© 1996 International Monetary Fund
Cataloging-in-Publication Data
Balance of payments textbook.—Washington, DC, USA:
International Monetary Fund, © 1996.
viii, 150 p.
Companion volume to: Balance of payments manual. 5th ed. and Balance of payments compilation guide.
ISBN 9781557755704
1. Balance of payments—Statistics.
I. International Monetary Fund.
HG3882.B342 1996
Price: US$25.00
Please send orders to:
International Monetary Fund, Publication Services
700 19th Street, NW, Washington, DC 20431, USA
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Internet: publications@imf.org
Contents
Foreword
I. The Balance of Payments Conceptual Framework
Definition of the Balance of Payments
Double Entry System
Concept of an Economy
Principles for Valuation and Time of Recording; Unit of Account and Procedures for Conversion
Coverage of the Balance of Payments
II. Residents of an Economy
Definition of Residents
Households and Individuals
Enterprises
Nonprofit Institutions
Government
III. Classifying Balance of Payments Transactions
Structural Overview of the Standard Components
Goods, Services, and Income
Current Transfers
Capital Account
Financial Account
International Investment Position
Standard Components of the Balance of Payments
Selected Supplementary Information
Standard Components of the International Investment Position
IV. Goods
Convention for Recording Change of Ownership
Exceptions to the Change of Ownership Rule
Physical Movement of Goods and the Goods Component
Time of Recording
Valuation
Adjustments to Basic Data
V. Services
Transportation Services
Travel
Other Services
VI. Income
Definition
Compensation of Employees
Investment Income
VII. Current Transfers and the Capital Account
General Information on Transfers
Current Transfers
Capital Transfers
Transactions in Non-Produced, Nonfinancial Assets
VIII. Introduction to the Financial Account
Definition and Coverage
Transactions in Financial Assets
Financial Item Changes to Be Excluded from the Balance of Payments
Net Recording
Valuation and Timing
Classification
Supplementary Classifications
IX. Direct Investment
The Concept of Direct Investment
Motivation for Direct Investment
Defining the Direct Investment Relationship
Direct Investment Capital
Direction of Investment
Valuation
Special Cases
X. Portfolio Investment
Equity
Bonds and Notes
Money Market Instruments
Financial Derivatives
XI. Other Investment
Trade Credits
Use of Fund Credit and Loans from the Fund
Other Loans
Currency and Deposits
Other Assets and Liabilities
XII. Reserve Assets
Reserve Assets and the Adjustment Process
The Relationship Between Reserve Assets and Liabilities
Coverage of Reserve Assets
Transactions with the International Monetary Fund
XIII. The International Investment Position
Balance Sheets and the International Investment Position
The Relationship between the International Investment Position and the Balance of Payments
Calculation of Price and Exchange Rate Changes
Classifying the International Investment Position
Valuation of the International Investment Position
A Practical Example of International Investment Position Compilation
Foreword
The Balance of Payments Textbook (the Textbook) is the second of two companion documents to the fifth edition of the Balance of Payments Manual (the Manual), which was published by the International Monetary Fund in 1993. The fifth edition of the Manual addresses the many important changes that have occurred in international transactions, harmonizes (as closely as possible) balance of payments concepts with the revised System of National Accounts 1993 and other IMF statistical methodologies, and covers the important topic of international investment position statistics. The Balance of Payments Compilation Guide, published by the IMF in 1995, offers practical direction for using established and emerging data sources and applying or adapting a variety of methods to compile statistics for the balance of payments and the international investment position. Publication of the Balance of Payments Textbook completes the trilogy that provides a comprehensive range of information on the compilation of balance of payments statistics and will, it is hoped, make a significant contribution to the understanding of balance of payments issues.
The Textbook is intended as one of the main reference materials for training courses in balance of payments methodology. Such courses may be conducted—under the aegis of the IMF Institute—by the Statistics Department at IMF headquarters in Washington, DC or organized externally. The Textbook is designed to provide illustrative examples and applications of concepts, definitions, classifications, and conventions contained in the Manual and to afford compilers with opportunities for enhancing their understanding of the relevant parts of the Manual.
The Textbook was produced by the IMF Statistics Department under the supervision of Mr. Mahinder S. Gill, assistant director, Balance of Payments and External Debt Division I (BOPED I). The task of drafting and finalizing the Textbook was undertaken by Mr. Peter Harper, an economist in BOPED I. Ms. Nancy W. Basham edited and coordinated print production of the Textbook, and Ms. Suzanna Persaud, administrative staff assistant in BOPED I, typed the final version.
I am hopeful that the Textbook, as part of the comprehensive range of documentation on balance of payments methodology now available, will make a significant contribution to the training of compilers as well as users of balance of payments statistics.
John B. McLenaghan
Director, Statistics Department
International Monetary Fund