Abstract

Aimed primarily at meeting the needs of economists and statisticians, this pamphlet concisely describes the principles underlying the four main sets of macroeconomic accounts statistics, viewed as an integrated system. The four main sets are the national accounts, balance of payments and international investment position, monetary and financial statistics, and government finance statistics. To illustrate the relationships among the sets, the pamphlet covers statistics on transactions, stock data (asset and liability positions), and the linkages between stock data and transactions, as well as some economic statistical series closely related to these accounts.

Aimed primarily at meeting the needs of economists and statisticians, this pamphlet concisely describes the principles underlying the four main sets of macroeconomic accounts statistics, viewed as an integrated system. The four main sets are the national accounts, balance of payments and international investment position, monetary and financial statistics, and government finance statistics. To illustrate the relationships among the sets, the pamphlet covers statistics on transactions, stock data (asset and liability positions), and the linkages between stock data and transactions, as well as some economic statistical series closely related to these accounts.

This pamphlet also takes account of new developments in standards for macroeconomic statistics. The standards for preparing statistics in the four main areas were revised following the publication of the System of National Accounts 1993 (1993 SNA),1 which set out the overarching conceptual framework for all macroeconomic statistics. The 1993 SNA incorporated two significant enhancements: the full integration of stocks (balance sheets) and flows, and a complete sets of accounts covering production, income, consumption, saving, investment, and financial activities for sectors of the economy as well as for the economy as a whole.

Coincident with the publication of the 1993 SNA, the IMF revised the methodology for balance of payments statistics—also broadening its scope to include the international investment position—and published the Balance of Payments Manual, fifth edition (BPM5; IMF, 1993), also in 1993. Subsequently, the IMF developed the methodology for monetary and financial statistics—published as the Monetary and Financial Statistics Manual (MFSM; IMF, 2000c)—and revised the methodology for government finance statistics—published as the Government Finance Statistics Manual 2001 (GFSM 2001; IMF, 2001).

Developed by the IMF in close consultation with country experts and other international agencies, each statistical standard has been recognized as the international standard for the sector. Although the standards have been harmonized with the 1993 SNA, each is also oriented toward important policy variables not covered by the national accounts, such as measures of the balance of payments surplus or deficit, the fiscal position, and money and credit measures. At the time of this writing, the 1993 SNA and the BPM5 are again being updated in harmony to take account of new developments in economic activities and analysis since 1993.2

Standards for macroeconomic statistics are thus not lacking, but the reader can easily be overwhelmed by the very size of the various manuals and sometimes by the language in them. Thus, for purposes of broad exposition of the meaning and uses of macroeconomic statistics, this pamphlet simplifies many concepts. For an understanding of the standards in detail, readers should refer to the relevant statistical manuals or guides.

An important feature of the sets of macroeconomic statistics is the use of the same basic concepts. Thus, before the pamphlet addresses each main macroeconomic account, this introduction describes the features in common. It then concludes with sections on data quality and the practical applications of the 1993 SNA framework.

Common Features of Macroeconomic Statistics

Macroeconomic statistics are aimed at one broad purpose—to serve decision makers—and this purpose can best be accomplished if the statistics are, as far as practicable, mutually consistent. It was with this objective in mind that the IMF revised and harmonized the manuals for the balance of payments, government finance, and monetary statistics with the 1993 SNA.

This section discusses common features of macroeconomic statistics: institutional units and sectors; residence; stocks (assets/liabilities), economic flows, and their integration; accounting rules; and market price valuation and conversion procedures.

Institutional Units and Sectors

The basic building block of macroeconomic statistics is the institutional unit. This section describes the two types of units and the five sectors into which these units are grouped.

Units

National data compilers obtain and combine as statistics the information on economic activities of the institutional unit. An institutional unit is defined as an economic entity capable, in its own right, of owning assets, incurring liabilities, and engaging in other economic activities and transactions with other entities. In other words, an institutional unit is an entity that can act economically on its own behalf and be held directly responsible and accountable for those actions. In particular, on its own behalf, it is able to own assets and incur liabilities. For the unit, data compilers could find a complete set of accounts existing (including a balance sheet), or they would find it possible and meaningful to compile a complete set of accounts for it.

Two main types of entities qualify as institutional units—households and legal and social entities whose existence is recognized independently of the persons, or other entities, that may own or control them.

In the first type, individual members of multiperson households are not treated as separate institutional units because they own many assets jointly, incur liabilities jointly, often pool income, and decide collectively about expenditures for the household as a whole.

The second type of unit comprises corporations, government units, and nonprofit institutions. Corporations produce goods and services for the market and may be a source of profit to their owners, whereas government units primarily produce goods and services on a nonmarket basis. Nonprofit institutions (NPIs) may be market or nonmarket producers but cannot be a source of profit to their owners.3 In much the same way as corporations, some unincorporated entities belonging to households or government units may produce market goods and services. If they have a complete set of accounts, or if it is possible and meaningful to compile a complete set of accounts, statisticians consider them to be quasi-corporations and treat them as corporations.

Sectors

Institutional units are grouped into five mutually exclusive institutional sectors of the economy according to their different economic objectives, functions, and behavior. The sectors are

  • Nonfinancial corporations sector,

  • Financial corporations sector,

  • General government sector,

  • Nonprofit institutions serving households (NPISH) sector, and

  • Household sector.

Among the five, the two sectors of corporations comprise not only corporations but also quasi-corporations and NPIs that are market producers. The general government sector comprises general government units that are not treated as quasi-corporations and nonmarket NPIs that are controlled and mainly financed by government units. The NPISH sector comprises nonmarket NPIs not controlled by government. Finally, the household sector comprises households and their unincorporated enterprises that are not treated as quasi-corporations.

Residence

All macroeconomic statistics relate to an economy—defined to comprise all its resident institutional units. This section defines (1) resident, (2) nonresident, (3) economic territory, and (4) economic interest; it also discusses how institutional sectors relate to residence.

Residents designates institutional units that have a closer tie with the economic territory of the country in question than with any other country. Residence is not based on nationality or currency of denomination; rather, it is based on where the unit’s center of economic interest lies.

As for nonresidents, units that are not residents of the given economy are residents of the rest of the world and are termed nonresidents.

The economic territory of a country consists of the geographic territory administered by a government. Within the territory, persons, goods, and capital circulate freely. It includes airspace, territorial waters, and continental shelf lying in international waters over which the country enjoys exclusive rights or over which it has, or claims to have, jurisdiction with respect to economic exploitation. It also includes territorial enclaves in the rest of the world, such as embassies, consulates, and military bases.

Regarding economic interest, an institutional unit has a center of economic interest within a country when there exists some location—dwelling, place of production, or other premises—within the economic territory of the country from which the unit engages in economic activities significantly, either indefinitely or over a finite but long period. Normally, a one-year rule is applied.

How do the institutional sectors relate to residence?

In relation to the general government sector, a country’s general government units at all levels (central, state, local) are regarded as resident of that country—that is, part of the domestic economy—even when they carry out activities abroad. Thus, any embassies, consulates, military bases, and other general government units located abroad are treated as residents of the home country, as are its nationals assigned to such agencies. Conversely, the embassies, consulates, and so forth maintained by a foreign government in a given country are nonresidents, as are their personnel who are not recruited locally. Similarly, international organizations whose members are governments are treated as nonresidents of the country in which they are located. However, the residency of the staff of an international organization is determined according to the criteria applied to other households in the country.

Regarding the two corporate sectors, a corporation (public or private) is a resident of a country (economic territory) when it is engaged in a significant amount of production there or when it owns land or buildings there, even when the corporation is owned wholly or partly by nonresidents. A branch or subsidiary of a foreign corporation located in a given country, therefore, is regarded as a resident of that country. Conversely, the foreign branches and subsidiaries of resident corporations are regarded as nonresidents. Offshore enterprises are residents of the economy in which the offshore enterprise is located, regardless of whether they are in special zones of exemption from customs or other regulations.

Regarding the household sector, household units may be more difficult to classify as resident or nonresident. A household has residency in a country when it maintains a dwelling in that country that is used by members of the household as their principal residence. Therefore, those who live permanently in a country are regarded as residents, even when they are temporarily abroad—for example as tourists or as business travelers. Similarly, individuals who work abroad but return to the household after a limited period (for example, seasonal workers and border workers) are treated as residents of the economy in which they maintain their household, even if they make frequent journeys abroad over a long period.

Conversely, also regarding households, an individual normally ceases to be a member of a resident household when he or she works abroad continuously for one year or more. The individual is deemed to have changed household, because most of the individual’s consumption takes place in the country where he or she lives or works, and the individual is considered to have a center of economic interest there. Students are treated as residents of their country of origin regardless of how long they study abroad, provided they remain members of households in their home countries.

Stocks, Flows, and Their Integration

Stocks

Stocks, another common feature of the macroeconomic statistics, are economic magnitudes measured at a point in time. That is, they are positions in, or holdings of, assets and liabilities at a point in time. Assets must be owned by an institutional unit and can be expected to provide economic benefit to the owner. The economic benefit may arise through the use of the asset in production (for example, a machine or building) or the generation of income by the asset (interest, dividends, or rent) or the holding of the asset as a store of value.

Stocks are recorded in the balance sheet (Box 1) at the beginning and end of the accounting period. Stocks are to be valued at current market prices on the day the balance sheet is drawn up.

Looking further at assets (either nonfinancial or financial) and liabilities, this section provides examples of financial assets and illustrates the difference between a unit’s total stock of assets and its stock of liabilities—net worth.

Assets, within the systems of macroeconomic statistics, are defined as entities over which institutional units—individually or collectively—enforce ownership rights and from which they can derive economic benefits by holding or using the assets over a period.

Assets are either nonfinancial (such as land, machinery and equipment, and inventories) or financial (generally representing claims of one unit on another), whereas liabilities are financial obligations of one unit to another and are, therefore, the counterpart to financial assets.

Nonfinancial assets include produced assets, such as machinery and equipment, and nonproduced assets, such as land, and also include intangible assets, such as computer software.

Most financial assets involve claims arising from one institutional unit that is providing resources to another unit that must be repaid. The unit providing the resources has a claim (asset), and the unit that must repay has a liability, displaying an asset/liability symmetry.

Typical examples of financial assets/liabilities are currency (an asset for the holder and a liability for the central bank); deposits (an asset for the depositor and a liability for the bank); and loans (an asset for the lender and a liability for the borrower). Securities display the financial asset/ liability symmetry as well. Financial assets also include the ownership of corporations in the form of shares issued by the corporation. The shares are considered to be financial claims of the owners and liabilities of the corporation.

Further examples of financial assets are monetary gold and SDRs (special drawing rights, the IMF’s unit of account), considered assets by convention and used by monetary authorities to settle international payments, although they do not reflect claims on other designated units. Monetary gold consists only of gold held by the central bank or government as part of official reserves. SDRs are international reserve assets created by the IMF and allocated to members to supplement existing official reserves.

Not to be considered as financial assets are some financial contracts, such as guarantees, letters of credit, and loan commitments (conditional on some future event occurring). However, on these contracts, data compilers often find it useful to collect information, because contracts can indicate possible future risks for the units with the commitments.

A detailed discussion of the list of financial assets and liabilities (financial instruments) can be found in Box 2.

The difference between a unit’s total stock of assets (financial and nonfinancial) and its stock of liabilities is defined as net worth. When measuring net worth, analysts include a corporation’s shares and other equity obligations in its stock of liabilities. Therefore, net worth is a different concept from net equity and shareholders’ funds used in commercial accounting.

Flows

Compared with stocks, flows are economic magnitudes measured with reference to a period of time, and they have two types—transactions (further delineated into exchanges or transfers) and other economic flows (further delineated into holding gains and losses and changes in the volume of the asset). Flows fully reflect the change in the value of the stock of an asset or liability during the accounting period. Compilers measure the two types of flows at market prices at the time the transaction or other economic flow takes place.

Balance Sheet

Balance sheets are statements, drawn up at a particular point, showing the values of all assets owned by an institutional unit and the values of all the liabilities of that unit. In the T-account presentation, assets are recorded on the left-hand side of the balance sheet and liabilities on the right. The difference between the total stock of assets and the total stock of liabilities is the net worth of the unit, which is also recorded on the right-hand side of the balance sheet, whether it is positive or negative. Balance sheets for sectors of the economy and the economy as a whole can be compiled from the data on individual units.

Net worth as measured in the macroeconomic accounts should not be confused with net equity (total assets minus total liabilities) as measured in commercial accounting, where liabilities exclude the value of shares and other equity. In the macroeconomic accounts, the stake of shareholders in a corporation is measured through shares and other equity and is included as a liability. Because net worth excludes all liabilities, including the value of shares and other equity, a corporation can have a net worth of its own that is separate from the aggregate stake of the shareholders.

The stock of assets and liabilities recorded in the balance sheet is to be valued at market prices. Sometimes, direct observations are available—such as in prices fetched on the stock exchange. When no direct observations are available, market prices for close substitutes may be used. For fixed assets, balance sheet values are often estimated using a perpetual inventory method, whereby information on acquisitions over many years is accumulated, revalued using appropriate price indices, and amortized using rates based on the expected life of the assets involved. In the case of assets whose returns are spread over a long period, the estimation of net present value of the future returns may be used. The valuation of financial items should include any accrued interest.

Readers should note that the closing balance sheet of one period is identical to the opening balance sheet of the next period. Also, the changes in the holding of assets and liabilities that occur during an accounting period can be fully explained by either transactions or other economic flows (revaluations and other volume changes). In other words, for each asset and liability, the closing balance sheet value is equal to the opening balance sheet value plus transactions plus other economic flows. This identity provides a very useful compilation and analytic tool.

The existence of a set of balance sheets integrated with the flow accounts enables analysts to verify the reasonableness of the statistics by analyzing the components of the change in the balance sheet from one period to the next. It also allows analysts to look more broadly in monitoring and assessing economic conditions and behavior. For example, in determining household behavior, analysts can use wealth variables in consumption and savings functions to capture the impact of these functions; that is, they capture the effects of other flows in assets (such as price fluctuations) and the impact these have on households’ purchasing patterns. Analysts also need household balance sheets to assess the distribution of wealth and liquidity.

Balance sheet data on the level and composition of tangible, intangible, and financial assets are of considerable interest for indicating the economic resources of a nation and for assessing the external debtor or creditor position of a country. Interested parties can analyze changes in the structure of assets and liabilities using balance sheets for different periods—for example, to assess whether infrastructure assets are being adequately maintained or whether the portfolio of financial assets (or debt liabilities) is appropriate. Such information may not be apparent from transactions data and requires details of the stocks of assets and liabilities involved.

Balance sheets in business accounting are likely to differ from the macroeconomic accounts balance sheets in the following ways:

  • Enterprises often value items at historic cost rather than current market prices.

  • The value of fixed capital in enterprise accounts is usually influenced by tax rules on depreciation allowances.

  • Similarly, shares are sometimes valued at nominal or issue prices rather than current market prices.

  • Enterprise balance sheets include provisions for contingent risk that are not included as liabilities in macroeconomic accounts.

Therefore, analysts need to adjust balance sheet data of business accounts before including them in the balance sheet accounts of macroeconomic accounts. For instance, it would be problematic to combine the historic-cost balance sheets of individual units to provide sectoral or economy-wide balance sheets because the valuations used for the assets and liabilities involved would not be consistent.

Financial Assets and Liabilities

All the statistical systems recognize eight categories of financial assets (with or without corresponding liabilities).

  • Monetary gold and SDRs are financial assets by convention, because monetary authorities may use them in settling financial claims. Monetary gold is a financial asset not having a corresponding liability. SDR holdings are treated as financial assets because they represent unconditional rights to obtain foreign exchange or other reserve assets from other IMF members. IMF member countries to which SDRs are allocated are not regarded as having an actual (unconditional) liability to repay their SDR allocations. However, the allocations resemble liabilities, and many IMF member countries show a liability entry in their accounts equal to their original SDR allocations.

  • Currency and deposits comprise the most liquid financial assets. Currency consists of notes and coins of fixed nominal value and generally usable directly for transactions. Currency is issued by central banks and governments. Deposits fall into two broad types—transferable and other deposits (savings, time, fixed). Transferable deposits are exchangeable at par on demand and can be used directly for transactions. Other deposits have some forms of restriction but are often very easily converted into transferable deposits and are therefore close substitutes.

  • Securities other than shares are negotiable instruments that serve as evidence of a unit’s obligations, most often to pay interest and to repay a principal amount at maturity. Securities other than shares may pay a specific amount of interest or may sell at a discount with interest calculated as the difference between the face value and the sale price. Short-term securities, particularly those issued by depository corporations, may be very close substitutes for deposits.

  • Loans are financial claims created when a creditor provides funds directly to a debtor, and the resulting claim is nonnegotiable. Loans generally pay interest that may be fixed or adjustable to changes in a contractually agreed base. Loans may become negotiable, and, in that case, they should be reclassified as securities.

  • Shares and other equities are evidence of ownership of a corporation that gives to the owner claims on the residual value of the corporation after creditors’ claims have been met. Shares and other equity may pay property income in the form of dividends and may be held with the expectation of achieving holding gains.

  • Insurance technical reserves are the liabilities of insurance companies and pension funds to participants. These liabilities include net equity of households in life insurance reserves, net equity of households in pension funds, amounts outstanding but not earned when premiums are prepaid, and amounts reserved for outstanding claims.

  • Financial derivatives are instruments linked to a specific financial instrument, indicator, or commodity. Through them, specific financial risks (such as interest rate risk; currency, equity, and commodity price risk; credit risk; and so forth) can be traded in their own right in financial markets. The value of a derivative instrument derives from the price of the underlying item such as an asset or index. The two broad types of financial derivatives are forward-type contracts and option contracts.

  • Other accounts receivable/payable include trade credit and advances and a wide range of miscellaneous creditor/debtor relationships that do not fall under the other categories.

Transactions are interactions among institutional units by mutual agreement.4 They may be of two kinds—exchanges or transfers.

The first kind of transaction, an exchange, involves one party providing a good, service, labor, or asset to another party and receiving a counterpart in return. For example, a unit may exchange goods and services for a financial asset, or it may receive cash (a financial asset) in exchange for the obligation to repay the cash (a loan liability). Readers should note that in the latter case, the lender has exchanged a financial asset (the cash) for another financial asset (the loan).

The second kind, a transfer, involves one party providing a good, service, labor, or asset to another without receiving anything in return. An example is one government donating food and medical supplies to another in response to a natural disaster. Also considered a transfer is the payment of taxes, even though the taxpayer is able to benefit from the collective services provided by government and funded from tax revenue. This is because no direct link exists between the amount of tax payable and benefits received.

The other type of flow, other economic flows, is all the changes in the stock of an asset (or liability) that do not arise from transactions. The two kinds are holding gains and losses and changes in the volume of the asset.

The first kind of other economic flow, a holding gain or loss, arises when the market price of the asset changes during the period, including changes in the domestic value of assets denominated in a foreign currency when the exchange rate of that currency changes.

The second kind, a change in the volume of an asset, covers a wide variety of events, including the discovery of new natural resources, depletion of sub-soil assets, destruction of assets through natural disaster, and debt write-off.

Integration of stocks and flows

It follows from the above definitions of stocks and flows that the total change in the stock of each asset or liability from the beginning of a period to the end of the period is explained fully by the flows. That is,

Stock (end) = Stock (beginning) + Transactions + Other Economic Flows.

For example, at the beginning of the period a unit has $100 in a bank account. During the period it deposits $30 and withdraws $10, giving a net increase in the bank account of $20 from transactions. If there are no other changes, the stock in the bank account at the end of the period would be $120, representing the stock at the beginning plus the net transactions.

However, the unit may also own an asset with a market price that changes from day to day, such as shares in a corporation. In this case, even without any transactions, the value of the stock of shares is likely to differ at the end of the period from its value at the start because of price changes for the shares. This change in stock values would be recorded not as a transaction but as an other economic flow. In other cases, both transactions and other economic flows may take place during the period, and together they explain the total change in the stock.

This integration of stocks and flows provides a useful check on the accuracy of the data for both stocks and transactions by revealing information on the other economic flows. For instance, analysts could check the size of the revaluations and other volume changes to ensure they are consistent with known economic conditions. Further, because transaction data are sometimes estimated from changes in the stock data, analysts need to exercise care to ensure they or other parties have taken account of any other economic flows that may have occurred during the period.

Accounting Rules

A fourth common feature of macroeconomic statistics is accounting rules. All systems of macroeconomic statistics are based on the double-entry accounting system, whereby the accountants have recorded every flow twice—as a debit entry and as a credit entry. The accounting rule concept also hinges on accrual and cash recording.

Debits and credits

The debit entry refers to the increase in an asset, decrease in a liability, or decrease in net worth (for example, an expense) of the unit. The credit entry refers to the counterpart increase in a liability, decrease in an asset, or increase in net worth (for example, revenue) of the unit.

For example, a household may provide labor to a corporation in exchange for cash. The household unit would record this as a debit entry for the increased cash asset and a credit for its increased net worth (the wages and salaries revenue). Conversely, the corporation would record a credit for the reduction in cash and a debit for the decrease in its net worth (the wages and salaries expense).5

Credits include

  • Sales of goods and services (including exports),

  • Property income receivable,

  • Compensation of employees receivable by households,

  • Transfers receivable (including tax revenue for government),

  • Increases in liabilities,

  • Decreases in nonfinancial assets (including inventories), and

  • Decreases in financial assets.

Debits include

  • Purchases of goods and services (including imports),

  • Property income payable,

  • Compensation of employees payable by employers,

  • Transfers payable,

  • Decreases in liabilities,

  • Increases in nonfinancial assets (including inventories), and

  • Increases in financial assets.

Accrual and cash recording

Units record flows on an accruals basis, and/or a cash basis, in each macroeconomic statistical system. That is, they record them when units exchange, transform, create, transfer, or extinguish economic value, which is not necessarily when the units make payment. The accruals basis ensures consistency of recording among units and over time (as well as from country to country) and can completely cover economic events. On the other hand, a cash basis of recording records events only when cash is received or disbursed; it omits all noncash transactions (such as barter and in-kind transfers).

In many cases, under both accrual and cash recording, the timing will be the same for a transaction, such as the cash payment for the provision of a service. However, in other cases, the timing can differ considerably, such as provision of goods and services on credit or the recording of interest on discounted securities.

If units have not recorded the underlying statistics on an accrual basis, it is important that analysts adjust the statistics, on some estimated basis, to an approximate accrual basis to preserve the internal consistency of the macroeconomic accounts when they are to be fully integrated. Most notably, they may need to adjust for government finance statistics that were compiled on the cash-based system recommended in the earlier publication, A Manual on Government Finance Statistics 1986 (GFSM 1986; IMF, 1986), particularly if significant arrears or borrowing using discounted securities exist.

Market Price Valuation and Conversion Procedures

Finally, another common feature of macroeconomic statistics sets is valuation and conversion procedure. In principle, units should measure all transactions and position (stock) data on the basis of market prices. This means they value transactions at the actual price agreed upon by the parties (in other words, amounts of money that willing buyers pay to acquire something from willing sellers). At the same time, they value the stock of assets and liabilities on the basis of the market prices in force at the time to which the balance sheet relates.

However, units cannot always implement the market price principle. Therefore, the staff who record macroeconomic data may find it necessary to resort to alternative measures or proxies in cases where no actual market prices have been set.

Compiling macroeconomic accounts is also complicated because, initially, units may express the transactions or stocks of assets and liabilities in different currencies. To convert these currencies into the unit of account (normally the domestic currency) adopted for compiling these statements, compilers use the most appropriate exchange rates for conversion purposes—those rates prevailing on the transaction date or those prevailing on the reporting date for valuation of stocks. A rule of thumb recommends the midpoint between buying and selling rates.

This introduction concludes by discussing data quality and the use and practical application of macroeconomic statistics.

Data Quality

Statisticians and economists always have understood the importance of providing or using high-quality statistics. In recent years, international experts have developed formal frameworks to systematically assess data quality by comparing country statistical practices with best practices, including internationally accepted conceptual standards and timely dissemination. One such framework is the IMF’s Data Quality Assessment Framework (DQAF;Box 3), which was introduced in 2001 and updated in 2003 (IMF, 2003).

Use and Practical Application of Macroeconomic Statistics

Macroeconomic statistics are essential for evaluating a country’s economic performance and for making cross-country and multilateral comparisons. They also provide the framework for planning, formulating, and monitoring the implementation of economic and budgetary policy. Further, they serve the needs of market participants through providing timely and transparent information.

Two examples of the use of the integrated macroeconomic accounts in the IMF’s surveillance activities are the financial programming (FP) exercise and, more recently, the balance sheet approach (BSA) to macroeconomic analysis.

Data Quality Assessment Framework

The Data Quality Assessment Framework (DQAF; IMF, 2003) brings together a structure and common language for best practices and internationally accepted concepts and definitions in statistics, including those of the United Nations’ Fundamental Principles of Official Statistics (UN, 1994) and the IMF’s Special Data Dissemination Standard (SDDS; IMF, 2007a) and the General Data Dissemination System (GDDS; IMF, 2007b). The DQAF identifies quality-related features of governance of statistical systems, statistical processes, and statistical products. The DQAF is organized around a set of prerequisites and five dimensions of data quality—assurance of integrity, methodological soundness, accuracy and reliability, serviceability, and accessibility. The generic DQAF serves as the umbrella for the specific frameworks for the data sets. The IMF has developed the DQAF for seven macroeconomic data sets: national accounts, consumer price index, producer price index, external debt, government finance, monetary, and balance of payments.

The DQAF has proven to be valuable to at least three groups of users. First, it has guided the IMF staff on using data in policy evaluation, preparing the data module of Reports on the Observance of Standards and Codes (ROSCs), and designing technical assistance. Second, it has guided country efforts to evaluate shortcomings in the compilation of statistics, including in preparing self-assessments. Third, it has guided data users in evaluating data for policy analysis, forecasts, and economic performance.

Under the FP exercises, analysts evaluate the linkages between the main macroeconomic accounts of an economy to assess the impact of exogenous shocks and to formulate appropriate policy responses to achieve specified goals (stabilization, growth, and so forth), including by preparing alternative prospective scenarios for the medium term.

The BSA, on the other hand, exploits information from sectoral and national balance sheets to examine the countries’ vulnerabilities, including vis-à-vis nonresidents. In essence, the BSA focuses on identifying and analyzing the vulnerabilities of an economy to financial and economic shocks through the evaluation of the balance sheets of its key institutional sectors. Using this approach, analysts evaluate the (1) financial position of the economy’s key institutional sectors; (2) possible mismatches in maturity, currency, and term structure of assets and liabilities; and (3) potential propagation of sectoral weaknesses owing to linkages among balance sheets of different sectors. Vulnerability indicators point to potential risks that could trigger liquidity and solvency problems at times of stress. The financial crises of the late 1990s underscored the importance of balance sheet data as critical elements for vulnerability analysis.

The following chapters address each main macroeconomic account—the national accounts, balance of payments and international investment position, monetary and financial statistics, and government finance statistics—and the linkages reflecting the common features across the systems.