- International Monetary Fund
- Published Date:
- November 2005
© 1993 International Monetary Fund
Published 1993. Second Printing 1997.
Balance of payments manual. 5th ed.—Washington, DC, USA: International Monetary Fund, © 1993. xii, 188 p.
1. Balance of payments — Handbooks, manuals, etc. 2,. International finance. I. International Monetary Fund. II. Title.
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Note on Second Printing
In this second printing of the fifth edition (1993) of the Balance of Payments Manual, corrections have been made of errors and omissions noted by IMF staff or users of copies from the first printing. Consequently, copies from the second printing contain minor variations in wording and a few differences in pagination. All paragraph reference numbers are identical to those of the first printing.
- CONCEPTUAL FRAMEWORK
- I. Introduction
- II. Conceptual Framework of the Balance of Payments and International Investment Position
- III. Balance of Payments and National Accounts
- IV. Resident Units of an Economy
- V. Valuation of Transactions and of Stocks of Assets and Liabilities
- VI. Time of Recording
- VII. Unit of Account and Conversion
- STRUCTURE AND CLASSIFICATION
- VIII. Classification and Standard Components of the Balance of Payments
- IX. Structure and Characteristics of the Current Account
- X. Goods
- XI. Transportation
- XII. Travel
- XIII. Other Services
- XIV. Income
- XV. Current Transfers
- XVI. Structure and Characteristics of the Capital and Financial Account
- XVII. Capital Transfers and Acquisition or Disposal of Nonproduced, Nonfinancial Assets
- XVIII. Direct Investment
- XIX. Portfolio Investment
- XX. Other Investment
- XXI. Reserve Assets
- XXII. Supplementary Financial Account Information
- XXIII. International Investment Position
- REGIONAL ALLOCATION
- XXIV. Regional Statements
- I. Relationship of the Rest of the World Account to the Balance of Payments Accounts and the International Investment Position
- II. A Note on Sectors
- III. Balance of Payments Classification of International Services and the Central Product Classification
- IV. Accounting for Exceptional Financing Transactions
- V. Selected Issues in Balance of Payments Analysis
Measurement of the external positions of member countries has been a central feature of International Monetary Fund operations since inception. Such measurement is conducted in the dual context of Fund responsibility for surveillance of countries’ economic policies and provision of financial assistance in support of adjustment measures to correct balance of payments disequilibria. Consequently, the Fund has a compelling interest in developing and promulgating appropriate international guidelines for the compilation of sound and timely balance of payments statistics. Such guidelines, which have evolved to meet changing circumstances, have been embodied in successive editions of the Balance of Payments Manual (the Manual) since the first edition was published in 1948. Because of the important relationship between external and domestic economic developments, timely, reliable, and comprehensive balance of payments statistics based on an appropriate and analytically oriented methodology are an indispensable tool for economic analysis and policy making. Indeed, with the growing interdependence of the world’s economies, the need for such statistics—which reflects in part the underlying movement towards greater liberalization and integration of markets—has increased over time.
I am particularly pleased to introduce the fifth edition of the Manual, which addresses the many important changes and innovations that have occurred in international transactions since the fourth edition was published in 1977. The fifth edition of the Manual also addresses, for the first time, the important area of international investment position statistics. In addition, concepts in the Manual have been harmonized, as closely as possible, with those of the revised System of National Accounts 1993 and with the Fund’s methodologies pertaining to money and banking and government finance statistics.
The revised Manual has been prepared by the Fund’s Statistics Department in close consultation with balance of payments experts in member countries and international and regional organizations (including the Statistical Office of the European Communities, the Organisation for Economic Cooperation and Development, the United Nations, and the World Bank). The process underlying the revision of the Manual demonstrates the spirit of international collaboration and cooperation, and I would like to thank all of the national and international experts involved for their invaluable assistance. In this regard, I am particularly grateful to Mr. Pierre Esteva, chairman of the Fund’s Working Party on the Statistical Discrepancy in World Current Account Balances, and to Baron Jean Godeaux, chairman of the Working Party on the Measurement of International Capital Flows. Their assessments of the effects of the unprecedented changes in the conduct of international transactions contributed significantly to the revision of the structure and classification of the international accounts.
I would like to commend the Manual to compilers and users around the world and to urge member countries to adopt the conceptual guidelines of the fifth edition as the basis for compiling balance of payments and international investment position statistics and for reporting this information to the Fund.
International Monetary Fund
The fifth edition of the Balance of Payments Manual (the Manual) continues the series of international standards that have been issued by the International Monetary Fund (IMF) for providing guidance to member countries in the compilation of balance of payments and related data on the international investment position.
Since the fourth edition of the Manual was published in 1977, important changes have occurred in the manner in which international transactions are conducted. These changes are, in particular, a result of the liberalization of financial markets, innovations in the creation and packaging of financial instruments, and new approaches to the restructuring of external debt. In addition, there has been unprecedented growth in the volume of international trade in services. All these developments have necessitated changes in the treatment and classification of such transactions within the structure of the balance of payments accounts. Furthermore, since publication of the fourth edition, experience with application of that edition has brought to light a number of instances in which guidelines could usefully be augmented and recommendations clarified. An additional impetus to the preparation of the fifth edition of the Manual was the work undertaken to revise the system of economic and financial statistics encompassed in the System of National Accounts 1993 (SNA). There was the need to achieve, to the maximum extent possible, harmonization between the two systems and with IMF statistical systems pertaining to money and banking statistics and government finance statistics.
The fifth edition of the Manual provides international guidelines for the compilation of data for an articulated set of international accounts encompassing the measurement of external transactions (balance of payments), on the one hand, and the stock of external financial assets and liabilities (the international investment position) on the other. This edition of the Manual provides explicit links between the outstanding stock of external financial assets and liabilities and corresponding changes that occur, during specified periods, in these external financial instruments. The changes reflect transactions, valuation changes, and other adjustments in the relevant financial instruments. The delineation of an articulated set of international accounts represents a major shift in orientation from the fourth to the fifth edition. The fifth edition also differs from its predecessor in other important respects. First, the current account of the balance of payments is redefined to exclude capital transfers, which are included in an expanded and renamed capital and financial account. This change provides for a greater degree of harmonization and integration with the SNA in terms of the underlying concepts and the identification of major aggregates. Second, within the current account, clear distinctions are made among goods, services, income, and current transfers. As a reflection of the heightened analytical and policy interest in data on international trade in services (particularly in the context of the General Agreement on Tariffs and Trade negotiations on services) considerable disaggregation is introduced in the classification of international services transactions.
The classification of the financial account follows a hierarchical structure for functional categories, asset or liability distinctions, instrument specification, sectorization, and the distinction between long- and short-term instruments. In addition, the classifications underlying the income components of the current and financial accounts and the international investment position are closely aligned to enhance analytic potential.
Despite the extensive revision of the Manual, IMF recommendations for balance of payments compilation maintain a high degree of continuity. Thus, compilers who have been producing statistics that conform reasonably well to the standards established in previous editions should not experience great difficulty in adapting procedures for data collection or in reporting according to the recommendations of the fifth edition. The basic concepts and principles in the Manual remain generally valid and any necessary adjustments may be readily effected within a largely unchanged theoretical framework.
The fifth edition of the Manual was produced by the IMF Statistics Department—primarily through the work of a consultant, Mr. Jack Bame (formerly the associate director for international economics at the Bureau of Economic Analysis, U.S. Department of Commerce), and through close consultation with national compilers of balance of payments statistics and experts from interested international and regional organizations. The reports of the IMF working parties on the Statistical Discrepancy in World Current Account Balances and on the Measurement of International Capital Flows also contributed to the development of the Manual. In addition, an advisory group of IMF staff provided assistance in articulating IMF operational and analytic needs in the area of balance of payments statistics. The members of the group were Mr. Bruce Smith, senior advisor in the Southeast Asia and Pacific Department; Mr. Peter Clark, assistant director in the Research Department; and Mr. Michael Kuhn, division chief in the Policy Development and Review Department. The project was supervised by Mr. Mahinder S. Gill, assistant director for the Balance of Payments and External Debt Division in the IMF Statistics Department. Most of the original drafting was done by Mr. Bame. He also was responsible for subsequent redrafting undertaken to reflect comments received from national compilers and concerned international and regional organizations and to incorporate conclusions that were reached at the meeting of balance of payments experts held at IMF headquarters in March 1992. Through comments on earlier drafts or through drafting of selected chapters and appendices, staff of the Balance of Payments and External Debt Division made specific contributions: Mr. Gill (Chapter 3 and Appendix 1), Mr. Jan Bové and Mrs. Florencia Frantischek (Appendix 4), and Mr. Abul Siddique (Appendix 3). Mr. Clark of the Research Department made a particularly valuable contribution by preparing Appendix V, which addresses selected issues in balance of payments analysis. Ms. Nancy Basham, Statistics Department, edited and coordinated print production and Ms. Suzanna Persaud, administrative staff of the Balance of Payments and External Debt Division, typed the various drafts and the final version of the Manual.
The IMF benefitted immensely from the contributions and comments made by experts who participated in the March 1992 meeting of balance of payments experts. Their deliberations culminated in a set of conclusions that, coupled with further consultation through correspondence, formed the basis for redrafting and finalizing the fifth edition. The IMF staff wishes to acknowledge, with thanks, indebtedness to the following experts in national balance of payments offices and to representatives from regional and international organizations who participated in the meeting and contributed to the preparation of the Manual.
|Australia||Ms. Barbara Dunlop|
|Brazil||Ms. Maria Oliveira Nabao|
|Canada||Ms. Lucie Laliberté|
|Chile||Mrs. Teresa Cornejo Black|
|China||Ms. Wang Lingfen|
|France||Mr. Jacques Cuny|
|Dr. Marc Auboin|
|Germany||Dr. Rudolf Seiler|
|Hungary||Mrs. P. Horvath|
|Iran||Mrs. Mehrangiz Tavassoli|
|Italy||Dr. Antonello Biagioli|
|Japan||Mr. Shinichi Yoshikuni|
|Mr. Takashi Kori|
|Kenya||Mr. Pius P. Kallaa|
|Libya||Mr. Ali Ramadan Shnebesh|
|Mexico||Mr. Jorge Carriles|
|Netherlands, The||Dr. Marius van Nieuwkerk|
|Saudi Arabia||Mr. Mohammed Al-Hakami|
|Mr. Mohanna Al-Mohanna|
|Sweden||Mr. Gunnar Blomberg|
|United Kingdom||Mr. John E. Kidgell|
|Mr. Bruce Buckingham|
|United States||Dr. J. Steven Landefeld|
|Zaire||Ms. Nkobafily Marie Marthe Lebughe|
|EUROSTAT||Mr. J. C. Roman|
|OECD||Mr. Erwin Veil|
|UN||Mr. Jan van Tongeren|
|World Bank||Datuk Ramesh Chander|
John B. McLenaghan
Director, Statistics Department
International Monetary Fund