CHAPTER 18
REST OF THE WORLD ACCOUNTS
INTRODUCTION
- the external account of goods and services (V.I), covering imports and exports of goods and services;
- the external account of primary and secondary incomes (V.II), covering compensation of employees, property and investment income, and current transfers such as personal transfers (including workers' remittances) and international aid;
- the external accumulation accounts (V.III), consisting of:
- the capital account (V.III.1), showing capital transfers and acquisitions less disposals of non-produced non-financial assets;
- the financial account (V.III.2), showing transactions in financial assets and liabilities;
- other changes in volume of assets account (V.III.3.1), showing uncompensated seizures etc.;
- revaluation account (V.III.3.2), showing nominal holding gains and losses;
- the external assets and liabilities account (V.IV) presents the opening and closing balance sheets, and the changes in the value of those assets and liabilities between opening and closing balance sheets.
ECONOMIC TERRITORY
- whether the entity qualifies as an institutional unit; and, if so,
- whether the entity also meets the criteria set out in Chapter 2 concerning determination of residency.
Residence
INSTITUTIONAL UNITS
BRANCHES AS A TERM USED IN THE INTERNATIONAL ACCOUNTS OF THE BALANCE OF PAYMENTS
- either a complete set of accounts, including a balance sheet, exists for the branch; or
- it is possible and meaningful, from both an economic and legal viewpoint, to compile those accounts if required. The availability of separate records indicates that an actual unit exists and makes it practical to prepare statistics.
- the branch undertakes or intends to undertake production on a significant scale and that production is based in a territory other than that of its head office, for one year or more:
- if the production process involves physical presence, then the operations should be physically located in that territory;
- if the production does not involve physical presence, such as some cases of banking, insurance, other financial services, ownership of patents, trademarks or copyrights, merchanting and 'virtual manufacturing,' then the operations should be recognised as being in the territory by virtue of the registration or legal domicile of those operations in that territory;
- even if it has tax-exempt status, the branch is recognised as being subject to the income tax system, if any, of the economy in which it is located.
NOTIONAL RESIDENT UNITS []
MULTI-TERRITORY ENTERPRISES []
GEOGRAPHICAL BREAKDOWN []
- Member States and institutions and bodies of the European Union (S.21):
- Member States of the European Union (S.211);
(i) Member States of the euro area (S.2111);
(ii) Member States outside the euro area (S.2112); - institutions and bodies of the European Union (S.212):
(i) the European Central Bank (ECB) (S.2121);
(ii) European institutions and bodies, except the ECB (S.2122);
- Member States of the European Union (S.211);
- non-member countries and international organisations non-resident in the European Union (S.22).
the Member States of the euro area and the European Central Bank
(S.2I = S.2111 + S.2121);
countries and international organisations that are non-resident in the euro area
(S.2X = S.2112 + S.2122 + S.22).
A description of the European accounts is provided in Chapter 19.
THE INTERNATIONAL ACCOUNTS OF THE BALANCE OF PAYMENTS []
A summarised form of the international accounts as presented in the BPM6 is given in Table 18.1.
BALANCING ITEMS IN THE CURRENT ACCOUNTS OF THE INTERNATIONAL ACCOUNTS
Balance of payments |
|||
---|---|---|---|
Current accounts |
Credits |
Debits |
Balance |
Goods and services account |
|
|
|
Goods |
462 |
392 |
70 |
Services |
78 |
107 |
-29 |
Goods and services |
540 |
499 |
41 |
Primary income account |
|
|
|
Compensation of employees |
6 |
2 |
|
Interest |
13 |
21 |
|
Distributed income of corporations |
36 |
17 |
|
Reinvested earnings |
14 |
0 |
|
Primary income |
69 |
40 |
29 |
Goods, services and primary income |
609 |
539 |
70 |
Secondary income account |
Credits |
Debits |
Balance |
Taxes on income, wealth |
1 |
0 |
|
Net non-life insurance premiums |
2 |
11 |
|
Non-life insurance claims |
12 |
3 |
|
Current international transfers |
1 |
31 |
|
Miscellaneous current transfers |
1 |
10 |
|
Secondary income |
17 |
55 |
-38 |
Current account balance |
|
|
32 |
Capital account |
|||
Acquisitions/disposals of non-produced assets |
0 |
|
|
Capital transfers |
1 |
-4 |
|
Capital account balance |
|
|
-3 |
Net lending (+)/borrowing (–) |
|
|
29 |
Financial account (by functional category) |
Change in assets |
Change in liabilities |
Balance |
Direct investment |
-4 |
8 |
|
Portfolio investment |
17 |
7 |
|
Financial derivatives etc. |
3 |
0 |
|
Other investment |
42 |
22 |
|
Reserve assets |
8 |
— |
|
Total change in assets/liabilities |
66 |
37 |
|
Net lending (+)/net borrowing (–) (financial) |
|
|
29 |
Net errors and omissions |
|
|
0 |
THE ACCOUNTS FOR THE REST OF THE WORLD SECTOR AND THEIR RELATIONSHIP WITH THE INTERNATIONAL ACCOUNTS OF THE BALANCE OF PAYMENTS
The external account of goods and services []
Tables 18.2 and 18.3 show how primary and secondary income is recorded in the ESA and the BPM6.
Uses |
Resources |
||||
---|---|---|---|---|---|
P.6 |
Exports of goods and services |
540 |
P.7 |
Imports of goods and services |
499 |
P.61 |
Exports of goods |
462 |
P.71 |
Imports of goods |
392 |
P.62 |
Exports of services |
78 |
P.72 |
Imports of services |
107 |
B.11 |
External balance of goods and services |
-41 |
|
|
|
Current accounts |
Credits |
Debits |
Balance |
---|---|---|---|
Goods and services account |
|
|
|
Goods |
462 |
392 |
70 |
Services |
78 |
107 |
-29 |
Goods and services |
540 |
499 |
41 |
The valuation principles are the same in the ESA and the balance of payments. FOB valuation is, therefore, to be followed for recording exports and imports of goods (see paragraph 18.32).
Transit trade [] is where goods cross a country on their way to their final destination, and, for the country crossed, are generally excluded from foreign trade statistics, balance of payments statistics and the national accounts.
Quasi transit trade are goods imported into a country, cleared through Customs for free circulation within the EU, and then dispatched to a third country in the EU. The entity used for Customs clearance is usually not an institutional unit as defined in Chapter 2, and so does not acquire ownership of the goods. In this case, the import is shown in the national accounts as a direct import to the final destination, as in the case of simple transit trade. The appropriate value is that recorded as the goods enter the final destination country.
- manufacturing services in relation to physical inputs owned by others [];
- maintenance and repair services [] n.i.e.;
- transport [];
- travel [] ;
- construction [];
- insurance and pension services [];
- financial services [];
- charges for the use of intellectual property n.i.e. [];
- telecommunications, computer and information services [];
- other business services [];
- personal, cultural and recreation services []; and
- government goods and services n.i.e. []
- Travel [] covers all goods or services, acquired by non-residents during visits, whether for own use or to give away. Travel includes goods, local transport, accommodation, meals and other services.
- Construction [] covers the total value of the product delivered by the contractor, including any materials sourced locally and, therefore, not recorded in imports and exports of goods.
- Government goods and services n.i.e. [] cover a range of items that cannot be allocated to more specific headings.
Valuation []
Goods for processing
|
Purchases |
Final demand |
Total |
|
---|---|---|---|---|
Sales |
Food manufacturing |
Household expenditure |
Exports |
|
Food |
|
90 |
50 |
140 |
|
|
|
|
|
Canned food imports |
90 |
|
|
90 |
Value added |
50 |
|
GDP (E) = |
50 |
Total output |
140 |
|
|
|
|
Purchases |
Final demand |
Total |
|
---|---|---|---|---|
Sales |
Food manufacturing |
Household expenditure |
Exports |
|
Food |
|
90 |
0 |
90 |
|
|
|
|
|
Canning services imports |
40 |
|
|
40 |
Value added |
50 |
|
GDP (E) = |
50 |
Total output |
90 |
|
|
|
The recording of this example in the BPM6 is shown in Table 18.6.
Current accounts |
Credits |
Debits |
Balance |
---|---|---|---|
Goods and services account |
|
|
-40 |
Services (standard components) |
|
|
|
'Manufacturing services on physical inputs owned by others' |
|
40 |
-40 |
|
|
|
|
Supplementary items |
|
|
|
Goods for processing abroad |
50 |
90 |
-40 |
Merchanting
Goods under merchanting []
The treatment of merchanting is that:
- the acquisition of goods by merchants is shown under goods as a negative export of the economy of the merchant;
- the sale of goods is shown under goods sold under merchanting as a positive export of the economy of the merchant;
- the difference between sales over purchases of goods for merchanting is shown as the item 'net exports of goods under merchanting'. This item includes merchants' margins, holding gains and losses, and changes in inventories of goods under merchanting. As a result of losses or increases in inventories, net exports of goods under merchanting may be negative in some cases; and
- Merchanting entries are valued at transaction prices as agreed by the parties, not FOB.
Imports and exports of FISIM []
The external account of primary and secondary income
Uses |
Resources |
||||
---|---|---|---|---|---|
|
|
|
B.11 |
External balance of goods and services |
-41 |
D.1 |
Compensation of employees |
6 |
D.1 |
Compensation of employees |
3 |
D.2 |
Taxes on production and imports |
0 |
D.2 |
Taxes on production and imports |
0 |
D.3 |
Subsidies |
0 |
D.3 |
Subsidies |
0 |
D.4 |
Property income |
63 |
D.4 |
Property income |
38 |
D.5 |
Current taxes on income, wealth |
1 |
D.5 |
Current taxes on income, wealth |
0 |
D.6 |
Social contributions and benefits |
0 |
D.6 |
Social contributions and benefits |
0 |
D.7 |
Other current transfers |
16 |
D.7 |
Other current transfers |
55 |
D.8 |
Adjustment for the change in pension entitlements |
0 |
D.8 |
Adjustment for the change in pension entitlements |
0 |
B.12 |
Current external balance |
-32 |
|
|
|
|
ESA code |
Credits |
Debits |
Balance |
---|---|---|---|---|
From goods and services |
|
|
|
41 |
Primary income account |
|
|
|
|
Compensation of employees |
D.1 |
6 |
2 |
|
Interest |
D.4 |
13 |
21 |
|
Distributed income of corporations |
36 |
17 |
|
|
Reinvested earnings |
14 |
0 |
|
|
Taxes on production and imports |
D.2 |
0 |
0 |
|
Subsidies |
D.3 |
0 |
0 |
|
Primary income |
|
69 |
40 |
29 |
Goods, services and primary income |
|
609 |
539 |
70 |
Secondary income account |
|
|
|
|
Taxes on income, wealth |
D.5 |
1 |
0 |
|
Net non-life insurance premiums |
D.6, D.7, D.8 |
2 |
11 |
|
Non-life insurance claims |
12 |
3 |
|
|
Current international transfers |
1 |
31 |
|
|
Miscellaneous current transfers |
1 |
10 |
|
|
Secondary income |
|
17 |
55 |
-38 |
Current account balance |
|
|
|
32 |
The primary income account []
Direct investment income
For a direct investment enterprise that is 100 per cent owned by a non-resident, reinvested earnings are equal to retained earnings and the balance of primary incomes of the enterprise is exactly zero.
The secondary income (current transfers) account of the BPM6
The external capital account
Change in assets |
Change in liabilities and net worth |
||||
---|---|---|---|---|---|
|
|
|
B.12 |
Current external balance |
-32 |
|
|
|
D.9 |
Capital transfers, receivable |
4 |
|
|
|
D.9 |
Capital transfers, payable |
-1 |
B.101 |
Changes in net worth due to current external balance and capital transfers |
-29 |
|
|
|
(1) For the rest of the world, this refers to changes in net worth due to current external balance and capital transfers. |
Changes in assets |
Changes in liabilities and net worth |
||||
---|---|---|---|---|---|
|
|
|
B.101 |
Changes in net worth due to current external balance and capital transfers |
-29 |
NP |
Acquisitions less disposals of non-produced assets |
0 |
|
|
|
B.9 |
Net lending(+)/net borrowing(–) |
-29 |
|
|
|
|
Credits |
Debits |
Balance |
---|---|---|---|
Current account balance |
|
|
32 |
Capital account |
|||
Acquisitions/disposals of non-produced assets |
0 |
|
|
Capital transfers |
1 |
4 |
|
Capital account balance |
|
|
-3 |
Net lending (+)/borrowing (–) |
|
|
29 |
The external financial account and international investment position (IIP)
Changes in assets |
Changes in liabilities and net worth |
||||
---|---|---|---|---|---|
F |
Net acquisition of financial assets |
37 |
F |
Net incurrence of liabilities |
66 |
F.1 |
Monetary gold and SDRs |
1 |
F.1 |
Monetary gold and SDRs |
0 |
F.2 |
Currency and deposits |
11 |
F.2 |
Currency and deposits |
-2 |
F.3 |
Debt securities |
9 |
F.3 |
Debt securities |
30 |
F.4 |
Loans |
4 |
F.4 |
Loans |
45 |
F.5 |
Equity and investment fund shares |
3 |
F.5 |
Equity and investment fund shares |
14 |
F.6 |
Insurance, pension and standardised guarantee schemes |
0 |
F.6 |
Insurance, pension and standardised guarantee schemes |
0 |
F.7 |
Financial derivatives and employee stock options |
0 |
F.7 |
Financial derivatives and employee stock options |
3 |
F.8 |
Other accounts receivable/payable |
10 |
F.8 |
Other accounts receivable/payable |
-14 |
|
|
|
B.9 |
Net lending (+)/net borrowing (–) |
-29 |
Net lending (+)/borrowing (–) (current and capital accounts) |
|
|
29 |
Financial account (by functional category) |
Change in assets |
Change in liabilities |
Balance |
---|---|---|---|
Direct investment |
-4 |
8 |
|
Portfolio investment |
17 |
7 |
|
Financial derivatives etc. |
3 |
0 |
|
Other investment |
42 |
22 |
|
Reserve assets |
8 |
— |
|
Total change in assets/liabilities |
66 |
37 |
|
Net lending (+)/net borrowing (–) (financial account) |
|
|
29 |
Net errors and omissions |
|
|
0 |
International account functional categories |
|||||
---|---|---|---|---|---|
ESA instruments |
Direct investment |
Portfolio investment |
Financial derivatives |
Other investment |
Reserve assets |
Monetary gold |
|
|
|
|
X |
Special Drawing Rights (SDRs) |
|
|
|
X |
X |
Currency and deposits |
|
|
|
|
|
Currency |
|
|
|
X |
X |
Interbank positions |
|
|
|
X |
X |
Other transferable deposits |
X |
|
|
X |
X |
Other deposits |
X |
|
|
X |
X |
Debt securities |
X |
X |
|
|
X |
Loans |
X |
|
|
X |
X |
Equity and investment fund shares |
|
|
|
|
|
Equity: |
|
|
|
|
|
Listed shares |
X |
X |
|
|
X |
Unlisted shares |
X |
X |
|
|
X |
Other equity |
X |
|
|
X |
|
Investment fund shares/units: |
|
|
|
|
|
Money market fund shares/units |
X |
X |
|
|
X |
Non-MMF investment fund shares/units |
X |
X |
|
X |
X |
Insurance, pensions, and standardised guarantee schemes |
|
|
|
|
|
Non-life insurance technical reserves |
X |
|
|
X |
|
Life insurance and annuity entitlements |
X |
|
|
X |
|
Pension entitlements |
|
|
|
X |
|
Claims of pension funds on pension managers |
X |
|
|
X |
|
Entitlements to non-pension benefits |
|
|
|
X |
|
Provisions for calls under standardised guarantees |
X |
|
|
X |
|
Financial derivatives and employee stock options |
|
|
|
|
|
Financial derivatives |
|
|
X |
|
X |
Employee stock options |
|
|
X |
|
|
Other accounts receivable/payable |
|
|
|
|
|
Trade credits and advances |
X |
|
|
X |
|
Other accounts receivable/payable, excluding trade credits and advances |
X |
|
|
X |
|
BALANCE SHEETS FOR THE REST OF THE WORLD SECTOR
|
|
Opening balance |
Changes due to transactions |
Other changes in volume |
Revaluation |
Closing balance |
---|---|---|---|---|---|---|
Assets |
|
|
|
|
|
|
Non-financial assets |
|
|
|
|
|
|
Financial assets |
805 |
37 |
0 |
7 |
849 |
|
AF.1 |
Monetary gold and SDRs |
0 |
1 |
0 |
0 |
1 |
AF.2 |
Currency and deposits |
105 |
11 |
0 |
0 |
116 |
AF.3 |
Debt securities |
125 |
9 |
0 |
4 |
138 |
AF.4 |
Loans |
70 |
4 |
0 |
0 |
74 |
AF.5 |
Equity and investment fund shares |
345 |
2 |
0 |
3 |
350 |
AF.6 |
Insurance, pension and standardised guarantee schemes |
26 |
0 |
0 |
0 |
26 |
AF.7 |
Financial derivatives and employee stock options |
0 |
0 |
0 |
0 |
0 |
AF.8 |
Other accounts receivable/payable |
134 |
10 |
0 |
0 |
144 |
Liabilities |
1 074 |
66 |
0 |
3 |
1143 |
|
AF.1 |
Monetary gold and SDRs |
770 |
0 |
0 |
0 |
770 |
AF.2 |
Currency and deposits |
116 |
-2 |
0 |
0 |
114 |
AF.3 |
Debt securities |
77 |
20 |
0 |
2 |
99 |
AF.4 |
Loans |
17 |
45 |
0 |
0 |
62 |
AF.5 |
Equity and investment fund shares |
3 |
14 |
0 |
1 |
18 |
AF.6 |
Insurance, pension and standardised guarantee schemes |
25 |
0 |
0 |
0 |
25 |
AF.7 |
Financial derivatives and employee stock options |
7 |
3 |
0 |
0 |
10 |
AF.8 |
Other accounts receivable/payable |
59 |
-14 |
0 |
0 |
45 |
|
Net worth |
269 |
|
|
|
265 |
International investment position (IIP) |
Opening position |
Transactions |
Other changes in volume |
Revaluation |
Closing position |
---|---|---|---|---|---|
Assets |
|
|
|
|
|
Direct investment |
42 |
-4 |
0 |
1 |
39 |
Portfolio investment |
40 |
17 |
0 |
2 |
59 |
Financial derivatives |
0 |
3 |
0 |
0 |
3 |
Other investment |
152 |
42 |
0 |
0 |
194 |
Reserve assets |
63 |
8 |
0 |
0 |
71 |
Total assets |
297 |
66 |
0 |
3 |
366 |
Liabilities |
|
|
|
|
|
Direct investment |
132 |
8 |
0 |
2 |
142 |
Portfolio investment |
180 |
7 |
0 |
5 |
192 |
Financial derivatives |
0 |
0 |
0 |
0 |
0 |
Other investment |
261 |
22 |
0 |
0 |
283 |
Total liabilities |
573 |
37 |
0 |
7 |
617 |
Net international investment position (net IIP) |
-276 |
29 |
0 |
-4 |
-251 |
List of abbreviations and acronyms
ABO | accrued benefit obligation |
ABS | asset-backed security |
BPM6 | Balance of payments manual, sixth edition |
CCP | central counterparty clearing house |
CDS | credit default swap |
CIF | cost, insurance and freight |
COFOG | Classification of the Functions of Government |
COICOP | Classification of Individual Consumption by Purpose |
COPNI | Classification of the Purposes of Non-Profit Institutions Serving Households |
COPP | Classification of Outlays of Producers by Purpose |
CPA | Classification of Products by Activity |
EAA | economic accounts for agriculture |
EAFRD | European Agricultural Fund for Rural Development |
EAGF | European Agricultural Guarantee Fund |
EC | European Commission |
ECB | European Central Bank |
EMU | economic and monetary union |
ESA | European System of Accounts |
ESO | employee stock option |
ESSPROS | European System of Integrated Social Protection Statistics |
EU | European Union |
EURIBOR | European interbank offered rate |
EUROSTAT | the statistical office of the European Union |
FDI | foreign direct investment |
FISIM | financial intermediation services indirectly measured |
FOB | free on board |
FRA | forward rate agreement |
FVC | financial vehicle corporation |
GAB | general arrangements to borrow |
GDP | gross domestic product |
GFS | government finance statistics |
GNI | gross national income |
GVA | gross value added |
IAS | international accounting standards |
IASB | International Accounting Standards Board |
IASC | International Accounting Standards Committee |
IC | insurance corporations |
ICLS | International Conference of Labour Statisticians |
ICPF | insurance corporations and pension funds |
ICT | information, communications and telecommunications |
IFRS | International Financial Reporting Standards |
IIP | international investment position |
ILO | International Labour Organisation |
IMF | International Monetary Fund |
IMTS | international merchandise trade statistics |
INTRASTAT | statistical collection system |
I-O | input-output |
IPO | initial public offering |
IPSASB | International Public Sector Accounting Standards Board |
ISIC | International Standard Industrial Classification of all Economic Activities |
ISIN | international securities identification number |
KAU | kind-of-activity unit |
KLEMS | capital, labour, energy, materials and services |
LIBOR | London interbank offered rate |
MFI | monetary financial institution |
MMF | money market fund |
MSITS | Manual on statistics of international trade in services |
N.E.C. | not elsewhere classified |
NAB | new arrangements to borrow |
NACE | general industrial classification of economic activities within the European Union |
NDP | net domestic product |
NOS | net operating surplus |
NPI | non-profit institution |
NPISH | non-profit institution serving households |
NUTS | nomenclature of territorial units for statistics |
OECD | Organisation for Economic Cooperation and Development |
OMFI | other monetary financial institution |
OTC | over the counter |
PAYE | pay as you earn |
PBO | projected benefit obligation |
PF | pension funds |
PIM | perpetual inventory method |
PPP | purchasing power parity |
PPP | public-private partnership |
PPS | purchasing power standard |
PRGF | Poverty Reduction and Growth Facility |
R & D | research and development |
ROW | rest of the world |
SAM | social accounting matrix |
SDR | special drawing right |
SEEA | System of Environmental-Economic Accounts |
SNA | System of National Accounts |
SOCX | Social Expenditure Database |
SPE | special-purpose entity |
SPV | special-purpose vehicle |
STRIPS | Separate Trading of Registered Interest and Principal Securities |
UCITS | undertakings for collective investment in transferable securities |
UN | United Nations |
VAT | value added tax |