28 Principles of Valuation and Reconciliation Items in the IMF's Money and Banking Statistics and A System of National Accounts

Abstract

The presentation of economic accounts of the institutional sectors of the economy in the form of balance sheets is essential to economic and financial analysis because it provides a systematic record of the stocks of real and financial resources that are available to the respective sectors and that affect their economic decisions.1 Although the balance-sheet framework provides a basic structure for monitoring and forecasting the behavior of various economic transactors on the basis of existing patterns of wealth and indebtedness, it is also useful for deriving data on the flow of transactions over time in the absence of independent sources of data on flows. By comparing the values of the same balance-sheet item at different time periods, it is conceptually possible to ascertain the magnitude of transactions that have occurred during any given time period. In reality, however, changes in the values of most balance-sheet items will be affected by both variations in price and in quantity, and the impact of pure price changes, regardless of origin, must first be isolated before it is possible to proceed to determine flows of economic and financial activity. In the United Nation's A System of National Accounts (SNA), and as specified in the Provisional Guidelines,2 these valuation adjustments are recorded separately in a supplementary set of accounts that comprises all reconciliation-type items. The Fund's Money and Banking Statistics (MBS) records the counterparts of these price changes or valuation adjustments as items of net worth or in the capital accounts.3

Author: Vicente Galbis