» (-t-Vlosses (-). 

Changes in liabilities and net worth 
K.11.1 

Neutral holding gain» (-VIOMCS (+): 

AN 

Non-financial  assets 

AN.l 
A N . ll 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

AF 
AF.2 

AF.3 
AF.4 
AF.S 

Produced 
Fixed 

Inventories 
Valuables 
Non-produced i 

Tangible non-produced assets 
Intangible non-produced asset» 

Financial  assets 

Currency and deposit» 
Securities other than share* 
Loan» 
Share» and other equity 
Insurance technical  reserves 

AF.7 

Other isocounts receivable 

AF 
AF.2 

A FJ 
AF.4 
AF.S 
AF.7 

Liabilities 

Currency and deposit» 
Securities other than share» 

Loans 
Share» and other equity 
Other account» payable 

56 
34 
28 

22 
22 

36 

B.10.31  Changes  in net  worth  due  lo  neutral  holding  gainsAosses 

87 

lil.3.2.2:  Real holding gains/losses account 

Changes in assets 
K.11.2 

Real holding gams(+y.c«»cs(->. 

Changes in liabilities and net worth 
K.11.2 

Real holding gaina(-yio»»es(+>. 

AN 
AN.l 
A N . ll 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

AF 
AF.2 

AF.3 
AF.4 
AF.S 
AF.6 

AF.7 

Non-financial  assets 

Produced 

Fixed assets 
Irrventorie» 
Valuable» 

Non-produced assets 

Tangible non-produced assets 
Intangible non-produced assets 

Financial  assets 

Currency and deposits 
Securities other than shares 

Loans 
Share» and other equity 
Insurance technical reserves 

Other accounts receivable 

24 

AF 

liabilities 

1  AF.2 

Currency and deposit» 

-6 

Securities other than (hares 
Loans 
Other account»  payable 

AF.3 
AF.4 
_1_  AF.7 
22 
22 

-20 
-17 

•  6 
-1 

B.10.32  Changes  in net  worth  due  lo  real  holding  gainsAosses 

-  490  -

Table A.6  Full sequence of accounts for households [cont.] 

IV: Balance sheets 

fV.1 :  Opening balance sheet 

..  Assets 

AN  Non-financial  assets 
AN.l 

Produced assets 
Fixed assets 
Inventories 
Valuables 

AN.ll 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

AF 
AF.2 
AF.3 
AF.4 

AF.S 

AF.6 
AF.7 

Non-produced assets 

Tangible non-produced assets 
Intangible non-produced assets 

Financial  assets 

Currency and deposits 
Securities other than shares 

Loans 
Shares and other equity 

Insurance technical reserves 
Other accounts  receivable 

IV.2:  Changes in balance sheet 

.Assets 

Total changes in assets 

AN  Non-financial  assets 
AN.l 
AN.ll 

Produced  assets 
Fixed assets 
Inventories 
Valuable» 

AN.12 
AN.13 
AN.2 
AN.21 

AN.22 

AF 
AF.2 
AF.3 
AF.4 

AF.5 
AF.6 

AF.7 

Non-produced  assets 

Tangible non-produced assets 

Intangible non-produced  assets 

Financial  assets 

Currency and deposits 

Securities other than shares 
Loans 
Shares and other equity 
Insurance technical reserves 

Other accounts  receivable 

Liabilities 
and net worth 

AF 
AF.2 

AF.3 
AF.4 
AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 

Loans 
Other accounts payable 

289 
10 

169 
108 

B.90  Net  worth 

4  352 

Liabilities 
and net worth 

Total changes  in liabilities 

AF 
AF.2 

AF.3 
AF.4 

AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 
Loans 

Other accounts  payable 

B.10  Changes  in net worth,  total 

due to: 

33 

276 

Saving  and  capital 

B.10.1 
B.10.2  Other  changes  in volume  of  assets 

transfers 

B. 10.3  Nominal  holding  gainsAosses 
Neutral holding gains/losses 
B. 10.31 
Real holding gains/losses 
B.10.32 

2 822 
1698 
1423 
97 

1  124 

1819 

198 

291 
55 

110 
61 
47 

4_ 
10 
49 
48 

199 
68 
35 

5_ 
13 
38 
40 

-  491  -

Table A.6 

Full sequence  of accounts  for households  [cont.] 

IV.3.  Closing  balance  sheet 

Non-financial  assets 
Produced assets 
Fixed assets 

AN 
AN.l 
AN.ll 
AN.12 
A N! 3 

AN.2 
AN.21 
AN.22 

Valuables 

Non-produced assets 

Tangible non-produced assets 
Intangible non-produced assets 

AF 

Financial  assets 

AF.2 
AF.3 
AF.4 
AF.S 

AF.6 
AF.7 

Currency and deposits 
Securities other than shares 
Loans 
Shares and other equity 

Insurance technical  reserves 
Other accounts  receivable 

Liabilities 
and net worth 

AF 
AF.2 
AF.3 

AF.4 
AF.7 

Liabilities 

Cun-ency and deposit» 
Securities other than shares 

Loans 
Other accounts payable 

2  932 
1 7S9 

1470 

1173 
1 172 

2018 

233 
29 

B.90  Net  worth 

-  492 

Table A.7.  Full sequence of accounts for non-profit institutions serving households 

I:  Production account 

Uses 

P.2 

Intermediate consumpuon 

B.lg 

K.1 
B.1 a 

Value added,  gross 

Qxssumption of fixed capital 
Value added,  net 

II.  Distribution and use of income accounts 

11.1 :  Primary distribution of income account 

II. 1.1:  Generation of income account 

Uses 

D.1 
D.11 
D.12 
D.121 
D.122 

Compcntatioo of  ttnployoCT 

Wage» and «alarics 
Employers' «ocial contributions 

Employers' actual «ocial contribution» 
Employers' imputed «ocial contributions 

D.29 
D 39 

Other taxe» on production 
Other aubsidie» on production 

B.2 

Operating 

surplus 

Resources 

P.l 
P.ll 
P.12 

P.l 3 

Output 

Market output 
Output for own final use 
Other non-market output 

28 

23 

12 

10 

Resources 

B . ln  Value added, net 

16 

28 

-  493 -

Table A.7 

Full sequence of accounts for non-profit Irtstitutions serving households [conL] 

U.1.2:  Allocation  of  primary 

income 

account 

Uses 

D.4 
D.41 
D.42 

D.422 
D.43 
D.44 
D.45 

Property  income 

Interest 
Distributed income of corporations 

Withdrawals from income of quasi-corporations 

Reinvested earnings on direct foreign investment 
Property income attributed to insurance policyholders 
Rent 

B.5 

Balance  of primary 

incomes 

11.1.2.1 :  Entrepreneurial  income  account 

Uses 

D.4 
D.41 
D.45 

Property income 

Interest 
Rent 

B.4 

Entrepreneurial 

income 

H.122:  Allocation of other primary income account 

Uses 

D.4 
D.41 
D.45 

Property i 
Interest 
Rent 

B.5 

Balance  of primary 

incomes 

Resources 

B.2  Operating  surplus 

D.4 

Property i 

D.41 
D.42 

D.421 
D.422 
D.43 
D.44 
P.45 

Interest 
Distributed income of corporations 

Dividends 
Withdrawals from income of quasr^orporatioo» 

Reinvested earnings on direct foreign investment 
Property income attributed to insurance  policyholder» 
Rent 

Resources 
B.2  Operating  surplus 

D.4 

Property income 

D.41 
D.42 

Interest 
Distributed  income of corporations 

D.422 

Dividends 
Withdrawal» from income of quasi-corporations 

Resources 

B.4 

Entrepreneurial 

income 

D.4 

D.41 
D.42 

Property i 
Interest 
Distributed income of corporations 

D.421 
D.422 
D.43 
D.44 
D.4S 

Dividends 
Withdrawals from income of quasi-corporations 

Reinvested earnings on direct foreign invcsUitcut 
Property income attributed to insurance policyholders 
Rent 

494  -

Table A.7 

Full sequence of accounts for non-profit institutions serving households [conL] 

IL2:  Secondary distribution of income account 

U s es 

D.5  Current taxes on  income, wealth, etc. 
D.S9 

Other current taxes 

D.62 
D.622 
D.623 

Social benefits other than social transfer» in kind 

Private funded «ocial  benefit» 
Unfunded employee «ocial  benefits 

D.7  Other current transfers 
D.71 
D.7S 

Net non-life insurance premiums 
Miscellaneous current transfers 

Resources 
B.5 

Balance  of primary 

incomes 

Social  contributions 

D.61 
D.611 
D.61 II 
D.61 111 
D.6112 
D.61121 
D.61122 
D.612 

Actual social  contributions 

Employers' actual social corrtributions 

Compulsory employers' actual «ocial  contributions 

Employees'«ocial  contribution» 

Compulsory employee»' social contributions 
Voluntary employees' social  contributions 

Imputed social  contributions 

B.6  Disposable 

income 

D.75 

D.7  Other current transfers 
D.72 

Non-life  insurance claims 
Miscellaneous current transfers 

36 

11.3:  Redistribution of income in kind account 

Uses 
D.63 
D.631 
D.6313 
D.632 

Social transfers in kind 

Social benefits  in kind 

Social assistance benefits  in kind 

Transfers rf individual non-market goods and 

B.7 

Adjusted  disposable 

income 

11.4:  Use of income account 

M.4.1: Use of disposable income account 

Uses 

Final comumption expenditure 

P.3 
P.3I 
Individual consumption expenditure 
D.8  Adjustment for the change in net equity 

of households on pension 

fonds 

B.8 

Saving 

Resources 
B.6  Disposable 

income 

Resources 
B.6  Disposable 

income 

24 

13 
13_ 

0 
_ 

11.4.2:  Use of adjusted disposable income account 

Uses 

D.8  Adjustment for the change in net equity of household» 

Resources 
B.7 

Adjusted  disposable 

income 

24 

on pension funds 

B.8 

Saving 

-  495  -

Table A.7  Full sequence of accounts for non-profit instiujtiorw serving households  [cont] 

III.  Accumulation  accounts 

111.1:  Capital  account 

Ul.1.1:  Change  in net  worth  due  to  saving  and  capital  transfers  account 

Changes in liabilities and net worth 

B.8n 

Saving, net 

D.9 
D.92 
D.99 

D.9 
D.91 
D.99 

Capital transfers,  receivable 

uivtalmcnit guntt 
Other capital  transfers 

Capital transfera, payable 

Capital taxe» 
Other capital transfer» 

Changes in liabilities and net worth 

B.10.1  Changes  in net worth  due to  saving 

and  capital 

transfers 

24 

-3 
0 
-3 

Changes in assets 

B.10.1  Changes  in net worth  due to  saving 

and  capital 

transfers 

19 

14 
13 

10 

-5 

.1.2:  Acquisition  of non-financial  assets  account 

Changes In assets 

P.51 

Pros» fixed capital formation 

P.511 
P.5111 
P.5112 
P.S113 
P J 12 
P.S121 
P.S122 
P.S123 
P.513 

P.5131 

P.S132 

Acquisitions lew disposals of tangible fixed asset» 

Acqukitiona of new tangible fixed assets 
Acquisition» of existing tangible fixed assets 
Disposal» of existing tangible fixed asset» 

Acquisition» lea» disposal» of intangible fixed asset» 

Acqtiisition» of new intangible fixed asset» 
Acquisition» coexisting intangible fixed assets 
Disposals of existing intangible fixed asset» 

Additions to the value of non-produced 
non-financial i 

Major improvement» to nor*produced 
non-financial  assets 

Coat» of ownership transfer on Dcn-produced 
Doci-fitianctal asset» 

K.1 

Contumption of fixed capital 

P.52 

Change» kl inventorie» 

P.53 

Acquisitions les» disposal» of valuable» 

K.2 

K.21 

K.22 

Acquisitions lea» disposal» of non-produced 
non-financial  assets 

Acquiskioo» lea» disposals of land and other 
tangible non-produced asset» 
Acqukkion» less disposals of intangible 
non-produced asset» 

B.9 

Net lending  (+) /net  borrowing  (-) 

-  496  -

Table A.7  Full sequence of accounts for non-profit institutions serving households [cont.] 

111.2: Financial account 

Changes in assets 

Net acquisition of financial assets 

v  "F.2 
F.21 
F.22 
F.29 

Currency and deposit» 

Currency 
Transferable  deposit» 
Other deposit» 

FJ 

Securities other than shares 

F.4 
F.41 
F.42 

Loan» 

Short-term 
Long-term 

F.S 

Share» and other equity 

F.6 

Insurance technical  reserves 

Prepayment of premiums and reserves against 
outatanding claim» 

F.62 

F.7 
F.71 
F.79 

Changes in liabilities and net worth 

Net incurrence of liabilities 

F.2 
F.22 
F.29 

Currency and deposit» 

Transferable  deposits 
Other deposits 

F3 

Securities other than share» 

32 

12 
2 

12 

F.4 
F.41 
F.42 

Loan» 

JfSfc 

F.S 

Share» and other equity 

F.6 
F.61 

F.612 

Insurance technical reserve» 

Net equity of households on life insurance reserves 
and on pension  funds 
Net equity of households on pension fonds 

Other aooounts receivable 

8 

F.7 

Other account» payable 

Trade credits and advances 
Other accounts receivable, except trade credits and 
advances 

Trade credits and advances 
Other accounts payable, except trade credits and 
advances 

B.9 

Net  lending(+)/net 

borrowing^) 

-  497 

Table A.7  Full sequence  of accounts for non-profit institutions serving  households  [cont.] 

Changes in liabilities and net worth 

Liabilities 

K.7 
K.8 
K.10 

Catastrophic  losses 
Uncompensated  seizures 
Other volume change» in financial assets and 
ljabilitie» n.e.c. 

K.12 

Change» in clarification» and «tructure 

K.12.1 
K.1Z2 
K.XZ22 

ofwhich: 
AF.2 

Change» in lector clarification and «tructure 
Change» in classification of asset» and liabflitie» 
Change» in classification of asset» or liabilities 
other than monetization/denKsnetization of gold 

Currency and deposits 

AF.3 
AF.4 
AF.S 

AF.6 
AF.7 

Securities ether than share» 

Loans 
Shares and other equity 
Insurance technical reserve* 

Other account» payable 

111.3:  Other changes  in assets  accounts 

llt.3.1:  Other changes  in volume  of assets  account 

Changes in assets 

AN 
AN.l 
K.4 
K.7 

Non-financial  assets 
Produced assets 

Economic appearance of produced assets 
(Catastrophic losses 

K.8 
K.9 
K.12 
K.1X1 

K . l i2 
K.12.22 

ofwhich: 
AN.11 
AN.12 
AN.13 
AN.2 
K.3 
K.5 
K.6 
K.61 
K.62 
K.7 
K.8 

K.9 
K.12 
K.12.1 
K.1X2 
K.12.22 

ofwhich: 
AN.21 
AN.22 

Uncompensated seizures 
Other volume changes in non-financial  assets n.e.< 
Change» in classifications  and structure 

Changes in sector classification and structure 

Changes in classification of assets and liabilities 
Changes in classification of assets or liabilities 
other than montxaationMemonetization of gold 

Fixed assets 

Inventories 
Valuables 

Non-produced asset» 

Economic appearance of non-produced asset» 
Natural growth of non-cultivated biological  resource» 
Economic disappearance of non-produced assets 

Depletion of natural assets 
Other economic disappearance of non-produced assets 

Catastrophic losses 
Uncompensated i 

Other, volume changes in non-financial assets n.e.c. 
Change» in classification»  and structure 

Change» in sector classification and structure 
Changes in classification of assets and liabilities 
Changes in classification of assets or liabilities 
other than monetization/demonetization of gold 

Tangible non-produced assets 
Intangible nora-produced asset» 

AF 
K.7 

K.8 
K.10 

K.12 
K.12.1 
K.12.2 
K.1222 

ofwhich: 

AF.2 
AF.3 
AF.4 
AF.S 
AF.6 
AF.7 

Financial  assets 

Catastrophic losses 
Uncompensated  seizures 
Other volume changes in financial assets and 
liabilities ae.c. 
Changes in classifications  and «tructure 

Changes in sector classification and structure 
Change» in classification of assets and liabilities 
Changes in classification of assets or liabilities 
other than monetizatkm/demontHùration of eolc 

Currency and deposits 
Securities other than shares 
Loans 
Share» and other equity 
Insurance technical reserves 
Other accounts receivable 

B. 10.2  Changes  in net  worth  due  lo  other 

changes  in volume  of  assets 

-  498  -

Table A.7  Full sequence  of accounts for non-profit institutions serving households [conL] 

ttt.3.2:  Revaluation  account 

Changes in assets 

K.11 

Nominal holding gains(+yiosses(-): 

AN 

AN.l 
A N . ll 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

AF 
AF.2 
AF.3 
AF.4 
AF.S 
AF.6 

AF.7 

Non-financial assets 
Produced assets 

Fixed 
Inventories 
Valuables 

Non-produced assets 

Tangible non-produced asset» 
Intangible non-produced assets 

Financial  assets 

Currency and deposits 
Securities other than shares 

Loans 
Share» and other equity 
Insurance technical reserve* 

Other accounts  receivable 

Changes in liabilities and net worth 

8 
S 

K.11 

AF 
AF.2 

AFJ 
AF.4 
AF.S 
AF.6 
AF.7 

Nominal holding gains(-)/los»e»(-t-): 

Liabilities 

Currency and deposits 
Securities other than shares 

Share» and other equity 
Insurance technical reserves 
Other account»  payable 

B. 10.3  Changes  in net worth  due to nominal  holding  gainsAosses 

10 

-  499  -

Table A.7  Full sequence of accounts for non-profit institutions serving households [cont.] 

III.32.1 :  Neutral holding gains/losses account 

Changes in assets 
K.11.1 

Neutral  holding gains (+yiosscs (-): 

Changes in liabilities and net worth 

K.11.1 

Neutral holding gain» (-Vlosses (+): 

AF 
AF.2 

AF.3 
AF.4 
AF.S 

AF.6 
AF.7 

S 

2 

Liabilities 

Currency and deposit» 
Securities other than shares 

Loans 
Share» and other equity 
Insurance technical  reserves 

Other account» payable 

Non-financial  assets 
Produced assets 
Fixed assets 
inventories 
Valuables 

Non-produced assets 

Tangible non-produced assets 
Intangible non-produced assets 

Financial  assets 

Currency and deposits 
Securities other than shares 

Loans 
Share» and other equity 
Insurance technical reserves 

AN.ll 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

AF.2 
AF.3 

AF.4 
AF.5 

AF.7 

Other accounts receivable 

B. 10.31  Changes  in net worth  due  to  neutral  holding  gainsAosses 

m.322:  Real holding gains/losses account 

Changes in assets 
K.11.2 

Real holding  gamsf+yiossesQ: 

Changes in liabilities and net worth 
K.11.2 

Real holding gain»(-yiosscs(+): 

AN 
AN.l 
AN.ll 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

AF 
AF.2 

AF.4 

AF.5 

AF.7 

Non-financial  assets 
Produced asset» 
Fixed assets 
Inventories 

Valuables 

Non-produced asset» 

Tangible nort-produccd assets 
Intangible non-produoed asset» 

Financial  assets 

Currency and deposits 

Securities other than shares 
Loan» 
Shares and other equity 
Insurance technical reserves 
Other aooounts receivable 

Liabilities 

Currency and deposits 
Securities other than shares 

Shares and other equity 

Insurance technical reserves 
Other accounts payable 

AF.2 

AFJ 
AF.4 
AF.S 

AF.6 
AF.7 

0 

0 
0 
0 

2 

-2 

-0 

B.10.32  Changes  in net worth  due to  real  holding  gainsAosses 

500  -

Table A.7 

Full sequence  of accounts for  non-profit  institutions serving  households  [cont] 

IV:  Balance  sheets 

IV.1 :  Opening  balance  sheet 

Non-financial  assets 
Produced  assets 
Fixed assets 
biventortes 
Valuable* 

Assets 
AN 
AN.l 
AN.ll 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

Non-produced assets 

Tangible non-produced asset» 
Intangible non-produced assets 

AF 
AF.2 

AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

Financial assets 

Ourrency and deposit» 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical reserves 
Other accounts receivable 

IV.2:  Changes  in balance  sheet 

Assets 

Total changes in assets 

AN 

AN.l 
A N . ll 
AN.12 
AN.13 
AN.2 
AN.21 
AN.22 

Non-financial  assets 
Produced  assets 
Fixed assets 

Inventories 
Valuables 

Non-produced assets 

Tangible non-produced assets 
Intangible non-produced assets 

AF 
AF.2 
AF.3 
AF.4 
AF.5 
AF.6 
AF.7 

Financial  assets 

Ourrency and deposits 
Securities other than shares 
Loans 
Shares and other equity 
Insurance technical  reserves 
Other accounts  receivable 

35 

28 
0 
0 
24 
4 
0 
0 

21 
0 
10 

324 
243 

231 

10 

22 

25 
21 
21 
0 
0 
4 
4 
0 

33 
12 
13 
0 
1 
0 
8 

Liabilities 
and  net worth 

AF 
AF.2 

AF.4 
AF.S 

AF.6 
AF.7 

Liabilities 

Currency and deposit» 
Securities other than shares 

Loans 
Share» and other equity 

Insurance technical  reserves 
Other accounts payable 

B.90  Net  worth 

Liabilities 
and  net worth 

Total changes in liabilities 

AF 
AF.2 
AF.3 

AF.4 
AF.S 

AF.6 
AF.7 

Liabilities 

Currency and deposits 
Securities other than shares 

Loans 
Shares and other equity 
Insurance technical  reserves 
Other accounts payable 

B. 10  Changes  in net  worth,  total 

due to: 

B.10.1 
B. 10.2  Other  changes  in  volume  of  assets 

Saving  and  capital 

transfers 

B. 10.3  Nominal  holding  gainsAosses 
Neutral  holding gains/losses 
B.10.31 

B.10.32 

Real holding gains/losses 

-  501 

-

Table A.7 

Full s e q u e n ce  of accounts for non-profit institutions serving  households  [conL] 

IV.3.  Closing  balance  sheet 

Assets 

AN  Non-financial  assets 
AN.l 
AN.ll 
AN.12 

Produced  assets 

Fixed assets 

Inventories 
Valuables 

AN.13 
AN.2 
AN.21 
AN.22 

AF 
AF.2 
AF.3 

AF.4 
AF.S 
AF.6 
AF.7 

Non-produced assets 

Tangible non-produoed asset» 
Intangible non-produoed asset» 

Financial  assets 

Currency and deposits 
Securities other than shares 

Loans 
Shares and other equity 
Insurance technical  reserves 
Other accounts  receivable 

Liabilities 
and net worth 

AF 
AF.2 
AF.3 

AF.4 
AF.5 
AF.6 
AF.7 

Liabilities 

Currency and deposits 
Seajrities other than shares 

Loans 
Shares and other equity 
Insurance technical  reserves 
Other «coounts payable 

264 
252 

85 

205 

23 

B.90  Net  worth 

149 
38 

35 

406 

-  502 

ANNEXE 

4 o^ 

eurostat 

NOVEMBER  1994 

s"o <-( 

132) 

Overview of tables to be supplied in the framework of art. 3 
of the regulation 'ESA 95" 

first 
transmis 
sion 

delay 
t  + month 

trans 
mission 
for 

subject of the tables 

a 
a 
a 

(1998) 
(1998) 
(1998) 

a+1 
a+1 
a+1 
a+1 
a+1 
a+1 
a+1 
a+1 

a+2 
a+2 
a+2 

(1999) 
(1999) 
(1999) 
(1999) 
(1999) 
(1999) 
(1999) 
(1999) 

(2000) 
(2000) 
(2000) 

a+2 

(2000) 

a+2 

(2000) 

a+2 
a+2 
a+2 

(2000) 
(2000) 
(2000) 

a+3 

(2001) 

a+3 
a+3 
a+3 

(2001) 
(2001) 
(2001) 

a+3 

(2001) 

a+4 

(2002) 

a+4 

(2002) 

a+4 

(2002) 

4 
4 
8 

9 
9 
9 
12 
9 
9 
12 
24 

24 
12 
24 

24 

12 

12 
24 
24 

36 

36 
36 
36 

36 

24 

36 

36 

95-97 
95-97 
95-97 

95-98 
95-98 
95-98 
95-98 
95-98 
95-98 
95-98 
95-97 

95-98 
95-99 
95-98 

95-98 

95-99 

95-99 
95-98 
95-98 

95-98 

95-98 
95-98 
95-98 

95-98 

95-00 

95 
(00 in 03) 
95 
(00 in 03) 

Main aggregates, annual *) 
Main aggregates, quarterly *) 
Main aggregates general government 

Tables by industry *) **) 
Exports anu imports by EU/third countries 
Household final consumption expenditure by purpose 
Non-financial accounts by sector,  main aggregates  ***) 
Financial accounts by sector (transactions) 
Balance sheets for financial assets and liabilities 
Detailed taxes and social  contributations 
Tables by region, NUTS  II, A17 

Non-financial accounts by sector, details ***) 
Government expenditure by function 
Cross classification of production account by industry and by 
sector,  annual, A17x 4 sectors (S11, S12, S13, S14+S15) 
Cross classification of gross fixed capital formation by industry 
and by product, A31 x Pi3 
Supply table at basic prices incl. transformation  into  purchasers 
prices, A17 xP60 
Use table at purchasers prices, A17 x P60 
Tables by region, NUTS III, A3 
Household accounts by region 

Supply table at basic prices incl. transformation  into purchasers 
prices, A60 x P60 
Use table at purchasers prices, A60 x P60 
Symmetric input-output table at basic prices, P60 x P60 
Symmetric input-output table for domestic output at basic 
prices, P60 x P60 
Symmetric input-output table for imports at basic prices,  P60 x P60 

Cross classification of fixed assets by industry and by product, 
A31 x Pi3 
Cross classification of production account by industry and by 
sector, A60 x 5 sectors (S11,  S12, S13, S14, S1.5), 5-yearly 
Cross classification of gross fixed capital formation by industry 
and by product, A31 x P60, 5-yearly 

see table 

see table 

see table 

Backward calculations 

a+5 
a+5 
a+5 
a+5 

(2003) 
(2003) 
(2003) 
(2003) 

4/9 
9 
1 2 / 24 
1 2 / 24 

95-02 
95-02 
95-02/01 
95-02/01 

Acquisition less disposables of valuables 
Hours worked by industry 
Breakdown of corporations  by owner 
Breakdown of private households by groups 

a=  year  of  the  transmission  of  the  firs'  tables. 
t=  reference  year 
*)  until  2 0 03  Acquisition  less  disposables  of  valuables  together  w i th  changes  in  stocks 
* *)  until  2 0 03  no  hours  worked  by  industry 
* * *)  until  2 0 03  without  breakdown  of  corporations  by  owner  and  breakdown  of  private  households  by  groups 

J*bf 

17.11.94. 

tables  1 
| 

Nr. 

1  I 
1 
i 
2 
! 
i 
t 
3 
i 
4 
: 
5 
i 
s 
8 
' 
9  1 
i 
11 
; 
22 
i 
i 
j 
ij 

7 
10 
12 

13 

15 

\ 
j 
j 

17 ~1 
23 
| 
24 

16 

18 
19 
20 

21  1 

14 

I 

25 

26 

27 

1/3  J 
3 
\ 
6 /7 
6 /7 

| 

Table 1 :  MAIN AGGREGATES  -  quarterly and annual exercise 

code 

list of variables 

break 
down + 

curr. 
prices 

const, 
prices 

Value added and Gross Oornestic Product 
B.1 g 
D.21-D.31 

1. Gross value added at basic prices 
2. taxes less subsidies on products 
3. FISIM 
4. Gross domestic product at market prices 

. 

10. Gross capital formation 

a) Actual individual consumption 

5. Total final consumption  expenditure 
6. a) Household final consumption expenditure (domestic  concept) 
6. b) Household final consumption expenditure (national concept) 
7. Final consumption expenditure of NPISHs 
8. Government final consumption expenditure 
a) Individual consumption expenditure 
b) Collective consumption  expenditure 
9. Actual final consumption of households 

B.1*g 
Expenditure of the Gross Domestic  Product 
P.3 
P.3 
P.3 
P.3 
P.3 
P.31 
P.32 
P.4 
P41 
P.5 
P.51 
P.52 
P.53 
P.6 
P.7 
Income, Saving and Net Lendi ng 
B.5 
B.5*g 
K.1 
B.5*n 
D.5,D.6, D.7  17. Net current transfers with the rest of the world 
B.6n 
B.8n 
D.9 
B.9 
Population, Employment,- Compensation of employees 

18. Disposable income, net 
19. National saving, net 
20. Net capital transfers with the rest of the world 
21. Net lending or net borrowing of the nation 

a) Gross fixed capital formation 
b) Changes in inventories 
c) Acquisition less disposables of valuables*** 

11.  Exports of goods (fob) and services 
12. Imports of goods (fob) and services 

13. Balance of primary income with the rest of the world 
14. Gross national income at market prices 
15. Consumption of fixed capital 
16. Net national income at market prices 

22.  Population and employment data 

a) Total population (1000) 
b) Unemployed persons (1000) 
c) Employment, national and domestic concept (1000) 

. self employed 
.  employees 

D.1 
D.11 

23. Compensation of employees, national and domestic concept 

a) Gross wages and salaries 

+ If no breakdown is indicated that means total economy 
(x) = at real terms 
*** = until 2003 together with  P.52 

** = A6 only for domestic concept 

5~o & 

A6 

Pi 6 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

(x) 
X 

X 

(x) 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

A6** 
A6** 
A6** 
A6** 

X 

X 

Table 2: 

Main aggregates general government 

P.1 
P.11+P.12 
P.13 
P.2 
B.1 g 
K.1 
B.1n 
D.1 
D.29-D.39 

B.2n 
D.2 
D.4 
D.3 
D.4 
D.41 
D.42+D.43+D.44+D.45 
B.5n 
D.5 
D.61 
D.611 
D.612 
D.7 
D.5 
D.62 
D.7 
B.6n 
P.3 
P.31 
P.32 
D.8 

B.8 
K.1 
D.9 
D.91 
D.92+D.99 
D.9 
P.5 
P.51 
P.52+P.53+K.2 

B.9 

; 

received 

Output 
. Market output  and output for own use 
. Other non-market output 
Intermediate  consumption 
Value added,  gross 
Consumption of fixed  capital 
Value added, net 
Compensation of employees, paid 
Other taxes on production  paid - Other subsidies  on 
production 
Operating  surplus,  net 
Taxes on production and imports,  received 
Property  income, received 
Subsidies  paid 
Property  income, paid 
. Interest 
. Other 
Balance  of primary  incomes,  net 
Current taxes on income and wealth, received 
Social contributions,  received 
. Actual social contributions 
. Imputed social contributions 
Other current transfers,  received 
Current taxes on icome and wealth, paid 
Social benefits other than social transfers  in kind,  paid 
Other current transfers, paid 
Disposable  income,  net 
Final consumption  expenditure 
. Individual consumption expenditure 
. Collective consumption expenditure 
Adjustment for the change in net equity  of  households  on 
pension funds 
Saving,  net 
Consumption of fixed  capital 
Capital transfers, received 
. Capital taxes 
.Other 
Capital transfers, paid 
Gross capital  formation 
. Gross fixed capital formation 
. Changes in inventories and Acquisitions less disposables of 
valuables and Acquisitions of non-produced  non-financial assets 
Net lending  (+)/Net borrowing  (-) 

" 

i <^  ? 

Table 3: 

TABLES BY INDUSTRY 

annual exercise 

code 

list of variables 

break 
down 

curr. 
prices 

constant 
prices 

X 

X 

X 

X 

X 

A31 
A31 
A31 
A31 

A31 
A31 
A31 

A31 
A31 
A31 

A31 
A31 

X 

X 

X 

X 

X 

X 

X 

X 

X 

1. Output at basic prices by industry 
2. Intermediate consumption at purchaser's prices by industry 
3. Gross value added at basic prices by industry 
4. Consumption of fixed capita, by industry 

Value added 
P.1 
P.2 
B.1 g 
K.1 
Capital  formation 
P.5 
P.51 
P.52 
P.53 
Employment and compensation of employees, domestic  concept 

a) Gross fixed capital formation by industry 
b) Changes in inventories by industry 
c) Aquisition less disposables of valuables by industry*) 

5. Gross capital formation by industry 

6. Employment by industry  (1000) 
a) self employed by industry 
b) employees by industry 
c) hours worked by industry**) 

D.1 
D.11 

7. Compensation of employees by industry 

a) Wages and salaries by industry 

*)  until 2003 together with  P.52 
**) until 2003 voluntary 

^O  t 

Table 4: 

Exports and imports by EU / third countries 

code 

list of variables 

P.6 

1. Exports of goods and services 

a) EU countries 
b) third countries 

P.7 

2. Imports of goods and services 

a) EU countries 
b) third countries 

break 
down 
total 
economy 

curr. 
prices 

constant 
prices 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

Table 5:  Household final consumption expenditure by purpose 

code 

list of variables 

P.3 

Household final consumption expenditure by purpose 

break 
down 
COICOP 
2 digits 

curr. 
prices 

constant 
prices 

x 

x 

s o* 

Non-financial  accounts by sector, main aggregates:  t-f-12 

Table 6 

House 
holds 
and non-i 
profit 
institu 
tions 
serving 
house 
holds 

_  A  The 
Rest  _ 
Euro- 
Euro- 
ofthe 
pean 
..  pean 
Union 

U 

O 

The 

TWrd 
, 
countries 
member 
T 
Institu-  andinter-
Institu-  and inter-
A  , 
„ , 
countries  ^ 
, 
countries  ^ 
nons or  national 
nons or  national 
organi 
the EU 
zations 

_ „ 

A. 
„, 

Total 

Non-financial  accounts by sector, main aggregates:  t+12 

Table 6 

State 

Local 

So 
cial 
govern-  govern-  secu-
rity 
funds 

ment  ment 

House 
holds 
and non 
profit 
institu 
tions 
serving 
house 
holds 

Not  j Rest  Jhe 
E u r o- 
,A, 
of the 
secto 
pean 
rized 
Union 

A. 

The 
member 
countries 
of the 
EU 

The 
Institu 
tions of 
the EU 

Third 
countries 
and inter-
national 
organi-  j 
zations  i 

Total 

Total 
Eco 
nomy 

Non-
finan 
cial 
corpo 
rations 

Finan 
cial 
corpo 
rations 

Gene 
ral 

Cen 
tral 

govern-  govern 
ment  ment 

B.ln 

D.1 
D.2 

D.21 
D.29 
D.3 

D.31 
D.39 
B.2n 

II. 1.1 Generation of income account 
Resources 
Net domestic product /Value added, net 
Total resources 

II. 1.1 Generation of income account 
Uses 
Compensation of employees 
Taxes on production and imports, paid 
. to general government 
. to institutions of the EU 
. Taxes on products 
. Other taxes on production 
Subsidies, received 
. from institutions of the EU 
. from  general  government 
. Subsidies on products 
. Other subsidies on production 
Operating surplus, net 
Total uses 

)A 

Non-financial  accounts by sector, main aggregates:  t+12 

Table 6 

Non-financial  accounts by sector, main aggregates:  t+12 

Table 6 

Total 
Eco 
nomy 

Non-
finan 
cial 
corpo 
rations 

Finan-!  Gene-  Cen-
tral 

cial  j  ral 

corpo-{govern-  govern-
radons;  ment  ment 

! House-
]  holds 
So-  (and non-
cial  ;  profit 
govern-  govern-  secu-{ institu-
rity  !  tions 
ment  ment 
funds: serving 

State  Local 

j house-
j  holds 

Not 
secto 
rized 

; _  ^  The 
; Rest 
:  ...  Euro- 
• of the 
.,  pean 
; 
•world  _•;  , 
? 

Union 

The 
... 

T W rd 
The 
countries 
. 
,.  . 
T 
member 
Institu-  andinter-
.  . 
. 
countries  ^ 
tions of 
national 
_TT 
the EU 

, ., 
of the 
„_ 

organi 
zations 

Total 

*3^fjj6als^>f^ 

^ , 7 ft ,* I Hh», tMffrfeïiï 

Wï&Mi 

XW.V)fff.V)fft 

•?5"S*!?H.! 

il Hi I #$11 fill 

UWJJA'.W.'.vJ.ft' 

^"Y"1' 

D.4 

D.41 

P.119 
D.42 

D.43 

D.44 

D.45 

II.1.2 Allocation of primary income account 
Uses 
Property income 
. to general government 
. to other sectors 
.  Interest 
.. to general  government 
.. to other sectors 
.. FISIM 
. Distributed income of corporations 
.. to general  government 
.. to other sectors 
. Reinvested earnings on direct foreign  investment 
.. to general  government 
.. to other  sectors 
. Property income attributed  of insurance policy 
holders 
.Rent 
.. to general government 
.. to other sectors 

B.5n 

Net national income/Balance of primary incomes, net 

Total uses 

O, 

UJ 

Non-financial  accounts by sector, main aggregates:  t+12 

Table 6 

Total 
Eco 
nomy 

Non-
! finan-
!  cial 
corpo 
rations 

Finan 
cial 
corpo 
rations 

!  Gene-
| 
ral 
; govern 
ment 

Cen 
tral 
govern 
ment 

State 
govern 
ment 

Local 
govern 
ment 

So 
cial 
secu 
rity 
funds 

( House-
:  holds 
land non-
!  profit 
|  institu-
i  tions 
|  serving 
house 
holds 

Not 
! secto-
; rized 

;  Rest 
| of the 
| world 

The 
Euro 
pean 
Union 

The 
member 
countries 
of the 
EU 

The 
Institu 
tions of 
the EU 

Third 
countries 
and inter 
national 
organi 
zations 

j  Total 

Ox 

II.2 Secondary distribution of income account 
Resources 

B.5n 

National income /Balance of primary incomes, net 

D.5 
D.51 
D.59 
D.61 
D.611 
D.6111 
D.6112 

D.6113 

D.612 
D.62 

D.7 

D.71 
D.72 
D.73 
D.74 

D.75 

Current taxes on income, wealth, etc. 
. Taxes on income 
. Other current taxes 
. Social contributions 
.. Actual social contributions 
... Employers' actual social contributions 
... Employees' social contributions 
... Social contributions by self- and non-employed 

persons 
..Imputed social contributions 
. Social benefits  other than social transfers in kind 

Other current  transfers 
. from  general government 
. from  other sectors 
. Net non-life insurance  premiums 
. Non-life insurance claims 
. Current transfers within general  government 
. Current international  cooperation 
.. from institutions of the EC 
. Miscellaneous current  transfers 
.. from  general government 
.. from other sectors 
... GNP based fourth  own resource 
Total resources 

• 

' 

H 

' 

\ 

! 

:""" 
' 
.• 

••• 

: 

. . .r v i 1 1. . .j 

-

^H^B 

H 

lljjj 

l8s$s§isll 

%ÊÈ8rÊ£ 

&•:-:$:$:•:&&•?:•: 

-

*" 
' 

/ 

f-

• 

-

: 

v 

'1 

' 

' 

< 
^ 
-  ; 

' 

t 

s 

' 
' ; 
. '  ,  ; 
; 

'" 

*  " 

.•yyyrg 

'  '  '  «" 

, 

' '• 

* 

: 

-

tZJL 
:' 

, 

' î - , ? ': 

'Js ': 
.  "• : 
s 

' 

'i 

,  ' 

• " "" 

; 

•• 

' 

-  — 

,-, 

,  ' 

s 

Non-financial  accounts by sector, main aggregates:  t+12 

Table 6 

Total 
Eco 
nomy 

finan- 

:  Non- 
5 _ 
: 
|  dal 
: 
• corpo 
rations 

i Gene-  Cen- 
, 
, 
tral 

„ 
Finan-
.  , 
dd 
corpo-
: govern-  govern- 
• 
rations 
ment  ment 

. 
ral 

A 

T 
Local 

State 

cial 
govern-  govern-  secu-
rity 
„ 
, 
funds 

A 
A  ment  ment 

j  House-
:  holds 
andnon-
;  profit 
institu-
i  tions 
serving 
house 
holds 

Not 
secto 
rized 

: 
• „ 
;  Rest 
:  , ., 
; of the 
: 
•world  * 

A  The 
Euro- 
,,  pean 
Union 

The 
The 
, 
member 
. 
Institu- 
A, 
countries  A, 
tions of 
, A. 
.,  «TT 
of the 
the EU 
„TJ 

Third 
countries 
andinter-
, 
„ 
national 
. 
organi 
zations 

\  Total 

°n 

D.5 
D.51 
D.59 
D.61 
D.611 
D.6111 
D.6112 

D.6113 

D.612 

D.62 

D.7 

D.71 
D.72 
D.73 
D.74 

D.75 

B.6n 

II.2 Secondary distribution  of income account 
Uses 
Current taxes on income, wealth etc. 
. Taxes on income 
. Other current taxes 
. Social contributions 
.. Actual social  contributions 
... Employers' actual social  contributions 
...Employees' social contributions 
... Social contributions by self- and non employed 
persons 
... Imputed social contributions 

. Social benefits  other than social transfers in kind 

Other current  transfers 
. to general  government 
. to other sectors 
. Net non-life insurance  premiums 
. Non-life insurance claims 
. Current transfers within general government 
. Current international  cooperation 
.. to institutions of the EC 
. Miscellaneous current  transfers 
.. to general  government 
.. to other sectors 
... GNP based fourth own resource 
Disposable income, net 
Total uses 

' 

s 

% 

-
.. 

s 

.;........V  . 

i  ^ 

> 

\ 

-

$ 

'• 

V 
> 
- 

., 
' 
, 

v 

< 

^ 

"  O 

s 

x 

% 

s*^ 

I  \ 

.'  < 

....!" 

! 

'  ; 

• 

: 

; 
! 

-

* 

'• 

- 
' ! 
' 

s  ; 
!-....: 
; 

s 

.  ..  i 

M . I . M I I . .. 

"•> 

* : 
, 

% 

:• 

: 

j 

: 

• 

>. 

• 

s 

,  \\ 
^ ,;•;,  ! t  ->w-

y ^ A , ::  ,  -"  \\  s, 
,  '  1 
•'•: 
: 

'  .. 

\ 

': 
•ft 

l i i ii 

:• 

,! 

•* 

"• 

1 

, 

i 
i 
i 
! 

_ 

1 
i 

i 

: 

i 

; 

*> 

't 

: 
"""""'': 
: 

- ;-M 
, •• 

Non-financial  accounts by sector,  main aggregates:  t+12 

Table 6 

State 

Local 

;  House- j 
!  holds  j 
So-  :and non-i 
cial  j  profit  ;  Not  j Rest 
govern-  govern-  secu-j  institu-  jsecto-jofthe 
j rized  [world 
ment  ment 
j 
j 
| 

rity  | 
funds:  serving  ! 
|  house-  | 
I  holds  | 

tions 

The 

pean 
Union 

The 
member 
countries 
of the 
EU 

The 
Institu- 
tions of 
the EU 

Third 
countries j 
and inter- i 
national  i 
organi-  j 
zations  j 

Total 

v 

^ 

*: 

' 

1 

1 

î 

î 

" 

Total 
Eco 
nomy 

Non-
finan 
cial 
corpo 
rations 

Finan 
cial 
corpo 
rations 

ral 

Gene-  Cen-
tral 
govern-  govern 
ment  ment 

B.6n 

D.8 

P.3 
P.31 
P.3 2 

D.8 

B.8» 
B.12 

B.8n 
D.9 

D.91 

D.92 

D.99 

II.4.1 Use of disposable income account 
Resources 
Disposable income, net 
Adjustment  for the change in net equity of 
households on pension  funds 
Total resources 

II.4.1 Use of disposable income account 
Uses 
Final consuniption  expenditure 
. Individual consumption  expenditure 
. Collective consumption  expenditure 
Adjustment  for the change in net equity of 
households on pension  funds 
Net saving 
Current  external balance 
Total uses 

III.l. 1: Change in net worth due to saving and capital transfers  account 
Changes in liabilities and net worth 
Net saving/Current  external balance 
Capital  transfers 
. from  general  government 
. from  other sectors 
. Capital taxes 
.. from  general  government 
.. from other sectors 
. Investment  grants 
.. from  general government 
.. from  other sectors 
. Other  capital  transfers 
.. from  general government 
.. from  other  sectors 
Potal change in liabilities and net worth 

Non-financial  accounts by sector,  main aggregates:  t-f-12 

Table 6 

Total 
Eco 
nomy 

Non-
finan 
cial 
corpo 
rations 

Finan 
cial 
corpo 
rations 

ral 

Gene-  Cen-
tral 
govern-  govern 
ment  ment 

State 

Local 

So-
cial 
govern-  govern-  secu-
rity 
ment  ment 
funds 

House 
holds 
and non 
profit 
institu 
tions 
serving 
house 
holds 

Not 
secto 
rized 

Rest 
of the 
world 

The 

T hC 

pean 
Union 

member 
countries 
of the 
EU 

The 
Institu 
tions of 
the EU 

Third 
countries 
and inter 
national 
organi 
zations 

Total 

D.9 

D.9! 

| 
JD.92 
j 
{ 
D.99 

B.10.1 

B.10.1 

K.1 

P.5 
P.51 
P.52 
P.S3 

K.2 

B.9 

III.l.1 : Change in net worth due to saving and capital transfers  account 
Changes in assets 
Capital  transfers 
. to general  government 
. to other  sectors 
. Capital taxes 
.. to general  government 
.. to other  sectors 
. Investment  grants 
.. to general  government 
.. to other sectors 
. Other capital  transfers 
.. to general government 
.. to other sectors 
Changes in net worth due to saving and  capital 
transfers 
Total changes in assets 

« • H I H V H T I , . » -1 

.'|||'.HI.-IM. 

fcj.-.M.;* 
*-1 - -i \ 

III.1.2 Acquisitions of non-financial assets account 
Changes in liabilities and net worth 
Changes in net worth due to saving and  capital 
transfers 
Consumption of fixed  capital 
Total change in liabilities and net worth 

111.1.2 Acquisitions of non-financial assets account 
Changes in assets 
Gross capital  formation 
. Gross fixed  capital  formation 
. Changes in inventories 
. Acquisitions less disposals of valuables 
Acquisitions less disposals of non-produced  non 
financial  assets 
Net lending (+)/ Net borrowing  (-) 
Total change in assets 

,;I.M..;A 

(i$.wmtf.m. 

8-S8JS-S 

•:::&Ss':: 

$$P 
i»&g& 

Mi 
M 

SMsa 

, 

\ 

Non-financial  accounts by sector, details:  t+24 

Total 
Eco 
nomy 

Non-  Public  Private 
non-
finan-  non- 
flnan-
finan- 
clal 
corpo- 
cial 
cial 
rations  corpo-  corpo 
rations  rations 

Finan 
cial 
corpo 
rations 

Cen 
tral 
bank 

o t h er 

tary 
flnan-
cial 
corpo 
rations 

Insu-  j 
/»,u 
ranee j 
, 
Other 
finan-  Finan-  corpo-  Gene- 
., 
,  , 
: 
,  , 
rations 
cial 
cial 
-i.i  _»i._..ra|g>>B 
.1-1 
inter-  auxili- 
and 
vern- 
medl-  aries  pen-
ment 
- slon 
aries 
funds 

, 

tral 

«°- 

,"  State  Local  Social: 
s 
$ecu-: House- 
rity 
holds 
-.-.  i  u.u. 
funds 

„„_ 
vern-  v 
ment  ment 

-^ 

ment 

Table 7 

The 
Institu 
tions of 
the EU 

Third 
coun 
tries 
and 
inter 
natio 
nal 
organi 
zations 

Total 

Not 
secto 
rized 

The 

The 
Rest of Euro-  member 
the  pean  coun-
world  Un- 
ion 

tries of 
the EU 

*) 
Em-
ploy-
ersand  _ 

) 

*) 
R e c |- 

Non-
«• 
profit 
P'e n ts  institu 
of  pro 
-tions 
ser 
ving 
house 
holds 

Em-
ploy-
......  p«rty 
and 
ees 
trans 
fer In 
come 

o wn 
ac 
count 
wor 
kers 

P.l 
P.ll 
P.119 
p.12 
p. 13 
p,7 
P.71 
p.72 
D.21-D.31 

I Production Account/External account of goods and services 
Resources 
Output 
. Market output 
..FISIM 
. Output for own final use 
, Other non-market output 
Imports  of goods and services 
. Imports of goods 
. Imports  of services 
Taxes less subsidies on products 
Total resources 

1 Production Account/External  account of goods and services 
Uses 

1—T 

fi Mil i ll I.I I ' ll I.I.0.M.M '.'i. 

.UiBjaulCffiafeajaMi 

i. I'^II1 

'jiiiiijiii 

" MI 

i 

WMmmmï 

51 

*) until  2003  breakdown of corporations by owner and breakdown of private households by groups voluntary 

Non-financial  accounts by sector,  details:  t+24 

Table 7 

State  Local  Social 
go- 
go- 

vern-  vern- 
ment  ment 

secu-
rity 
funds 

!„ 
: House- 
:  . 
,. 
:  holds 

^} 
Em- 
ploy- 
ersand 
own 
ac- 
count 
wor- 
kers 

Em- 
ploy- 
ees 

^ 

„ *\  Non-
Reel-
plents 
of  pro-
r 
perty 
r 
. 
and 
trans- 
. 
„ 
fer  In- 
come 

-tions 
sér 
ving 
, 
house-
. .. 
holds 

Not 
secto 
rized 

The 

The 
Rest  of  Euro-  member 
pean 
world  Un- 
Ion 

coun-
tries  of 
the  EU 

the 

The 
Institu 
tions  of 
the  EU 

Third 
coun 
tries 
and 
inter 
natio 
nal 
organi 
zations 

Total 

Total 
Eco 
nomy 

Non-  Public  Private 
non- 
finan- 
finan- 
cial 
corpo- 
cial 
rations  corpo- 

non-
finan-
cial 
corpo 

rations  rations 

«.. 
Flnan-  „ 

Cen- 
tral 
bank 

cial 

corpo-
rations 

Other 
mone- 
tary 
finan 
.  , 
cial 
corpo- 

rations 

Y 

_, 

cial 

Insu-  j 
nA. 
ranee  j 
. 
Other 
:_ 
finan-  Finan-  corpo- : Gene-
'-
rations irai  go-
and 
• vern-
pen-  :  ment 
' 
sion 
| 
funds  : 

cial 
Inter-  auxlll- 
„ 
medi- 
aries 

, 
aries 

_ 
Cen-
tral 

go-
.  vern-

ment 

H.1.1 Generation  of Income  account 
Resources 

Net  domestic  product  /Value  added,  net 

Total  resources 

|D.l 
\D.11 

n.1.1  Generation  of  income  account 
Uses 
Compensation  of  employees 
.  Wages  and  salaries 

. Employers'  social 

contributions 

\D.121 
\D  122 

..  actual 
..  imputed 

Taxes  on  production  and  Imports,  paid 

. to  general  government 
. to  institutions  of the  EU 
. Taxes  on  products 
. Other  taxes  on  production 
Subsidies,  received 
.  from  Institutions  of the  EU 
. from  general  government 
.  Subsidies  on  products 
.  Other subsidies  on  production 
Operating  surplus,  net 
Total  uses 

p.:i 
D.29 

D.31 
D.39 
B.2n 

3 

lïiiiWiWpWBMMtaïiOOOOOWJw 

gj 

^^ 

FiWiW 

until  2 0 03  breakdown  of  corporations  by  owner  and  breakdown  of private  households  by  groups  voluntary 

Non-financial accounts by sector, details: t+24 

Table 7 

Thlrd 
coun 
tries 
and 
inter-

The 
Institu-

tions  of 
.  „ .T  natio-
the  EU 
nal 
organi 

zations 

Total 

Total 
Eco 
nomy 

*) 
•) 
Non-  Public  Private 
non- 
finan- 
finan- 
clal 
corpo- 
cial 
rations  corpo- 

non-
finan-
cial 
corpo 

rations  rations 

j Finan- 
j  cial 
: 
: corpo- 
., 
: rations 

Other 
Other 

,"  _ 
. 

tral 
. 
, 
bank 

,  , 
d al 
. 
rations 

Insu-

ranee 

_ ,. 
Other 
finan-  Finan-  corpo-, 
rations! 
cial 
dal 
finan- 
\ 
... 
Inter-  auxlll- 
: 
., 
. 
aries 
medi- 
aries 

and 
pen-
sion 
. 
. 
funds 

Gene- 
ral go- 
vern- 
ment 

.  State  Local  Social 

go- 

go- 

vern-  vern- 
ment  ment 

secu-
rity 
funds 

tral 

ment 

! 
;„ 
; House- 
.. 
:  . 
holds 

r> 
Em- 
. 
P l 0 y" 
ersand 
own 
ac- 
count 
wor- 
kers 

•) 
Em- 
, 
ploy- 
ees 

. 
« 
Reci-

Non-
profit 

P'e n tS 
of  pro- 
r 
perty 
. 
and 
A 
trans- 
. 
„ 
fer in- 
come 

institu 
At 
-tions 
sér 
vine 
, 
house-
. 
,. 
holds 

Not 
secto 
rized 

The 

The 
Rest  of  Euro-  member 
pean 
,, 

the 
.. 

world  Un- 
ion 

coun-
. 
. 
tries of 
.  „ ,, 
the  EU 

n.1.2 Allocation  of primary  income  account 
Resources 
Operating  surplus,  net 
Compensation  of  employees 

.  Wages  and  salaries 

. Employers'  social 

contributions 

..actual 
..  imputed 
Taxes  on  production  and  imports,  received 

. Taxes  on  products 

..VAT 

.. Taxes  and  duties  on  Imports excl.  VAT 

B.2n 
D.1 

D.ll 

D.  12 

D.121 
D. 122 

D.21 

D.211 

D.212 

D.2121 

... Import  duties 

D.2122 

...Taxes  on  Imports excl.  VAT and  duties 

.. Taxes  on  products  excl.  VAT  and  import  taxes 

. Other  taxes  on  production 
Subsidies,  paid 
. on  products 
.. Import  subsidies 
.. Other  subsidies  on  Imports 
. other 
Property  income 
..  from  general  government 
..  from  other  sectors 
.  Interest 
..  from  general  government 
..  from  other  sectors 
..FISIM 

D.214 

D.29 
D.3 
D.31 
D.311 
D.319 
D.39 
D.4 

D.41 

P. 119 

0 

I'J^S'l'JSl'iOJJ^TOJJl'JJSM'JJ'wJJJJJ. 
fofni*.  ^« 

• ••••..••it»*iti» 

iiiiiiiimiiini 

iiiiiiiini  iilliiiilii 
•:t*V*^ 

*s 

•t'|MM.M.W.'lt'.'.W.'.W.'.' 

iïifflïlïiïilïlïl 1111111 ii 1111111111 f l' Uk4~ 
y ***A**£*.**4&*Av 

Vs  ? 

II I.I 111 i.i 11 i i i ii i n 11 i imo  (\ixt 
'/•^•.'C 

\. 

i i' 
v> 

L + M ÏH 

' • •' 

^ 

\ 

! • • fi It .Ï Wt I Wl • ,Jn 

O U I. 

s>-%. r f c i *^ 

y,<" 

rr 

\ 

t 

SXOjlMTO'X'X'.iOl' 

WM. 

ffiftfflffiWftfffllffMjffSfSfffSftf. 

"SffffffffjXffS&fftS} 

iili'iiiiiKWiWi 

jhrtBBfiiiCTKSfeK^sSW r»4.rsSwfri  i»8MiU«** 

•igMSgwftj 

WM 

U* 

WssfifsSsiStSSftf. 

msm 

*)  until  2 0 03  breakdown  of  corporations by  owner  and breakdown  of  private  households  by  groups  voluntary 

Non-financial accounts by sector, details:  t+24 

Table 7 

Total 
Eco 
nomy 

.\ 
*) 
*  . 

: 

~ 

*) 
:  ^ 
. .. 
:  Non-  Public  P r i v a t e : -, 
: 
:  finan- 
: 
,  . 
:  cial 
: 
: corpo- 
: 
.'rations  corpo- 

non- 
finan- 
,  , 
cial 

.  ,  Cen- 
tral 
, 
. 
bank 

Finan-  _ 
: 
non- 
:  cial 
_ 
finan-  j 
: corpo- 
,  . 
cial 
A, 
: 
: rations 
corpo-  ; 
: 
.. 
rations  : 
• 
: 

' 

., 
rations 

«»u 
Other  _ ,. 
mone- 
tary 
finan- 
,  , 
cial 
corpo- 
.. 
rations 

! 

I n s u- 
ranee  : 
: 

cial 
,„ 

Other 
finan-  Finan-  corpo-  : Gene- 
. . • • :, 
rations :ral  go- 
: 
. 
• vern- 
and 
'• 
:  ment 
pen- 
; 
, 
slon 
: 
: 
, 
funds  • 
: 
. 

cial 
,  A 
inter-  auxili- 
.
.. 
aries 
medi- 
, 
«ries 

„ 
Cen-  „  A 
tral 
go- 
" 
A  vern- 

,  _ 

: 
: 
,  ,: 
,  State  Local  Social : 
• T, 
s e c u -: House- 
go- 
go- 
,A 
:  , 
rity 
vern-  vern- 
•  holds 
: 
.. 
funds  : 
ment  ment 
• 
: 
: 
: 
: 

ment 

,, 

T 

.

! 

T, 
Em- 
. 
ploy- 
ers  and  _ 
own 

. 

ac- 

. 
r. 
Recl-
. 
pients 
. 
of  pro- 
r 
perty 
, 

and 

.. 

) 
E m- 
, 
ploy- 
ees 

trans- 

fer  in- 
come 

count 

wor- 
kers 

•• 

D.42 

. Distributed  income  of  corporations 

..  from  general  government 
..  from  other  sectors 

D.421 

..Dhidends 

KSSS-S 

^^•Ps 

ss¥^i§; 

income  of  quasi-

..  Withdrawals  from 
corporations 
... from  general 
... from  other  sectors 
. Reinvested  earnings  on  direct  foreign 

government 

•

.. 

investment 
..  from  general  government 
..  from  other  sectors 
. Property  income  attributed  of  Insurance 
policy  holders 
.  Rent 
..  from  general  government 
.. from  other  sectors 
Total  resources 

D.43 

D.45 

SsÉls; 

£:-:5:-:.&: 

lÉftÉï* 

SÉ&I* 

ésëÉ 

' '": 

, 

* ) until  2003  breakdown  of  corporations  by  owner  and  breakdown  of private households by  groups voluntary 

The 

The 

iRest  of  Euro-  member  , 
, 
: 
; 
pean 
the 
,. 
,, 
: 
:  world  Un- 
: 

, 
Institu- 
„, 
. 
tions  of 
.. 
t ne  EU 

coun- 
, 
. 
tries  of 
.  ™T
the  EU 

ion 

Third 
coun-
tries 
and 
, 
inter-
„,,.  natio-

nal 
organi 
zations 

Total 

N o n-
profit 
,  A,A 
institu 
A, 
-tions 
ser-
vine 

. 
house-
. .. 
holds 

Not 
secto 
rized 

: 

.'.'.'....Ï.ÏJ 

: 

 
Non-financial  accounts by sector, details:  t+24 

Table 7 

_ 
Cen- 
tral 
go-
Dr 
vern- 
ment 

0 

,  , 
.  State  Local  Social 

,  _ 

- 

. 

go- 

go- 
vern-  vern- 
A 
ment  ment 

. 

secu-
rity 
. 
. 
funds 

i? 

„ 
House- 
,. 
. 
holds 

r. 
Em- 
. 
ploy- 
ers  and 
own 
ac- 
count 
wor- 
kers 

Em- 
ploy- 
ees 

r> 
, 
Recl-
pients 
of  pro- 
perty 
and 
trans- 
. 
fer  in- 
come 

, 

Non-
profit 
l n j U tu 
A, 
-tions 
sér 
ving 
, 
house-
. .. 
holds 

Not 
secto 
rized 

The 

The 

iRest  of  Euro-  member  _  AlA 
: 
pean 
t he 
: 
,T 
., 
:  world  Un- 
: 
ion 

coun- 
. 
tries  of 
.  ™. 
the  EU 

Third 
coun-
tries 
and 
Institu-
., 
inter-
, 
tions  of 
,  _TT  natlo-
the  EU 
nal 
organi 
zations 

: 
. 

\; 

, 

".'.v."".:  .' 
: 
. 

••y 

•. 

' 

' 

' ;. 

• ; "• 

< • • • • •£  .i> 

. . I „ I. 

1 

•. 

• 

' 

':'. 

... 

'"""""; 
* 

s 

, 

j 

\.: 
: 
: 

. 

' 

: 

• • • • • i - i. 

Total 

; 
3 
1 

j 

j 

, 
i 

: 

D.4 

D.41 

P.l 19 

D.42 

D  421 

D.422 

D.43 

D-44 

D.45 

B.5n 

'"1 

Total 
Eco 
nomy 

n.1.2  Allocation  of  primary  income  account 
Uses 
Property  income 
. to  general  government 
.  to  other  sectors 
.Interest 
.. to  general  government 
.. to  other  sectors 
..  FISLM 

. Distributed  Income  of  corporations 

.. to  general  government 
..  to  other  sectors 
..  Dividends 
..  Withdrawals  from 
. 

income 

ofquasi-

government 

corporations 
... to general 
... to  other  sectors 
. Reinvested  earnings  on  direct  foreign 
investment 
.. to  general  government 
.. to  other  sectors 
. Property  income  attributed  of  insurance 

.. 

.

_ 

.v 
•) 
,  „ 

-x 
") 
_  , ' 

: 
: 
• 
Non-  Public  P r i v a t e : -, 
: Finan-  _ 
,  ,  Cen- 
non-  • 
non- 
finan- 
. 
A 
:  cial 
_ 
,  . 
tral 
: 
finan- 
finan- 
cial 
-corpo- 
. 
. 
,  . 
corpo- 
bank 
At 
; 
cial 
cial 
: rations 
rations  corpo-  corpo-  : 
•' 
rations  : 
: 

.i 
rations 

.i 

finan- 

^  i 
O t h er  ^ 
mone- 
tary 
_ 
finan- 
,  , 
cial 
corpo- 
J 
rations 

. 
O t h er 

,  , 
cial 
„, 

Insu-  : 
: 
ranee  : 
•_ 
_, 
Finan-  corpo-  : Gene- 
: 
, 
rations jral  go- 
: 
, 
: vern- 
and 
i 
:  ment 
pen- 
: 
, 
5 i on 
: 
. 
: 
. 
funds  ; 

,  . 
cial 
, 
Inter-  auxili- 
. 
medl- 
aries 
, 
a r i" 

, 

: 

: 

* 

—— 

M&m Mœï& 

M UM 

policy  holders 
. R e nt 
.. to  general  government 
.. to  other  sectors 
Net  national  income/Balance  of  primary 
, 
incomes,  net 
Total  uses 

'  t until  2003  b r e a k d o wn  of  (.oqiorations  by  owner  and  b r e a k d o wn  of  private  households  by  groups  voluntary 

.No.n.-financial.accounts.hy..secfor.  details:  t+24 

...Table? 

•1 

*) 

total 
Eco 
nomy 

Public  Private 

j  Non 
finan-  non-  non-
! 
finan-
finan- 
i  cial 
: corpo- 
cial 
cial 
'rations  corpo-  corpo 

: Finan-
;  cial 
j corpo-
| rations 

, 
tral 
bank 

„  . 
°t h er 
mone-  _ 
_ 
finan-
.  . 
cial 

b>s u-

! 

_, 

rs.u 
Other 
ranee 
finan-  Finan-  corpo-
rations 
cial 
and 
pen-
slon 
funds 

cial 
Inter-  auxili- 
., 
medi- 
aries 

. 
aries 

: 
JGene- 
: 
, 
:rai  go- 
: 
:  vern- 
:  ment 
: 
: 
• 
: 

1 

;} 

Lm 

»\ 

No-i 

tral 
g°- 
A  vern- 
ment 

,  State  Local  Social! 
• 
s e c u -: House- 
go- 
go- 
.
.. 
.
:
,
rity 
vern-  vern- 
holds 
.  : 
. 
funds  : 
ment  ment 
• 
: 
: 
! 
: 

A 

•) 
P' °y' 
ers and  _ 
Em- 
own 
, 
ploy- 
ac- 
ees 
count 
wor- 
. 
kers 

p i e n t* 

_ 
institu  j 

Reel 
of  pro- 
Pc r tv 
and 
trans- 
, 
. 
fer  in- 
come 

: 
, 
, 
:  Not 
- t i o n s: 
: secto-
ser-  j 
. 
:  rized 
, 
vlng  : 
• 
. 
house-: 
: 
. .. 
holds  ; 
; 

rations  rations 

rations 

n.2  Secondary  distribution  of Income  account 
Resources 
National  income  /Balance  of primary  incomes, 

B.5n 

D5 

D.51 
D.59 
D.ol 
I).61 1 

net 
Current  taxes  on income,  wealth,  etc. 

. Taxes  on Income 
. Other  current  taxes 
. Social  contributions 
.. Actual  social  contributions 

I).6111 

... Employers'  actual  social  contributions 

--

'. 

1 

!.. 

t i ll  1111 

Ihe 

L 
the 

! 
The 
! 
•Rest  of  Euro-  member 
: 
• 
pean 
: 
., 
. . 
:  world  Un- 
: 
ion 
[ 

coun- 
. 
tries of 
.  T,TT 
the  EU 

The 
. 
Institu-
, 
, 
tions of 
„ ., 
. 
the  EU 

Third 
coun 
tries 
and 
inter 
natio 
nal 
organi 
zations 

|  Total 

Ill 

i 
"1 

! 

D.61111 

D.61112 

D 6112 

D.61121 

D.61122 

D.6113 

D.61131 

D.611.12 

D.612 

D.62 

D. 621 

D.622 

D.62.1 

...  Compulsory  employers'  actual  social 
'  • 

..' 
contributions 
....  Voluntary  employers'  actual  social 

• 

. 

. 

'  .. 
contributions 
... Employees'  social  contributions 

....  Compulsory  employers'  actual  social 

. 

.L 
contributions 
....  Voluntary  employers'  actual  social 

. .. 

contributions 
... Social  contributions  by self- and non-

employed  persons 
....  Compulsory  social  contributions  by self- and 

, 

. 

n on-employed 

persons 

....  Voluntary  social  contributions  by self- and 

, 

. 

persons 

non-employed 
..Imputed  social  contributions 
.  Social  benefits  other  than  social  transfers  in 
. 
.. 
kind 

. Social  security  benefits  in  cash 

. Private  funded 

social  benefits 

.. Unfunded  employee  social  benefits 

D. 624 

.. Social  assistance  benefits  in  cash 

s'  i 

-

' 

S 

'i 

'  s  : 

i 

: 

: 
: 
: 

\ 
; 
: 

; 

: 

\ 

'"  I 

1 

; 
; 
: 
.lv, 
\ 

.,... 

.  : 
: 

• 

; 
: 

! 

5 

')  until  2003  breakdown  of corporations by owner  and breakdown  of private households by groups  voluntary 

Non-financial  accounts by sector,  details:  t+24 

Table 7 

Gene- 
ral go- 

vern- 
ment 

tral 

80- 

ment 

.  State  Local  Social 

go- 

go- 

vern-  vern- 
ment  ment 

secu-
,. 
rity 
funds 

:TT 
House- 
,. 
:  . 
holds 

T. 
Em- 
, 
P'°y- 
, 
ers and 
own 
ac-,. 
count 
wor- 
kers 

.•> 
•) 
' 
Em- 
ploy- 
J 
r 
ees 

„ 
. 
R e d-

plents 
. 
of  pro-
*\ 
perty 
, 
and 
trans- 
. 
_ 
fer  In- 
come 

Non-

profit 
, 
institu 
-tions 
sér 
ving 
, 
house-
,. 
, 
holds 

Not 
secto 
rized 

The 

The 
Rest  of  Euro-  member 
pean 
world  Un- 
Ion 

coun-
tries of 
the  EU 

the 

The 
Institu 
tions  of 
the  EU 

Third 
coun 
tries 
and 
Inter 
natio 
nal 
organi 
zations 

Total 

XOHOIOXKôy.O''iViï 

AW.M.W.W.W.ftO.WJ.W.}îiJjjj.'j.' 

Other 

Insu 
rance 
Finan-  corpo-
rations 
and 
pen-
slon 
funds 

cial 

dal 
inter-  auxili- 
medl-  aries 

Total 
Eco 
nomy 

*) 
*) 
Non-  Public  Private 
non- 
finan- 
finan- 
cial 
cial 
corpo- 
rations  corpo- 

non-
flnan-
cial 
corpo 
rations  rations 

Finan- 
cial 
corpo- 
rations 

. 
_ 
tral 
. 
. 
bank 

Other 

finan- 
_ 
finan-
.  . 
cial 
corpo-
rations 

i.i.ijXuV.'.i.v.O.'.i.'.'.1.'.'.'.1.' T.'.U.OJX'.'.'.'.'. [OJlftiJX^^O.OK'KK'j.'JlM'JM 

D.7 

D.71 

D.72 

D.73 

D.74 

D.75 

Other  current  transfers 
.  from  general  government 
.  from  other  sectors 

. Net  non-life  insurance  premiums 

. Non-life  insurance  claims 

. Current  transfers  within  general  government 

. Current  International  cooperation 

.. from  institutions  of the  EC 
. Miscellaneous  current  transfers 
..  from  general  government 
..  from  other  sectors 

... GNP  based  fourth  own  resource 

Total  resources 

')  until  2 0 03  b r e a k d o wn  of  corporations  by  owner  and  b r e a k d o wn  of  private  h o u s e h o l ds  by  groups  v o l u n t a ry 

Noikfiriancial.accoiuits.hy..§ectox^..d£tails:J.+2.4 

...Table..! 

„** 
E m- 
. 
P' °y- 

-) 
ers  and  _' 
E m- 
own 
ploy- 
ac- 
ees 

„ *\ 
Recl-
, 
penU 
of  pro- 
r 
perty 
. 
and 

count 
wor- 
, 
kers 

. 

trans- 
„ 
fer  in- 
come 

Non-
profit 

Institu 
,, 
-tions 
ser-
ving 

. 
house-
,_, 
. 
holds 

j Not 
j secto-
rized 
| 

The 
, 

The 
| 
t he 
„ 
• 
, 
:Rest  of  Euro-  member 
Institu-
, 
: 
coun- 
: 
., 
pean 
the 
: 
tions of 
, 
.  . 
,T 
.. 
tries of  A.  _TT 
:  world  Un- 
: 
...  ™, 
the  EU 
the  EU 
i 

. 
ion 

Third 
coun 
tries 
and 
Inter 
natio 
nal 
organi 
zations 

j Total 

Total 
Eco 
nomy 

*) 

| 
*) 
:  Non-  Public  Private 
finan-  non-  non-
| 
finan-
finan- 
•  cial 
cial 
| corpo- 
cial 
corpo-
! rations  corpo- 
rations 
rations 
j 

:  Finan-
!  ciat 
|  corpo-
;  rations 

Insu-  | 
ranee  : 

n t. 
O t h er 

— . 
O t h er 
mone-  — 
finan- 
tary 

finan- 

.  _ 

„ 
Cen- 
tral 
b a nk 

.  . 
cial 
corpo- 
rations 

, 

,  . 
d al 

.  , 
cial 
... 
Inter-  auxili- 
.
.. 
medl- 
aries 
, 
aries 

: _ 
_, 
Finan-  corpo- : Gene- 
: 
.. 
rations :ral  go- 
: 
and  • vern- 
pen-  : ment 
• 
, 
sion 
: 
: 
. 
, 
funds  • 

! 

, 

Cen-  _, 
tral 
go-

,  State  Local 

go- 
vern- 

go-
vern-
A  ment  ment 

vern-

m e nt 

< 
• 
: 
Social! 
:„ 
secu-  : House- 
.
,
,. 
:
,
rity 
;  holds 
.  : 
, 
funds  : 
• 
: 
• 
• 
; 

• 

' 

: 

i 

" 

• 

, 

-

' 

-

m m i- -

: 

-

, 

' 

; 

... 

j . ^ .1 

A 

ji 

: 

, 

r 

tu  I 

"1" " 

' 

,  . ..•: 

n.2  Secondary  distribution  of Income  account 
Uses 

C u r r e nt  taxes  on Income, wealth etc. 

. Taxes on  income 
. O t h er  current  taxes 
. Social  contributions 
.. Actual  social  contributions 

D.5 

D.51 
D.59 
D.61 
D.611 

D.6111 

... Employers'  actual  social  contributions 

D. 61111 

D.61112 

....  Compulsory  employers'  actual  social 
contributions 
....  Voluntary  employers'  actual  social 

'  . 

.. 
contributions 

. 

D.6112 

...Employees'  social  contributions 

D.61121 

.... Compulsory  employees'social 

contributions 

D.61122 

D.6113 

D.61131 

D.611.12 

D.612 

D« 

D. 621 

D.622 

D. 623 

Voluntary  employees'social 

contributions 

... Social  contributions  by self- and non 

, 

. 
employed  persons 
....  Compulsory  social  contributions  by self- and 

, 

, 

n on-employed 

persons 

....  Voluntary  social  contributions  by self- and 

, 

, 

n on-employed 

persons 

... Imputed  social  contributions 
.  Social  benefits  other  than  social  transfers  in 

kind 

.. Social  security  benefits  in  cash 

.. Private  funded 

social  benefits 

... Unfunded  employee  social  benefits 

D. 624 

... Social  assistance  benefits  in  cash 

r^ 

')  until  2003  breakdown of corporations  by owner  and  breakdown of private  households by groups  voluntary 

' 

' 

| 

. | 

t| . 

; 

••• 

:  . 

: 

! 

'• 

\ 
1 

: 

1 

: 

| 

iSP* 

lllll 
111 
iiiliii 

, 

llliill 
111 

Non-financial  accounts by sector,  details:  t+24 

Table 7 

„. 
Finan-  _ 

cial 
corpo- 
J 
rations 

, 
tral 
, 
bank 

Total 
Eco 
nomy 

") 
*) 
Non-  Public  Private 
finan- 
non- 
finan- 
clal 
corpo- 
cial 
rations  corpo- 

non-
flnan-
dal 
corpo 
rations  rations 

D.71 

D.72 

D.73 

D.74 

O t h er  current  transfers 
.  to  general  government 
.  to  other  sectors 

. Net  non-life  insurance  premiums 

. Non-life  Insurance  claims 

. Current  transfers  within  general  government 

.  Current  international  cooperation 

.. to  institutions  of the  EC 
.  Miscellaneous  current  transfers 
.. to  general  government 
.. to other  sectors 

... GNP  based  fourth  own  résout  re 

Disposable  income, net 
Total uses 

Insu-

, . .. 
°t h er  r..». 
mone-  _ 
finan- 
„ 
finan- 
,  , 
dal 
corpo 
rations 

cial 

Other 

cial 
... 
Inter-  auxili- 
medi-  aries 
aries 

ranee 
_. 
Finan-  corpo-
rations 
and 
pen-
sion 
funds 

Gene- 
ralgo- 
vern- 
ment 

Cen-
tral 

go- 

,  State  Local  Social 
secu-
rity 
funds 

go- 
vern-  vern- 
ment  ment 

ment 

r, 
Em- 
, 
ploy- 

:TT 
; House- 
,. 
i  . 
!  holds 
; 
• 
: 

ers and  _ 
Em- 
. 
ploy- 
ees 

own 
ac- 
count 
wor- 
kers 

Non-
profit 
j n s t | tu 

« 
. 
Reci-
.  A 
plenU 
of  pro-  Al 
perty 
r 
, 
and 
trans- 
, 
. 
fer  in- 
come 

-tions 
ser-
ving 
, 
house-
. .. 
holds 

Not 
secto 
rized 

The 

The 
Rest  of  Euro-  member 
pean 
world  Un- 
ion 

coun-
tries  of 
the  EU 

the 

The 
Institu 
tions  of 
the  EU 

Third 
coun 
tries 
and 
Inter 
natio 
nal 
organi 
zations 

Total 

kWffffwJffffftf/S 

!|X0X0I''|''Ï!0XÙXMX'Ï0)|'.|À0K 

. ) ,. 

,  1. 

• Kl 

| .\ 

l ' u n '; 

> ! , i i i l . i ;\ 

Non-financial  accounts by sector, details: t + 24 

Table 7 

Gene- 
rai  go- 
vern- 
ment 

Cen-
tral 
go- 
vern- 
ment 

,  State  Local  Social 
secu-
, 
rity 
. 
„ 
funds 

go- 
go- 
vern-  vern- 
ment  ment 

House- 
. 
holds 

Em- 
ploy- 
ers  and 
own 
ac- 
count 
wor- 
, 
kers 

Em- 
ploy- 
ees 

R e d- 
plents 
of  pro-
perty 
. 
and 
trans- 
, 
, 
fer  in- 
come 

^ 
profit 
^^ 

-tions 
sér 
ving 
, 
house-
, 
,, 
holds 

Not 
secto 
rized 

• 

••. 

; ; .. 

I  1!  ..  1 

The 

The 
Rest  of  Euro-  member 
coun- 
pean 
- 
. 
.  .  TT  ' 
tries  of 
world  Un- 
•  ™, 
the  EU 
ion 

tive 

Third 
coun-
tries 
„., 
The 
and 
, 
. 
Institu 
, 
inter-
, 
tions  of 
.  _ ..  natio-
the  F.U 
nal 

organi 
zations 

Total 

! 

Total 
Eco 
nomy 

") 
*) 
Non-  Public  Private 
non- 
finan- 
finan- 
cial 
corpo- 
rial 
rations  corpo- 
rations 

non-
finan-
cial 
corpo 
rations 

». 
Finan- 
clal 
corpo- 
rations 

tral 
bank 

Insu-

~  , 
O t h er 
mone- 
finan- 

,  , 
cial 
corpo-
rations 

finan- 

_ ,. 
O t h er 

cial 

cial 
... 
inter-  auxill- 
medi- 
aries 
aries 

ranee 
_, 
Finan-  corpo-
rations 
, 
and 
pen-
sion 
„ 
, 
funds 

II.4.1  Use  of  disposable  income  account 
Resources 
Disposable  income,  net 

Adjustment  for  the  change  in  net  equity  of 

households  on  pension  funds 

Total  resources 

n.4.1  Use  of disposable  income  account 
Uses 
Final  consumption  expenditure 
. Individual  consumption  expenditure 
. Collective  consumption  expenditure 

Adjustment  for  the  change  In  net  equity  of 
households  on  pension  funds 

Net  saving 
Current  external  balance 
Total  uses 

— 

11.611 

D.8 

P.3 
P.31 
P.32 

n.8n 
B.l2 

^ 
N 
hJ 

!  v 

* 

*) until  2003  breakdown  of corporations  by owner  and breakdown  of private households by groups  voluntary 

..N.Q.n-jSr$ncial..a^ 

JM.Ç.l. 

")  | 
*) 
! 
:  Non-  Public  Private; 
non-  j 
finan-
cial 

Total  j finan-  non- 
finan- 
Eco- 
cial 
nomy  • corpo- 
; rations  corpo-  coipo-  j 
rations  rations : 
: 

;  cial 

Flnan-
j  cial 
: corpo 
rations 

Cen- 
tral 
bank 

Other 
mone-
tary 
flnan-
cial 
corpo 
rations 

Insu-  • 
ranee  j 

cial 

cial 

Other 
finan-  Finan-  corpo- jGene-
rations -rai go-
and 
j vern-
pen-  j  ment 
sion 
funds 

Inter-  auxlll- 
medi-  aries 
aries 

j 

*) 

Cen 
tral 

go-

: 
State  Local  Social! 

go- 

go- 

vern-  vern- 
ment  ment 

;„ 
secu- -House- 
_ >. 
:  a.  .j 
:  holds 
rity 
funds : 

*) 

Em-

I 
Pay 
ees 

Em-
p ,°y", 
ers and 

o wn 
ac 
count 
wor 
kers 

') 
Reci 
pients 
of  pro 
perty 
and 
trans-
.fer  in 
come 

Non- 
j 
profit : 
institu: 
-tions ; 
s e r- 
ving 
house-j 
holds  : 

The 

The 

:  Not  :Rest of  Euro-  member  . 
• 
: secto- : 
:  _.  A  : 
:  rized  • world  Un- 
Ion 

pean  coun-
, 
,  , 
,, 
tries of 
the  EU 

, 
the 
,, 

The 
Instltu-
tions of 
the EU 

Third  j 
coun-  j 
tries  I 
and 
j 
inter-  j  Total 
natio-  j 
nal 
; 
organl-j 
zationsj 

ni.1.1:  Change in net worth due to saving and capital transfers account 

Changes in liabilities  and net worth 

• 

Net saving/Current  external  balance 

Capital  transfers 
. from  general government 
.  from  other  sectors 
. Capital  taxes 
.. from  general  government 
.. from  other  sectors 
• Investment  grants 
.. from  general  government 
.. from  other  sectors 
• Other  capital  transfers 
.. from  general  government 
.. from  other  sectors 

Total  change in liabilities  and net  worth 

— 

—  — 

"— 

• . .„  —  — 

• 

i*:§:§ë*5: ïllll 

Sips*; 

i:i;P::S*S: 

iS&Ssg 

:$&&¥•:;: 

SSSSSa:; 

?:?:¥:•:&:•:•  'ffifflffi. 

:&*:•:•&•:£ 

II11IË 

ë^js*™ 

SSSSj 

: 

n i . l . r.  Change in net worth due to saving and capital transfers account 
Changes  in assets 
Capital  transfers 
. to general  government 
. to other  sectors 
. Capital taxes 
.. to general  government 
.. to other  sectors 
. Investment  grants 
.. to general  government 
.. to other  sectors 
• Other  capital  transfers 
.. to general  government 
.. to other  sectors 
Changes in  net worth  due to  saving and  capital 

, 

j 
: 

• 
: 

j 
: 

{ 
i 

{ 
i 

j 
1 

y;£*;:| 

Umiiiiiii 

SSSg;::: 

:•:§£•:•:•:•:•:•:¥! SW:-:&Sw5 

WMma 
ï:É?É£& 

Sggggffî. 

B.Kn 

D.9 

D.91 

D.92 

D.99 

D.9 

D.91 

D.92 

D.99 

B.10.1 

transfers 
Total changes in assets 

., 

')  until  2003  breakdown  of corporations  by owner  and breakdown  of private households by groups  voluntary 

Non-financial  accounts by sector,  details:  t + 24 

Table 7 

Total 
Eco 
nomy 

;  Non-
! finan 
cial 
corpo 
rations 

*) 
Public 
non-
finan 
cial 
corpo 
rations 

•) 
Private 
non-
finan 
cial 
corpo 
rations 

i Flnan-
:  dal 
! corpo 
rations 

Cen 
tral 
bank 

Other 
mone 
tary 
finan 
cial 
corpo 
rations 

Other 
finan 
cial 
inter 
medi 
aries 

Finan 
cial 
auxili 
aries 

Insu 
rance 
corpo 
rations 
and 
pen 
sion 
funds 

jGene-
iral go-
j vern-
; ment 

Cen 
tral 
go 
vern 
ment 

State 
go 
vern 
ment 

Local 
go 
vern 
ment 

Social 
secu 
rity 
funds 

jHouse-
!  holds 

*) 
Em 
ploy 
ers ant 
own 
ac 
count 
wor 
kers 

;> 
Em 
ploy 
ees 

*) 
Reci 
pients 
of  pro 
perty 
and 
trans 
fer in 
come 

Non 
profit 
institu 
-tions 
ser 
ving 
house 
holds 

|  Not 
; secto-
:  rized 

j 
The 
•Rest of  Euro 
pean 
: 
:' world  Un-
ion 
: 

the 

The 
member 
coun 
tries of 
the EU 

The 
Institu 
tions of 
the  EU 

Third 
coun 
tries 
and 
inter 
natio 
nal 
organi 
zations 

j Total 

EH 1.2 Acquisitions of non-financial  assets account 

Changes in liabilities and net worth 

Changes in net worth due to saving and capital 
transfers 
Consumption of fixed capital 

Total change in liabilities and net worth 

ni.1.2 Acquisitions of non-financial  assets accou 
Changes in assets 
Gross capital  formation 
. Gross fixed capital  formation 
. Changes in inventories 

nt 

. Acquisitions less disposals of valuables 

Acquisitions less disposals of non-produced  non 
financial assets 

Net lending (+y Net borrowing (-) 
Total change in assets 

K.l 

P.5 
P.51 
P.52 

P.53 

B.9 

\ until  2003  breakdown  of corporations  by owner and  breakdown  of private households  by groups  voluntary 

PU 
M^fâk$8$M 
iEI 

' 
'!  "UJ 

"' 
nun  IIIIII„..„ 
•  •• 

: 
.?.::•. 

i 
! 

* 

•• 

| 
\ 
., 
1* 

1 

1 

Table 8 

Financial accounts  oy sector  (transactions; 

cufibuiiucueu  d i iu  n o n-  c o i i b o i i u a i eu 

sectors and 

Financial  corporations 

General government 

Households 

sub-sectors 

Non-financial 

Monetary 

Other 

Insurance 

and 

Rest of the world 

corporations 

Total 

financial 

financial 

Financial 

corporations and 

Total 

Central and state 

Local 

Social security 

non-profit  Institutions 

Institutions 

Intermediaries 

auxiliaries 

pension funds 

government 

government 

funds 

serving  households 

(National  currency) 

Changes  in financial assets and liabilities 

ESA 

S.11 

S.12 

S.121/3.122 

S.123 

S.126 

S.13 

S.1311/S.1312 

S.1313 

S.14/S.15 

S.2 

Net acquisition  of financial  assets 

F. A 

Monetary gold and SDRs 

Currency and  deposits 

Securities other than  shares 

Loans 

Shares and other  equity 

Insurance technical  reserves 

Net equity of households In life Insurance 

reserves and In pension funds reserves 

Prepayments of Insurance premiums and 

reserves for outstanding claims 

Other accounts  receivable 

Net incurrence of  liabilities 

Currency and deposits 

Securities other than  shares 

Loans 

Shares and other  equity 

Insurance technical  reserves 

Net equity of households In life Insurance 

reserves and In pension funds reserves 

Prepayments of Insurance premiums and 

reserves for outstanding claims 

Other accounts  payable 

Net lending (*) I net borrowing  M 

F.1 

F.2 

F.3 

F.4 

F.6 

F.6 

F.62 

F.7 

F.L 

F.2 

F.3 

F.4 

F.5 

F.6 

F.82 

FJ 

B.9 

6 

Table 9 :  Balance sheets for financial assets and liabilities 

consolidated and  non-consolidated 

Financial  corporations 

General  government 

Households 

Non-financial 

Monetary 

Other 

Insurance 

and 

Rest of the world 

corporations 

Total 

financial 

financial 

Financial 

corporations and 

Total 

Central and state 

Local 

Social security 

non-profit  institutions 

Institutions 

Intermediaries 

auxiliaries 

pension funds 

government 

government 

funds 

serving  households 

(National currency) 

Financial assets and  liabilities 

S.11 

S.12 

S.121/S.122 

S.123 

S.125 

S.13 

S.1311/S.1312 

S.1313 

S.14/S.15 

S.2 

Financial assets 

Monetary gold and SDRs 

Currency and deposits 

Securities other than shares 

Loans 

Shares and other  equity 

Insurance technical reserves 

Net equity of households In life Insurance 

reserves and In pension funds reserves 

Prepayments of insurance premiums and 

reserves for outstanding claims 

Other accounts  receivable 

Liabilities 

Currency and deposits 

Securities other than  shares 

Loans 

Shares and other  equity 

Insurance technical  reserves 

Net equity of households In life Insurance 

reserves and In pension funds reserves 

Prepayments of Insurance premiums and 

reserves for outstanding claims 

Other accounts  payable 

Net financial  assets 

ts*> 

Q>' 

AF.82 

AF.7 

AF.L 

AF.2 

AF.3 

AF.4 

AF.6 

AF.6 

AF.82 

AF.7 

BF.90 

Table 10:  Government expenditure by function 

Final 
consump- 
tion 

ofwhich:  Subsidies  Property 
income 
compen- 
(consoli-  other than 
sation of 
dated) 
expenditure  employees 

Social 
benefits 

Other 
current 
transfers 
(consoli- 
dated) 

Gross 
capital 
formation 

Capital 
transfers 
(consoli-
dated) 

Total 
outlays 

D.7 

P.5 

D.9 

social 
transfers in 
kind 
D.62 

P.3 

D.1 

D.3 

D.4 

1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 

j General public services 
Defence affairs and services 
Public order and safety affairs and services 
Education affairs and services 
Health affairs and services 
services 
Housing 
and services 
Fuel and energy affairs and services 
affairs and services 
and services 
and services 
Other economic affairs and services 
Expenditure not classified by major group 
[Total 

| __ 

Table 11: 

Detailed tax receipts by type of tax and by receiving subsector 

General  Central  State 
The 
govern-  govern-  govern-  govern-  security  institu-
tions of 
the EC 

ment  ment  ment  ment 

Local  Social 

funds 

Total 

SNA Code 

D.5 
D.51 
D.51 a 

Detailed tax receipts by sector 
Current taxes on income, wealth etc. 
Taxes on income 
Taxes on individual or households income 

D.51 b 

Taxes on the income of corporations 

D.51c 

Taxes on capital gains 

D.51 d 

Taxes on winnings from lotteries or gambling 

D. 59 
D.59.1  Current taxes on capital 

Other current taxes 

D.59.1a  Current taxes on land and buildings 

D. 59.1 b  Current taxes on net wealth 

D.59.1 c  Current taxes on other assets 

D.59.2  Miscellaneous current taxes 
D.59.2a  Poll taxes 
D.59.2b  Expenditure taxes 

D.59.2c  Payments by households to obtain certain 

licences 

D.59.2d  Taxes on international transactions 

D.2 
D.21 
D.211 

Taxes on production and imports 
Taxes on products 
Value added type taxes 

D.212 
D.2121 

Taxes and duties on imports excluding VAT 
Import duties 

D.2122  Taxes on imports, excluding VAT and duties 

D.2122a  General sales or turnover taxes 

D.2122b  Excise duties 

D.2122c  Taxes on specific services 

D.2122d  Profits of import monopolies 

D.2122e  Taxes resulting from multiple exchange rates 

D.214 

Taxes on products, except VAT and import taxes 

D.214a  General sales or turnover taxes 

D.214b  Excise duties 

D.214c 

Taxes on specific services 

D.214d  Taxes on financial and capital transactions 

D.214e  Profits of fiscal monopolies 

^^ 

Table11: 

Detailed tax receipts by type of tax and by receiving subsector 

SNA Code 

D.29 
D.29a 

D.29b 

Other taxes on production 
Taxes on payroll and workforce 

Recurrent taxes on land, buildings or other 
structure 

D.29c 

Business and professional licences 

D.29d 

Taxes on the use of fixed assets or other 
activities 

D.29e 

Stamp taxes 

D.29f 

Taxes on pollution 

D.29g 

Taxes on international transactions 

D.91 
D.91 a 

Capital taxes 
Capital levies 

D.91b 

Taxes on capital transfers 

General  Central  State 
The 
govern-  govern-  govern-  govern-  security  instru 

Local  Social 

Total 

ment  ment  ment  ment 

funds 

tions  of 
the EC 

t 

D.611 
D.6111 
D.6112 
D.6113 

Total tax receipts 
Actual social contributions 
- Employers' actual social contributions 
- Employees' social contributions 
- Social contributions  by self-and non-employed 
persons 

Total receipts from taxes and social contributions 

5^S 

Table 12: 

Cross classification of production account by industry 
and by sector 

industries: 

A 17 

NACE Rev. 1 

sectors: 

S11 
S 12 
S 13 
S14 + S15 

variables: 

output 

- market 
- own final use 
- other non-market 

intermediate consumption 

gross value added 

- compensation of employees 
- other taxes less subsidies on production 
- operating surplus, net 
- consumption of fixed capital 

prices: 

current and constant 

Table 13: 

Cross classification of gross fixed capital formation by 
industry and by product 

industries: 

A 31 

NACE Rev. 1 

products: 

Pi 3 

CPA 

variable: 

gross fixed capital formation 

prices: 

current and constant 

Table 14: 

Cross classification of fixed assets by industry and by product 

industries: 

A 31 

NACE Rev. 1 

products: 

Pi3 

CPA 

variables: 

prices: 

fixed assets, gross 
fixed assets, net 

current replacement costs 
historic cost value 
constant replacement costs 

• S ~^ 

Table 15:  A supply table at bas.,  prices, including a transformation  into purchaser's prices 

prices: current and constant 

n=17, m=60 

Table 16:  A supply table at basic prices, including a transformation into purchaser's  prices 

prices: current and constant 

n=60, m=60 

Industries (NACE) 

1  2  3  4... 

....n 

(1) 

2(1) 
(2) 

1 
2 

3 
4 

(1) 

Output  by  product  and  by  industry  at 
basic prices 

Products 
(CPA) 

m 

(Adjustm. items) 
1(1) 
Total ofwhich: 
Market output 
For own final use 
Other  non-market 
output 

(2) 

(3) 

Total output by industry 

Imports 
cif 

(3) 
a)intra 
EU 
b)extra 
EU 

0 

0 

Total supply 
at basic 
prices 
(4) 

Trade and 
transport  margins 

(5) 

Taxes less 
subsidies on 
products 
(6) 

Total supply 
at purchasers' 
prices 
(7) 

0 

0 

0 

Table 17:  A use table at purchasers' prices 

prices: current and constant 

n=17,  m=60 

Table 18:  A use table at purchasers' prices 

prices: current and constant 

n= 60,  m= 60 

1 
2 
3 

Industries (NACE) 

1  2  3  .... 

...n 

(1) 

1(1) 
(2) 

Final uses 
a)  b)  c)  d)  e)  f) 
(3) 
Final  uses at  purchasers' 
prices: 

1(3) 
(4) 

E(1) + 
2(3) 
(5) 

Products 
(CPA) 

(1) 

Intermediate  consumption  at  purchasers' 
prices by product and by industry 

w 

(Adjustment  items) 
I d) 
Comp.ofempl. 
Oth.  net taxes on 
production 
Cons, of fixed capital 
Oper.surplus, net 
K 3) 
1 ( 1 )+  1(3) 

m 

(2) 

(3) 

(4) 
(5.) 

Value added by industry 
Output at basic prices by industry 

Total interm. consumption  by industry 

Total final uses by type 

Total use 

Components  of value added by industry 

Final consumption  exp: 
a) by households 
b) by NPISH 
(t+12 together with a)) 
c) by government 

Gross capital formation: 
d) gr. fixed capital form. 
e) changes in inventories 

and valuables 

f) exports 

-  intra EU 
- extra EU 

Table 19:  A symmetric input-output table at basic prices (product by product) 

prices: current and constant 

n=60 

Products 
(CPA) 

1 
2 
3 

n 

Product (CPA) 

1  2  3  .... 

...n 

(1) 

2(1) 
(2) 

(D 

Intermediate consumption at basic prices 
(product by product) 

2(1) 

Taxes on products 
Subsidies on products  (-) 
1(1)+  (3) 

Comp.ofempl. 
Other net taxes on 
production 
Cons, of fixed capital 
Oper. surplus, net 
2(5) 
1(1)+  (3)+£(5) 
Imports 
(7)+(8) 
Fixed capital formation 
Fixed capital stock 
Labour inputs 

(2) 

(3) 

(4) 

(5) 

(6) 
(7) 
(8) 
(9) 

(10) 

Total interm.cons.at basic  prices by 
product 
Net taxes on products  by product 

Total interm. cons, at purchasers' prices 
by product 

Components  of value added by product 

Value added by product 
Output at basic prices by product 
Imports cif by product 
Supply at basic prices by product 

Final uses 
a)  b)  c)  d)  e)  f) 
(3) 

Final uses at basic' 
prices: 
Final consumption  exp: 
a) by households 
b) by NPISH 
c) by government 

Gross capital formation: 
d) gr. fixed capital form. 
e) changes in inventories 
and valuables 
f) Exporte 

-  intra EU 
- extra EU 

Final use at basic prices 
by type 
Net taxes on products by 
type of final use 
Total final uses by type at 
purchasers' prices 

2(3) 
(4) 

2(1) + 
2(3) 
(5) 

Total use at bas.pr. 

Tot.net tax. prod. 

Total use at 
purch.p. 

Table  20:  A symmetric  input-output  table for  domestic  output  (product  by  product) 

n=60,  prices :  current and constant 

Products  (CPA) 

1  2  3  .... 

...n 

i ll 

2(1) 

m. 

Products 
(CPA) 

(1) 

For domestic  output:  Intermediate 
consumption at basic prices (product by 
product) 

2(3) 

_[4) 

2(1) + 
2(3) 
(5) 

Final uses 
a)  b)  c)  d)  e)  f) 
J2L 

For domestic  output: 
Final uses at basic 
prices: 
Final consumption  exp: 
a) by households 
b) by NPISH 
c) by government 
Gross capital formation: 
d) gr. fixed capital form. 
e) changes  in inventories 
and valuables 

f) Exports 

-  intra EU 
- extra EU 

2 ( i; 

(2) 

Total interm.cons.  of domestic  output at 
basic prices by product 

Final use of domestic 
output at basic prices 

Total interm. cons, of imported  products 
by product 
Net taxes on  products for  intermediate 
consumption  by product 

Final use of imported 
products at basic prices 
Net taxes on products for 
final use 

Total interm. cons, at purch.p. by product 

Total final uses by type 

Total 
dom. 
output 
Total 
imports 
Total net 
taxes on 
products 
Total use 

Use of imported  products 

(3) 

(4) 

(5) 

(6) 

(A 

Net taxes on products 

2 ( D M 3 )+  (4) 
Comp.ofempl. 
Other net taxes on 
production 
Cons, of fixed capital 
Oper. surplus, net 
2(5) 
Z(1)  +  (3)+Z(5) 
Fixed capital formation 
Fixed capital stock 
Labour inputs 

Components  of value added by product 

(7)  Value added by product 
(8)  Output at basic prices by product 

(9) 

Table 21 :  A symmetric input-output table for imports (product by product) 

n=60,  prices :  current and constant 

Products (CPA) 

1  2  3  .... 

...n 

(1) 

2(1) 
(2) 

(1) 

For imports: Intermediate consumption at 
basic prices (product by product) 

Products 
(CPA) 

1 
2 
3 

n 

Total interm.cons. of imports at basic 
prices by product 
Total interm. cons, of domestic output by 
product 

Final uses 
a)  b)  c)  d)  e)  f) 
(3) 
For imports: Final uses 
at basic prices: 
Final consumption  exp: 
a) by households 
b) by NPISH 
c) by government 
Gross capital formation: 
d) gr. fixed capital form. 
e) changes in inventories 
and valuables 

f) Exports 

- intra EU 
- extra EU 

Final use of imports at 
basic prices 
Final use  of domestic 
output at basic  prices 

Net taxes on  products for  intermediate 
consumption  by product 

Net taxes on products for 
final use 

Total interm. cons, at purch.p. by product 

Total final uses by type 

Components  of value added by product 

Value added by product 
Output at basic prices by product 

X 
0 

2(1) 

Use of domestic  output 

Net taxes on products 

2(1)+  (3)+  (4) 
Comp.ofempl. 
Other net taxes on 
production 
Cons, of fixed capital 
Oper.  surplus, net 
2(5) 
1(1)+  (3)+1(5) 
Fixed capital formation 
Fixed capital stock 
Labour  inputs 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 
(8) 

(9) 

2(3) 
(4)  . 

2(1) + 
2(3) 
(5) 

Total 
import 
Total 
domestic 
output 
Total net 
taxes on 
products 
Total use 

Table  Nr.  2 2: 

Tables  by  industry  and  by  region  (NUTS  II), current  prices 

Code 

B1.g 
B1.g 
D.1 
B2.G 

List of variables 

Breakdown 

t + month 

1.  Gross  value added at basic  prices 
2.  Gross value added at basic prices 
3. Compensation of employees 
4.  Gross fixed  capital  formation 
5.  Employment 

-Total 
-  Employees 

A17 

A17 
A17 

A17 
A17 

24 
18 
24 
24 

24 
24 

Table  Nr.  2 3: 

Tables  by  industry  and  by  region  (NUTS  III), current  prices 

Code 

Bl.g 

List of variables 

Breakdown 

t +month 

1.  Gross value added at basic  prices 
2.  Employment 
- Total 
-  Employees 

A3 

A3 
A3 

24 

18 
18 

Table  Nr.  24: 

Households  accounts  by  regions  (NUTS  II), current  prices 

Allocation of primary  income  account of households 

Uses 

Resources 

D.4  Property  income 

B.5  PRIMARY  INCOME 

B.2/B.3  OPERATING SURPLUS/ 

D.1 
D.4 

MIXED INCOME 
Compensation of employees 
Property  income 

Secondary  distribution of income account of households 

Uses 

Resources 

D.5  Current taxes on income, wealth etc. 
D.61  Social  contributions 

D.7  Other  current  transfers 
B.6  DISPOSABLE INCOME 

B.5 
D.62 

D.7 

PRIMARY  INCOME 
Social benefits  other 
than social benefits  in kind 
Other  current  transfers 

^  M, 

Table 25: 

Cross classification of production account by industry 
and by sector 

industries: 

A 60 

NACE Rev. 1 

sectors: 

S11 
S 12 
S 13 
S 14 
S 15 

variables. 

output 

- market 
- own final use 
- other non-market 

intermediate  consumption 

gross value added 

- compensation of employees 
- other taxes less subsidies on production 
- operating surplus, net 
- consumption of fixed capital 

prices: 

current and constant 

Table 26: 

Cross classification of gross fixed capital formation by 
industry and by product 

industries: 

A 31 

NACE Rev. 1 

products: 

P 60 

CPA 

variable: 

gross fixed capital formation 

prices: 

current and constant 

5M^ 

Table 27:  Backward  calculations 

tables, foreseen for  recalculation 

table 1: 

Main aggregates 

annual 

quarterly 

periods 

transmission 

periods 

transmission 

88-94 
70-87 

Mar-98 
Dec-98 

88-94 
80-87 

Mar-98 
Dec-98 

table 2: 

Main aggregates general government 

70-94 

Dec-98 

table 3: 

Tables  by industry 

70-94 

Dec-00 

table 5: 

table 6: 

Household final consumption expenditure 
by purpose 

Non-financial  sector accounts, 
main aggregates 

80-94 

Dec-00 

90-94 
80-89 

Dec-98 
Dec-99 

table 10: 

Government  expenditure by function 

90-94 

Dec-00 

^M"b 

ISSN 0254-1475 

COM (94) 593 final 

DOCUMENTS 

EN 

17 

Catalogue number : CB-CO-94-619-EN-C 

ISBN 92-77-83484-6 

Office for Official Publications of the European Communities 

Lr2985 Luxembourg