Introduction

651. Transfers are offset items required to balance unilateral transactions in which one economic entity provides a real resource, such as goods or services, or a financial item to another entity without receiving any real resource or financial item in exchange. Transfers, according to the BPM, should be classified as capital or as current. Capital transfers are those that:

• transfer ownership of a fixed (capital) asset;

• are linked to acquisition or disposal of a fixed asset;

• involve forgiveness of a liability by a creditor.¹⁴⁰

652. Current transfers, which are all transfers that are not capital, are the subject of chapter 14 of this Guide.

653. Capital transfers are classified as transfers involving the compiling country’s general government and transfers involving other domestic sectors. The former are subdivided into debt forgiveness and other transfers, and the latter are subdivided into migrants’ transfers, debt forgiveness, and other transfers.

654. Table 15.1 shows the primary types of capital transfers and summarizes sources and methods that could be used to compile appropriate entries in the BOP. A subsequent section of this chapter provides further details on data sources and methods.

Table 15.1

Compilation of Capital Transfer Items

Table 15.1

Compilation of Capital Transfer Items

Item Number	Description			Source and Method of Compilation
x401	General government
x402		Debt forgiveness		Data on credits and debits should be available from official sources, such as records of the debt management office.
x410		Other transfers
			Investment grants	For the donor country (debits), data should be available from official records. For the recipient country (credits), data could be available from official records, partner country data (surveys of embassies and international institutions), or DAC data. Data on the cash component could also be available from an ITRS.
			Other capital transfers	Data could be available from official records or, for transfers in the form of cash, from an ITRS.
x430	Other sectors
x431			Migrants’ transfers	Data on amounts of cash transferred could be available from an ITRS. Data on goods transferred could be available from ITS. Alternatively, these data, as well as information on migrants’ external assets and liabilities, could be obtained from surveys of migrants. Partner country are another source of information, particularly in the case of debits. ES of banks and other financial institutions are other possible sources.
				Entries recorded under migrants’ transfers should equal the net worth of migrants at the time of their migration.
x432			Debt forgiveness	Data could be obtained from surveys of enterprises with external assets and Labilities or from a supplement to an ITRS.
x440			Other	Data could be available from an ITRS or from surveys of enterprises—particularly private aid agencies.

View Table

Table 15.1

Compilation of Capital Transfer Items

Item Number	Description			Source and Method of Compilation
x401	General government
x402		Debt forgiveness		Data on credits and debits should be available from official sources, such as records of the debt management office.
x410		Other transfers
			Investment grants	For the donor country (debits), data should be available from official records. For the recipient country (credits), data could be available from official records, partner country data (surveys of embassies and international institutions), or DAC data. Data on the cash component could also be available from an ITRS.
			Other capital transfers	Data could be available from official records or, for transfers in the form of cash, from an ITRS.
x430	Other sectors
x431			Migrants’ transfers	Data on amounts of cash transferred could be available from an ITRS. Data on goods transferred could be available from ITS. Alternatively, these data, as well as information on migrants’ external assets and liabilities, could be obtained from surveys of migrants. Partner country are another source of information, particularly in the case of debits. ES of banks and other financial institutions are other possible sources.
				Entries recorded under migrants’ transfers should equal the net worth of migrants at the time of their migration.
x432			Debt forgiveness	Data could be obtained from surveys of enterprises with external assets and Labilities or from a supplement to an ITRS.
x440			Other	Data could be available from an ITRS or from surveys of enterprises—particularly private aid agencies.

Data Sources

655. For capital transfers involving the compiling country’s general government sector, the preferred source of information—for both debits and for credits—will typically be official records (described in chapter 8). However, surveys of embassies and international institutions and DAC data could be used, either as primary sources or as checks on official data, in the compilation of certain credit entries.¹⁴¹

656. Migrants’ transfers are among the more difficult items to record correctly in the BOP. (The BOP treatment of migrants’ transfers is outlined in paragraphs 663–665.) Often, such transfers can be measured properly only by use of information from several sources. Information on cash transferred by migrants could be obtained from an ITRS or from ES of banks and other financial institutions. Information on goods transferred by migrants could be obtained from ITS. Financial assets and liabilities (such as bank accounts retained in migrants’ countries of origin) not actually transferred at times of migration are often difficult to measure. Compilers in some countries conduct, at least on an ad-hoc basis, surveys of immigrants to measure these items. Compilers in migrants’ countries of origin may be able to review bank records and similar documents to detect changes of address indicating migration. Alternatively, BOP statistics of partner countries could be analyzed.¹⁴²

657. For debt forgiveness associated with other sectors, an enterprise survey of the principals involved could be a source of information. In countries that use ES to measure transactions in, and stocks of, external assets and liabilities, a question relating to debt forgiveness could easily be included. Alternatively, information could be obtained via a supplement to an ITRS. However, use of an ITRS would presume that relevant enterprises are aware of the obligation to provide information on what constitutes noncash transactions.

658. Significant other capital transfers of the nongovernment sector are likely to be relatively few in number and fairly easy to identify. Information on those involving cash could be obtained from an ITRS or, alternatively, the principals involved in those transactions could be surveyed.

Estimation in the Absence of Data

659. For most capital transfer entries, it should be possible to obtain source data of high quality. However, for some items (most notably, migrants’ transfers), it may be necessary to develop estimates by using data models.

660. Migrants’ transfers can be estimated by multiplying numbers of migrants by per capita estimates of net worth. Information on numbers of migrants should be available from migration statistics, which are discussed in chapter 7. Data on the net worth of migrants could be obtained from periodic benchmark studies based on the types of sources described in paragraph 656. These benchmark estimates could be adjusted for inflation, exchange rate variations, and any other relevant factors. Development of a data model for estimating migrants’ transfers is comparable to that of the worker remittance data model described in paragraphs 639–640 of the previous chapter.

Extrapolations and Projections

661. When timely data are not available, estimates of transfer items will have to be extrapolated on the basis of historical trends and any other relevant information that may be available. For example, changes in numbers of migrants could be used to extrapolate migrants’ transfers. The compiler should exercise caution in extrapolating certain other capital transfer items as many—in particular, debt forgiveness—exhibit “lumpy” behavior over a period of time. In these cases, the compiler may prefer to obtain actual data on significant transactions.

662. For projections, the compiler could use historical trends and supplementary information (obtained from principals) on significant transactions that are expected. For example, the compiler should consider budgetary forecasts for projections of certain components of official transfers, such as investment grants. Also, any changes in government policy (for example, a decision to restrict the number of immigrants in future) that may affect capital transfer items should be considered when projections are developed.

BOP Treatment of Migrants’ Transfers

663. The following example illustrates the BOP treatment of migrants’ transfers. A resident of country B migrates to country A. Immediately prior to migration, this person’s assets and liabilities consist of:

Assets
Bank account in country B	100
Goods	200
Shares in enterprise in country B	50
Bonds issued by enterprise in country C	25
Total assets	375
Liabilities
Loan from bank in country B	125
Net worth	250
Total liabilities and net worth	375

View Table

Assets
Bank account in country B	100
Goods	200
Shares in enterprise in country B	50
Bonds issued by enterprise in country C	25
Total assets	375
Liabilities
Loan from bank in country B	125
Net worth	250
Total liabilities and net worth	375

664. At the time of migration, the person transferred funds (in the form of foreign exchange) from the bank account in country B to a bank account in country A and moved the goods from country B to country A. For the period in which the migration occurred, the following entries would be required in the BOP of country A:

			Credit	Debit
Current account—goods			…	200
Capital account—migrants’ transfers			250	…
Financial account
	Portfolio investment—assets
		Equities	…	50
		Bonds	…	25
	Other investment
		Assets—currency and deposits	…	100
		Liabilities—loans	125	…

View Table

			Credit	Debit
Current account—goods			…	200
Capital account—migrants’ transfers			250	…
Financial account
	Portfolio investment—assets
		Equities	…	50
		Bonds	…	25
	Other investment
		Assets—currency and deposits	…	100
		Liabilities—loans	125	…

665. The value of the migrant transfer entry is equal to the net worth of the migrant at the time of migration. In the BOP of country A, entries are recorded for the migrant’s holdings of shares in country B and bonds in country C and for the migrant’s loan from the bank in country B; the entries are recorded even though these assets and liabilities did not generate any actual transfer of funds to country A at the time of migration.