THE USEFULNESS OF AN AGREED STANDARD presentation for balance of payments statistics has been recognized since data were first organized into systematic accounts that provided the possibility of international comparisons. In the earliest presentations the form depended almost entirely on what scanty materials were available as a measure of a country’s international transactions; different systems were elaborated in individual countries on the foundation of what was at first possible. Unifying tendencies were first brought to bear by the League of Nations Secretariat, and the International Monetary Fund has inherited this segment of its international responsibilities. The League’s standard schedule for balance of payments reporting gained general acceptance and was a precursor of the Fund’s Balance of Payments Manual in its successive editions, prescribing a set form in which figures should be compiled. The results have been published by both the League and the Fund in yearbooks designed to make the statistics available in the standardized form.


THE USEFULNESS OF AN AGREED STANDARD presentation for balance of payments statistics has been recognized since data were first organized into systematic accounts that provided the possibility of international comparisons. In the earliest presentations the form depended almost entirely on what scanty materials were available as a measure of a country’s international transactions; different systems were elaborated in individual countries on the foundation of what was at first possible. Unifying tendencies were first brought to bear by the League of Nations Secretariat, and the International Monetary Fund has inherited this segment of its international responsibilities. The League’s standard schedule for balance of payments reporting gained general acceptance and was a precursor of the Fund’s Balance of Payments Manual in its successive editions, prescribing a set form in which figures should be compiled. The results have been published by both the League and the Fund in yearbooks designed to make the statistics available in the standardized form.

THE USEFULNESS OF AN AGREED STANDARD presentation for balance of payments statistics has been recognized since data were first organized into systematic accounts that provided the possibility of international comparisons. In the earliest presentations the form depended almost entirely on what scanty materials were available as a measure of a country’s international transactions; different systems were elaborated in individual countries on the foundation of what was at first possible. Unifying tendencies were first brought to bear by the League of Nations Secretariat, and the International Monetary Fund has inherited this segment of its international responsibilities. The League’s standard schedule for balance of payments reporting gained general acceptance and was a precursor of the Fund’s Balance of Payments Manual in its successive editions, prescribing a set form in which figures should be compiled. The results have been published by both the League and the Fund in yearbooks designed to make the statistics available in the standardized form.

League of Nations’ Balances of Payments, 1924–48

Uniformity in balance of payments reporting got its start under the auspices of the League of Nations Secretariat in 1922–23, when the League began collecting balance of payments statistics from governments that had the information available. The results were published in 1924 in the League’s Memorandum on Balances of Payments and Foreign Trade Balances in two parts: the first covered balance of payments statistics and the second trade account statistics. In that year, to prepare for a second volume, the League sent each government a schedule containing detailed categories of international transactions in the hope that the governments would present their balance of payments statements in that standard form. Only a few countries were already compiling official balance of payments statistics at that time, and the League’s action encouraged both the compilation of such statistics and the uniformity of their presentation.

The League’s first published Balances of Payments gave statistics for 13 countries: Argentina, Australia, British India, Denmark, Finland, Italy, the Netherlands, Norway, South Africa, Sweden, Switzerland, the United Kingdom, and the United States. Today, after some 40 years, the list exceeds 80 countries, whose statistics appear in the Fund’s Balance of Payments Yearbook. In the League’s Balances of Payments the presentation of the figures was by no means uniform, and the coverage of international transactions was incomplete; but the existence of those statistics, accompanied by explanatory notes, encouraged the League Secretariat to issue its own reporting schedule, the first international standard for balance of payments presentation.

It is interesting to compare the early form (1931) of the reporting schedule (Appendix I, p. 561) with the basic presentation used by the International Monetary Fund today. In the volume published by the League, the treatment of two key items, gold and foreign exchange, as well as net errors and omissions, differed greatly from the present-day treatment. The absence of a separate category of donations, or “transfer payments” as they are now called, may also be noted. For the rest, however, there are the familiar categories of merchandise, interest and dividends, other current items, and capital items.

In the League’s standard schedule, gold exports and imports (for whatever purpose) were recorded as the item next in sequence to merchandise exports and imports, while foreign exchange holdings formed an unidentifiable part of short-term assets and liabilities. Those short-term capital items occupied a final position in the table, which now tends to imply a “financing item”; then, its position at the bottom of the table seemed to have more the implication that the figures had been obtained, at least in part, as a residue when the other parts of the accounts failed to balance. It soon became more usual in the League’s published statements for individual countries to identify at least the officially held short-term assets abroad, and to show “other short-term capital” as a residual item, often footnoted as “including net errors and omissions” or as having been “interpolated as balancing accounts.”

By the time the League published its last volume of Balances of Payments (in 1948 and covering 1939–45), it had moved gold transactions in the reporting schedule to a position below goods and services but above capital transactions, thus forming a sort of intermediate account in a position somewhat like that of transfer payments in the Fund’s presentation today. Changes in earmarked gold were included, as well as the amounts of gold physically exported and imported.

In certain individual country tables published in Balances of Payments, gold movements (other than private imports and exports of gold) were grouped with foreign exchange reserves among the capital items. For Argentina, for example, there was a “movement of gold and foreign exchange,” which was footnoted: “The statements published by the Banco Central are arranged so as to make the amounts entered against this item emerge, with reversed sign, as a final ‘net balance’ of the whole account.”

The League of Nations encouraged uniformity of reporting, but it published uniform statements only for those countries that reported their figures in that way. For other countries, it published the balance of payments in whatever form the figures had been submitted. Some forms were incomplete versions of the League’s schedule; some anticipated later presentations of the balance of payments. Thus, in the example of the Argentine section cited above, the concept of financing a deficit by a movement in official reserves of gold and foreign exchange is clearly established. That basic concept is fundamental in the Fund’s Yearbook approach, although with successive modifications it developed from one of reserve movements forming the nucleus of “official compensatory financing” to one which included reserves in “official and banking short-term assets,” and more recently to a presentation of reserves as the nucleus of “monetary institutions’ assets” or “monetary movements.”

Because the attempt to achieve uniformity was only partly successful, the usefulness of the figures in the League’s publications is severely limited. Aggregations by areas, or for the whole world, are possible only for certain items and not for the entire balance of payments, and it is not easy to use even the later volumes of the League of Nations’ series for making international comparisons.

By 1938 the League had commenced a study to improve the standard form of presentation and to bring about greater uniformity in balance of payments statistics. That work was interrupted in 1939 and was not resumed until 1945, when a meeting of balance of payments experts was convened in Princeton, New Jersey (as a League of Nations subcommittee). It prepared a Note on Balance of Payments Statistics, much of which was incorporated in the first International Monetary Fund reporting schedules for balance of payments statistics and was published in January 1948 in the Balance of Payments Manual.

International Monetary Fund’s Balance of Payments Yearbook

The International Monetary Fund took over the League of Nations’ interest in balance of payments statistics, together with many of the suggestions that the League already had under consideration for greater uniformity and improved presentation of the statistics. The Fund’s first Balance of Payments Yearbook, published in 1949, presented figures that had been obtained from some 50 countries, most of which had reported the statistics on a standard schedule (Appendix II, p. 564), and the presentation was uniform in the basic table for each country. Special presentations, conceived within the Fund rather than nationally, were appended for each country and entitled “Financing of International Transactions.” Area summaries in various forms could now be made: Volume I of the Yearbook contained summary tables for Europe and for Latin America. National official publications with their idiosyncratic presentations were disregarded, and—at least superficially—international comparisons could be made between any of the countries included in the Yearbook.

The present standard form recommended by the Fund is set forth in considerable detail in the third edition of the Balance of Payments Manual, issued in July 1961 after a series of discussions with balance of payments statisticians in member countries (Appendix III, p. 566). It can be said to represent a consensus, although the participants in the discussions were aware that many countries—even their own—would be unable to provide all the desired details. Unlike previous standard presentations, the one recommended in the 1961 Manual was integrated with the standard form for national accounting.

Nationally Published Balance of Payments Presentations

Many countries ceased publishing balance of payments statistics during World War II. After the postwar reorganization they were able to supply the Fund with details that had not previously appeared in their reports to the League or in their own published figures. Later, some countries began to publish their figures almost exactly in the Fund’s form (e.g., Cyprus, Ecuador, Italy, and Japan), but most of them used individual presentations differing widely from one another and from the Fund’s standard.

The existence of an internationally accepted standard form for reporting balance of payments transactions has nevertheless strongly influenced national publications, even though few countries have adopted it outright. The French presentation of their balance of payments in their annual publication is close to the form recommended by the Fund (with a few variations in the grouping of items). Germany’s balance of payments is published with items grouped differently and in a different order, but by and large the statements can be readily rearranged in the Fund’s form. The presentations published by the United States and the United Kingdom are a little further away from the Fund’s standard, but after a rearrangement of the order of the items, the only remaining significant differences are in the complex categories of the monetary liabilities of these two reserve centers.

All Fund members have an obligation to report balance of payments information to the Fund; in practice, they report at least once a year and often quarterly or semiannually. At these times, national statistics have to be rearranged in the Fund’s form, and for many countries this has exerted a continuing influence on the form of national publication. The United Kingdom, for example, has made changes almost every year, both in its own presentation and, to an even greater extent, in the figures it reports to the Fund, each time moving closer to the Fund’s scheme for balance of payments presentation.

Generally, the frequency of publishing balance of payments figures has advanced from annually to semiannually, quarterly, and now even monthly. Two decades ago, few countries made quarterly figures available. Today, Canada, France, Germany, Italy, Japan, Pakistan, the United Kingdom, and the United States publish detailed quarterly statements; other countries publish quarterly summaries (Australia, Ceylon, India, the Netherlands, and South Africa) or make quarterly details available to the Fund (Israel, Korea, and Portugal).

Within the last year, Japan has enlarged the scope of its published balance of payments to cover a monthly presentation under the Fund’s principal balance of payments headings. The only other country that provides an equally detailed balance of payments, month by month, in official publications is Germany.

It may also be worthwhile to mention the existence of published statistics on foreign exchange transactions. In these, the exchange record is summarized and published monthly (e.g., in Austria, Brazil, Greece, Italy, Korea, New Zealand, Spain, and Yugoslavia). Although these summaries do not provide complete balance of payments statements, they do furnish some up-to-date raw material that is useful for establishing current trends.

Idiosyncracies of Balance of Payments Presentation

This section refers to the figures in the Fund’s Balance of Payments Yearbook. It lists, by each of the main categories used for classifying the balance of payments, the more important divergences from the standard classification recommended in the Fund’s Manual. Any deviations from the standard classification that affect the Yearbook figures may also be assumed to be present in the figures published nationally. No systematic attempt is made to list all of the deviations to be found in national publications; such a list would be overwhelmingly long, and much of it would consist of subvariants of the British, French, and Indian systems, which have been variously copied and adapted by the countries originally within one of those three spheres of influence. The British influence is renewed annually at the Commonwealth statisticians’ conference in London; the French presentation can be seen in the reports and publications sent to the Fund by Cambodia, Ivory Coast, Morocco, Tunisia, and Viet-Nam; and many common features remain in the balance of payments methods used by Burma, Ceylon, India, and Pakistan.

1. Merchandise, c.i.f. or f.o.b.

One area of the balance of payments—the transactions in merchandise, freight, and insurance—has not been standardized in the Fund’s scheme. Mainly for reasons of statistical necessity, the Balance of Payments Manual provides the alternatives of an f.o.b. or c.i.f. basis for reporting, although preference is given to the former, which would provide internationally comparable figures for exports and imports.

The principal countries that use the c.i.f. method of reporting imports are Argentina, Ceylon, Chile, Finland, Greece, India, Iran, Iraq, Ireland, Ivory Coast, Sweden, Switzerland, the United Arab Republic, and Yugoslavia, while the Sudan has a “double-c.i.f. basis” with both exports and imports valued in that way. Countries that have recently changed from a c.i.f. to an f.o.b. valuation of imports include Austria, Burma, the Republic of China, Haiti, Israel, Tunisia, and Uruguay.

At times some countries have changed their basis of reporting from f.o.b. to c.i.f. Before 1961, Belgian imports were valued f.o.b. but now are partly ci.f. Although Nigerian imports were originally reduced to an f.o.b. valuation by a 10 per cent deduction, this deduction was held to be too arbitrary to be continued; and since 1962, Nigeria’s balance of payments has been published on a c.i.f. basis.

Countries deriving their import totals from exchange control sources may expect to obtain figures that are mainly c.i.f. but partly f.o.b. An example is the group of nations that inherited their statistical methods from British India—Burma, Ceylon, India, and Pakistan. At present, Pakistan transfers to the freight item an estimated percentage of the value of imports c.ii. to arrive at an approximate f.o.b. valuation; Burma made methodological changes in 1964 to arrive at import totals that are mainly f.o.b. rather than mainly c.i.f.; Ceylon makes rough adjustments to arrive at a fully c.i.f. basis; and India continues to issue balance of payments figures with imports mainly ci.f.

In the Balance of Payments Yearbook, import totals that have been reported as f.o.b. but are known to have been obtained by deduction of an arbitrary percentage for freight and insurance, are noted to that effect: for example, Bolivia (15 per cent), Costa Rica (10 per cent), Cyprus (10 per cent), Ethiopia (11 per cent), Nicaragua (15–20 per cent), Saudi Arabia (10 per cent), Turkey (12 per cent), and Venezuela (13.5 per cent). In the absence of other information, statisticians often made a rough-and-ready adjustment to reduce c.i.f. imports to f.o.b. by deducting 9 or 10 per cent for freight and 1 per cent for insurance. To act on this convention may do no great violence to the balance of payments: it merely transfers the amounts from the merchandise item to the freight item, leaving the balance on goods and services unchanged.

As merchandise is usually a dominating category in the balance of payments, every country has made efforts to adjust its data to the standard balance of payments basis for coverage and for timing, as well as for valuation; and improvements are constantly being made. Australia has recently eliminated the amounts of migrants’ personal effects from its merchandise totals; Iran has found a firmer basis for its merchandise statistics in the trade accounts and no longer uses the exchange record; the United Arab Republic now records imports under long-term credits at the actual time of importation instead of at the time of the maturity of the credit. These are a few typical instances of recent moves toward standardization.

2. Nonmonetary gold

Statistics on nonmonetary gold are of special interest at a time when international liquidity is still greatly dependent on gold, especially when much gold is disappearing into private hoarding. This latter aspect of nonmonetary gold transactions, however, is only meagerly covered in official balance of payments reports. For certain Middle Eastern and Asian countries, the entries are negligible or nonexistent, despite the probability that these areas are recipients of large amounts of smuggled gold. In Pakistan, only the amounts of gold that are intercepted and added to State Bank holdings are recorded. France reported gold-market transactions separately for 1958 and 1959, but since then the figures have been merged with those for miscellaneous short-term capital transactions of the private nonmonetary sectors. Although “British” gold sovereigns have been minted in Italy, the Italian balance of payments has had no entries for nonmonetary gold corresponding to the profits presumably made on this operation. Most of the nonmonetary gold debits appearing in balance of payments reports represent official sales to industry and amount to a few millions out of some half billion U.S. dollars’ worth of gold unaccounted for in each year.

On the other hand, figures for gold production are virtually complete in the balance of payments reports of the gold-producing countries, where they appear as credit entries. The understatement of the debit entries for nonmonetary gold in the Fund’s Yearbook, noted above, is mitigated only by the absence of figures for certain gold producers, particularly the U.S.S.R. with its occasional large sales of gold in Western markets. Since mid-1965 there has been an additional small gap in the information available, as figures for Rhodesian gold production are no longer published.

3. Freight

Freight transactions are reported so diversely from country to country that it is one of the most difficult categories for international comparison. Not only are there alternative ways of reporting (on either an f.o.b. or a c.i.f. basis), but many countries do not attempt to distinguish between freight and other transportation transactions, while others analyze their transportation accounts under nonstandard headings.

Major countries that do not distinguish all their freight transactions are Austria, France, Greece, the Netherlands, Norway, Switzerland, and the United Arab Republic. The Netherlands and Norway have full details of the net earnings of their national fleets but have not yet developed their statistics to the point of providing the details required for the standard balance of payments presentation.

In recent years, freight estimates have been much improved in the statistics prepared by Australia, Belgium, Ireland, and the United Kingdom, as a result of the identification of additional subcategories. This improvement has made possible a more precise analysis of the totals of transportation transactions into their elements of freight and other transportation.

4. Insurance

Experience in balance of payments compilation has undoubtedly been that insurance companies’ books are ill adapted to the extraction of information on international transactions, whether in merchandise insurance or in other classes of insurance. Simply in order to make use of the available information, the compilers of national statistics have variously employed the following eccentric forms of presentation that can be found in the Yearbook:

(1) To assume that merchandise insurance transactions are in balance and therefore to omit them (Canada and the United States).

(2) To estimate net figures for merchandise insurance and include them unidentifiably with other insurance in “other services” (the United Kingdom) or with transportation (Australia).

(3) To estimate all classes of insurance and include the total with that for transportation (France).

(4) To employ exchange record data and thereby include net cash remittances of agencies (inward or outward) rather than the actual transactions presumed to give rise to the remittances (Burma and Cambodia).

In addition, the user of the Yearbook must remember that some merchandise insurance is presented on the c.i.f. basis, and also that import insurance claims received from abroad may be (or, at least, should be) omitted, and claims paid by domestic insurance companies to residents should be entered as a debit, when goods shipped at the risk of the importer and subsequently lost are not included in the import total (see the Japanese section of the Yearbook).

5. Travel

Travel figures are always in the public eye and receive more than their due share of attention. Legislators and government officials are likely to express great concern over national travel expenditures, yet those expenditures are a rather small part of any country’s total current payments abroad. On the receipts side, the item is more important for the major tourist countries; however, estimates are obviously difficult to compile and are often of doubtful accuracy. In many countries, the exchange record contradicts estimates based on statistics of tourists entering the country, either because travelers prefer to get foreign exchange from unofficial sources or because estimates of per capita expenditure are wrong. With the figures under constant scrutiny, considerable revisions have been made over the years, particularly in Belgium, Bolivia, Canada, Chile, Mexico, Spain, and the United Kingdom. A comparison of alternative estimates of travel receipts in the United Arab Republic has led the statisticians in that country to the temporary expedient of merging their published estimates of travel receipts with those for other invisible earnings.

Useful progress has been made by comparing travel receipts and payments between partner countries. The U.K. statisticians obtained such information from a number of the European countries, and the U.K. estimates now use the Irish figures for travel debits and credits between Ireland and the United Kingdom. In Mexico the revision of the Mexican estimates of “border travel,” undertaken in 1962, reduced their figures and brought them closer to the corresponding estimates published by the United States for Mexican border travel, although the Mexican figures may still include some earnings and expenditures of border workers.

In most countries, progress is being achieved, and today travel statistics can be quoted with rather more confidence than, say, a dozen years ago.

Some latitude is offered in the Balance of Payments Manual for including passenger fares in travel figures instead of in “other transportation,” but only a few countries do so (e.g., Austria, Canada, Chile, Ireland, Switzerland, and Yugoslavia). Belgium now classifies passenger fares in the standard way, under transportation, although until recently they were included in travel.

6. Investment income

The main divergence from the Fund’s recommended presentation of investment income transactions has been the omission of undistributed earnings, usually for lack of information. This is an important omission from both the French and the German statistics; the former includes some of such earnings but probably only a small part of the total. U.K. statistics advanced from token coverage to full coverage some years ago. U.S. and Canadian statistics omit undistributed earnings from their national balance of payments publications; nevertheless, the United States compiles such figures, and they are brought into the Fund’s presentation of the U.S. balance of payments. The Canadian estimates are considered by their national statisticians to be too rough for incorporation in balance of payments statements and are shown as a memorandum item only. India is typical of countries that depend on the exchange record and therefore have no information on reinvested earnings, although considerable progress is being made toward the compilation of adequate statistics drawn from other sources.

In certain national presentations of the balance of payments, investment income is not entered as a service and is shown below “other services” in the British, Dutch, and Norwegian versions of their own balance of payments statements.

Another divergence of treatment recently adopted by Australia for its own official balance of payments publication is the inclusion of patent and royalty payments with investment income. The amounts are made available to the Fund and are reclassified as “other services” for the standard presentation in the Fund’s Yearbook. Puerto Rico’s locally published balance of payments uses the same presentation for “rents and royalties,” and a similar correction is made for the Yearbook.

7. Government transactions, not included elsewhere

Government transactions are naturally more likely to be accurately recorded in the national balance of payments than private transactions, and the principal known asymmetry in this area results from the British practice of including only the transactions of its own Government and not those of foreign governments under the government heading in its own publications. Certain transactions in the United Kingdom by foreign governments are identified, however, and are appropriately reclassified for the Fund’s Yearbook. Similarly, in the balance of payments statements published by the United States, the government heading covers the U.S. Government only; for the Yearbook the transactions of foreign governments are brought into this item. In the U.S. balance of payments, the current receipts and expenditures of the U.S. Government are all included in “Government, n.i.e.” 1 and are not classified as exports, freight, or travel.

It is, of course, more difficult to keep track of expenditures by other governments in one’s own country than of the foreign expenditures of one’s own government, and foreign governments’ diplomatic and consular expenditures may sometimes be omitted. The most difficult transactions to estimate are probably technical assistance services which may have been granted under aid programs and are not paid for in cash.

A major series of government transactions between Germany and the United Kingdom were classified asymmetrically. The German special contributions to the United Kingdom in 1959 and 1960 for troops in Germany were classified in the German balance of payments as inter-government transfer payments (Yearbook item 10), but in the U.K. statistics they were included as a deduction from the debits for military services (item 7). The item numbers correspond to those in Appendix III.

Minor misclassifications of government expenditure are common in the balance of payments (even for the compiler’s own government’s transactions) where the individual amounts are small, and it has not been thought worthwhile to separate and reclassify government expenditure abroad as merchandise, freight, travel, pensions, or contributions to international bodies, any or all of which may be left in “Government, n.i.e.” Examples of countries whose statistics may be affected by more than minimal amounts are Morocco, Nigeria, and the Philippines. Almost all countries are constantly making small improvements here, many of them in order to catch up with the changes in classification introduced in 1961 to bring the balance of payments categories closer into line with the national income accounts.

8. Other services

The miscellaneous category in the balance of payments is necessarily host to many transactions that have failed to lodge themselves in their appropriate items; even nonmentary gold and purchases of goods abroad for sale abroad were inextricably included there by the United Kingdom until recently. For the countries that use the exchange record, “other services” may be inflated by all recorded amounts that are too vaguely described or are just too small to be worth trying to classify exactly. This is certainly true for Burma, Ethiopia, Greece, India, Pakistan, Tunisia, and probably many others.

9. Transfer payments

These transactions, described in the Fund’s statements as “donations” until 1961, are the counterpart of the movements of goods, services, or financial items that take place without a quid pro quo. They were not identified as a separate group in the League of Nations’ Balances of Payments and were probably partly omitted from the prewar compilations.

Today, a large part of transfer payments represents government payments for economic aid. The figures for aid received can be compared with the statistics of the donor countries, and differences can often be examined in detail. However, comparisons make it appear that far more aid is given than is ever received in this world.

One explanation may be that the United States, the main donor country, includes some elements of aid at the full U.S. domestic cost rather than at world prices. The Balance of Payment Yearbook attempts (perhaps unsuccessfully) to alleviate this problem by substituting U.S. aid figures for the figures furnished by the recipients, for many developing countries, especially those in Latin America. Some countries, such as Korea, obtain their statistics on U.S. aid directly from the local U.S. Aid Mission: Korea’s balance of payments illustrates an effective and accurate use of such information, though taken from an outside source.

Furthermore, some recipient countries find it difficult to regard aid given in their own currency as foreign aid, even though the currency is released from the holdings of the U.S. Government. The figures published by Pakistan take this viewpoint to an extreme application, by treating the original accumulation of rupees by the United States (say, from sales of surplus agricultural commodities) as a grant to Pakistan and thereafter excluding from the balance of payments all subsequent transactions effected through the rupee accounts held by the U.S. Government. Those transactions include disbursements and repayments on loans, U.S. receipts of interest payable in rupees, and embassy expenses financed with these rupees. Pakistan’s statistics are extensively adjusted for presentation in the Yearbook.

10. Direct investment

The direct investment sector (foreign-owned companies) can only be covered adequately by undertaking periodic special surveys, usually by means of questionnaires sent out to all companies with foreign connections (e.g., in Australia, New Zealand, Panama, South Africa, the United Kingdom, and the United States). Similar surveys are made in India and in Pakistan, but the results have not been fully integrated into the balance of payments. Many other countries have shown interest in developing these types of questionnaires. The Fund itself has drafted model sets of questionnaires, one set for use in the oil industry (first used for Venezuela) and another set with more general application. The latter was first made available at the Conference of African Statisticians in Rabat in 1963; its adoption is at present under discussion in Jamaica and Malaysia.

Unless special information is obtained from direct investment companies, their reinvestment of undistributed earnings will not be covered (see subsection 6, on investment income, above). The exchange record supplies only the cash transfers between direct investment companies and their parent (or daughter) companies abroad. Certain countries that otherwise rely on the exchange record have obtained special information on goods imported without payment by direct investment companies (e.g., Brazil, France, and Pakistan); and Brazil goes one stage further and incorporates in its own balance of payments the figures published by the United States for the reinvestment of undistributed earnings in Brazil by U.S. subsidiaries. Until 1959, Panama similarly relied on U.S. estimates for its figures for direct investment, but since then the Panamanian statisticians have conducted their own survey of direct investment, covering all countries.

Loans from abroad made to direct investment companies (e.g., loans by the Export-Import Bank of Washington to the subsidiaries abroad of U.S. parent companies) should be included by the recipient country with other forms of direct investment. Usually they are easily identified by balance of payments compilers, but some countries still do not distinguish the direct investment sector from the rest of the private non-monetary sector (e.g., Belgium, Guatemala, Jordan, Paraguay, and the Syrian Arab Republic). Other countries (e.g., Brazil, Colombia, and Germany) have an only partial distinction between direct investment companies and other private companies. Austria, after a recent overhaul of balance of payments statistics, will now be able to give separate figures for the direct investment sector.

11. Other capital transactions of the private nonmonetary sectors

In this area, information is fairly precise for some categories, such as security issues. Here, even Switzerland, whose capital account is generally most incomplete, has exact figures, although all the purchasers of foreign issues may not be Swiss residents. In many countries the information about other categories of private capital may be quite sketchy, especially for trade credit (other than credits negotiated through banks) and for miscellaneous flows of short-term capital.

Some trade credits received by the private sector, for lack of data, are omitted by certain countries (e.g., India, Iran, Nigeria, and Sweden); others have only recently called for additional information from companies to fill this gap (e.g., Italy and the United Kingdom). Hitherto, France had estimated trade credit by comparing the merchandise totals in the exchange record with the trade accounts, but has now replaced this method by direct estimation of trade credit. Many Latin American countries have taken their figures from the U.S. Treasury Bulletin tables on foreign assets and liabilities of U.S. nonbanking concerns, where individual country figures are given; Honduras uses figures for U.S. trade credit extended to that country, as published by the Federal Reserve Bank of New York.

Classification problems on foreign loans to the private sector are not confined to the identification of direct investment companies (see subsection 10, above). The private sector is defined in the Balance of Payments Manual to include all “enterprises,” whether privately owned or government-owned, except those included in the central government budget. The enterprise sector in the balance of payments, as in other social accounts, should include all decision-making units that have an economic behavior resembling that of private businesses. The allocation of each loan to the appropriate sector has often proved troublesome in practice. In Mexico, for example, the main development bank (Nacional Financiera), which receives many of the foreign loans, could be regarded in different contexts as part of the enterprise sector, the banking sector, or the government sector, without doing noticeable violence to the precepts of the Manual.

Miscellaneous short-term capital flows, though large, are often an unidentified element in the balance of payments and probably make up a large part of the errors and omissions of a number of countries (e.g., Australia, Malaysia, the Netherlands, Nigeria, Spain, Sweden, Uruguay, and Venezuela). Unidentified short-term capital movements must also be important for Haiti, Panama, and Puerto Rico, where the free circulation of U.S. dollar currency notes enables private capital flows to take place without statistical control. For Ireland, the movement of sterling notes to and from the United Kingdom is presumably mostly unrecorded, though most of the Irish errors and omissions are believed to consist of unrecorded current transactions.

The free movement of notes within any currency area can result in large, unrecorded capital movements. Between 1961 and 1964, there was a movement from Guyana, mainly through Trinidad—a rather irrational flight from the West Indian dollar into sterling. The size of the total movement was not fully known until the notes were presented for redemption. Similarly, the free movement of lira notes between Italy and Switzerland made possible a capital flow that cannot be estimated exactly but is certainly a large part of the US$1.5 billion of notes repatriated into Italy in 1963 alone.

12. Government capital

Information on their own government capital transactions should always be available to balance of payments compilers, but of course it is not always organized in exactly the way required for the Fund’s standard presentation.

A few countries do not distinguish between local government and central government capital (e.g., Germany and Malaysia). Canada’s local government figures cover only security transactions and include local government enterprises that are appropriate to the private sector. Until about 1962, few of the United Kingdom’s local government capital transactions abroad were identified separately, but now most of these transactions are known.

Some gaps remain in the record of central government capital, where it has not been considered worthwhile to undertake complex analyses of existing information. For example, in the United Kingdom, the government stock registers for many years were not examined for details of nonresident holders, since fairly adequate information was already available from other sources, such as income tax data.

Occasionally, considerations of national confidentiality have led to the omission of government capital transactions; thus, during the last few years there has been no record in the Ghanaian balance of payments of intergovernment loans extended. Other countries, such as the Syrian Arab Republic, have provided totals of central government loan transactions but have given no details.

13. Monetary sector’s capital

Progress in completing the balance of payments statistics in this area was achieved as the statisticians’ awe of banking secrecy began to diminish. The League of Nations’ second Memorandum on Balances of Payments (1925) contained the following wistful observation:

The positive or negative balances shown represent (except in the case of one or two countries) either error in estimation or changes in a country’s floating credit or debit balances. In one or two cases, information, which is of great value in this connection, is obtained from banks, financial houses, etc., concerning the amount of such floating balances outstanding at the end of the year.… Further enquiry concerning the volume and character of these floating balances is likely to lead to results of very special interest and value.2

Interesting and valuable areas for “further enquiry” can still be listed, but almost every commercial bank in the Fund’s member countries now sends statistics of its foreign business to its central bank or government. For a few countries, such as Spain (where the banks did not supply figures) and the United Kingdom (where certain figures were supplied confidentially), this information was incomplete in the Yearbook until quite recently. Some countries combine, for publication, their commercial bank figures with the figures for central institutions either because of special circumstances making some alternative analysis more significant (the United States and the United Kingdom) or because some, or all, commercial bank assets are included in the national definition of reserves (Australia and New Zealand). Even so, it is possible to go some way toward fitting their figures into the standard Fund form.

A few countries have conflicting series of estimates for the changes in the foreign assets and liabilities of banks, because special compilations have been made for the balance of payments independently of balance sheet or similar information published elsewhere (e.g., in Iceland, Iran, Israel, the Netherlands, Tunisia, and the United Arab Republic). In most such countries, work is in progress to eliminate these statistical differences.

Another occasional difficulty with commercial bank statistics has been the inclusion of liabilities to residents denominated in foreign exchange as though these were liabilities held abroad. This unwanted inclusion of transactions between residents has recently been eliminated by Canada and Japan, probably the last two instances of any importance.

All movements in the foreign balances of commercial banks, of course, should be recorded strictly on a spot basis, and no changes in positions in futures or in other contingent liabilities should be included. Some elements, however, may still enter into the recorded figures (as in Saudi Arabia) at the time of commitment rather than at the time the transaction is completed.

The main problem with the recording of foreign assets and liabilities of central institutions has been the desire of the authorities either to say nothing about national reserves or else to dress up the window a little. The belief that a good central banker need present his statement of assets no more frequently than once a year has surely disappeared at last, but today the nature of some of the most important figures, however frequently they may be issued, has never been more obscure. In the two reserve centers, the movements in U.S. reserves and related items and in the U.K. official reserves are frequently unclear because the published figures during certain periods of particular interest include official transactions falling outside the traditional definitions.

Reserve totals may also be unintentionally inflated. If a central bank subscribes to part of a security issue of its own central government denominated in foreign exchange, both the central bank’s assets and the government’s liabilities may be inflated by the amount of these transactions between residents. Both aspects of these transactions should be excluded from the balance of payments, as they take place between residents.

For 1964, by an unexpected quirk, the three members of the former Federation of Rhodesia and Nyasaland temporarily reverted to the 1925 style of presenting the monetary sectors’ transactions as a residual item. Malawi, Southern Rhodesia, and Zambia, after the breakup of their Federation, did not possess separate figures for movements in banking assets and liabilities for that year, and their monetary movements had to be bracketed with net errors and omissions.

Special Problems

Some particular problems of balance of payments compilation cut across all categories and are important enough to need consideration in any assessment of statistical progress.

The international operations of the oil industry have often proved difficult to fit into a balance of payments presentation. In the U.K. balance of payments the oil companies are concerned that the scope of their operations might be revealed and, in return for the provision of information, have obtained the concession that their capital transactions should be included in an unusual category, to aid concealment.

In the balances of payments of some oil-producing countries, the companies’ capital transactions are obtained as residual items which thus include the net effect of all errors in the recording of their other transactions that would otherwise fall into the general item for net errors and omissions. It is gratifying that the transactions are at least included, if not wholly appropriately.

Problems that are common to more than one country, such as the recording of oil company transactions, have often been solved for one country in a way that can then be applied to others. The transactions of the oil sector are presented in the Yearbook almost identically for Iran, Iraq, Libya, and Venezuela. Common prices per unit have been used in calculating certain agricultural exports from Costa Rica, Guatemala, Honduras, and Panama. Bauxite exports from Jamaica are at present undervalued and might be corrected by the substitution of figures calculated from world prices.

Shipping companies operating under flags of convenience (Bahamas, Honduras, Liberia, and Panama) are very probably considered as nonresidents in the reports of the countries from which they are effectively operated as well as those of countries in which they are nominally based. No progress in closing this statistical gap has been recorded.

Among the more technical problems of balance of payments compilation, it may be noted that most countries with multiple or changing exchange rates have dealt with this difficulty by adopting the Fund’s recommendation to draw up their statements in terms of a standard unit, such as the U.S. dollar, and their reported statistics have been published by the Fund without needing further adjustment or correction for changes in rates.

Among those series of balance of payments statistics which are primarily compiled by nonstandard years, only those for Haiti and Puerto Rico (fiscal years) are published without remedy. For Australia and New Zealand (fiscal years) alternative, slightly less detailed versions are available by calendar years. Both India and Pakistan made a full calendar-year version available to the Fund, while publishing their own versions by fiscal years. Iran uses the solar year (from our March 21) but has compiled standard-year estimates as well. The answer to this problem (except for solar years) is to compile the detailed figures by half years, as Australia does, or by quarters, as India and Pakistan do and New Zealand hopes to do, and obtain figures which can be combined to provide either fiscal-year or calendar-year totals.

Where the postwar “currency area” has been the geographic unit for which a balance of payments is compiled, some awkward problems remain. There is a currently published balance of payments of France and the non-franc world and also, somewhat in arrears, of the franc area with the non-franc world, but complete estimates of transactions between France and the rest of the franc area are not released by the French authorities for publication. Progress is being made, however, toward the establishment of a more complete series of figures. Portugal produces statistics for the escudo area’s balance of payments (subdivided between the metropolitan area and the overseas provinces) and also a balance of payments between the metropole and the provinces, but the two are not on the same basis and cannot be rearranged and recom-bined to give the metropole’s balance of payments with all the rest of the world.

Statistical Aggregations

The Balance of Payments Yearbook, for a number of years before the 1960 volume, contained area statements obtained by aggregating the balance of payments statements of the individual countries of the area (Latin America, the sterling area, and the Organization for European Economic Cooperation). Those may have been misleading, since there are so many differences in presentation for the various countries, or they may have been helpful, as the differences may have tended to cancel one another out. But the area statements have been dropped from the Yearbook as interest waned in statistics for purely geographic groups or for loosely knit currency areas. The aggregation of figures is probably more appropriate in a version that looks less authoritative without being less useful, as in recent studies of the Fund’s Balance of Payments Division.3 Since balance of payments statistics are not available from Mainland China, from the U.S.S.R., and from other nonmember countries, any world-wide aggregation will be incomplete. But a large part of these countries’ transactions is with one another, and the asymmetries resulting from this omission will usually not be of major significance.

The National Bureau of Economic Research attempted as early as 1953 to construct a matrix of balance of payments transactions using material available in the Balance of Payments Division of the Fund. The Bureau economists made their way through jungles of asymmetrical recording to match the credits recorded by one country against the debits recorded by another, and the matrix was finally completed for publication in 1965, covering the years 1950–54.4

A more brisk aggregation of balance of payments transactions was undertaken by the London Economist in a brief article entitled “What, No Creditors?” published in 1962.5 The point was made that, in total, more invisible payments than invisible receipts were being recorded in the balance of payments statistics issued by the Fund.

Any aggregation of statistics which has to be completed within a reasonable time must be accomplished by disregarding minor asymmetries and making allowance for all known large differences. The progress made toward uniform reporting has been sufficient to make aggregation feasible and, by now, even meaningful. The goal of perfect uniformity is still not clearly in sight, and it may not even be desirable to take great strides toward it. Statistical continuity, as well as international uniformity, has much to commend it.


The Fund continued the work of the League of Nations Secretariat in guiding the national compilers of balance of payments statistics toward uniform concepts and definitions, and the point was soon reached at which aggregations of individual country figures into totals for areas could provide meaningful statements. Although today numerous small divergencies in classification, in coverage, in timing, and in valuation can still be found in the different countries that prepare these statistics, nonstandard classifications are gradually being eliminated. In each country the benefits from moving closer to an international statistical standard have to be weighed against the additional resources needed to obtain more detailed information. As was intended from the outset, the recommendations of the Fund’s Manual are applied flexibly in order to make the most economical use of available figures. The most rewarding practical approach has been the gradual reorganization of national statistics so that they can yield more of the details required for reports to the Fund. In almost every reporting country there has been constant progress toward uniformity.



article image
article image
article image

Foreign shipping traffic here means all traffic other than that between domestic ports.

Maritime freight on imported goods, which is included in group I of imports, amounted to approximately ...... during the year. Of this amount, about ............. were paid to national ships, and included on the credit side against item 10.


article image
article image




Part 1: Goods and Services, and Transfer Payments

Part 2: Movements of Capital and Monetary Gold

Part 3: Reconciliation of Part 1 and Part 2 *

All residents other than the central government.

Excluding monetary institutions.

Part 3 of the Global Balance of Payments Summary (Table A) reconciles the transactions in goods and services, and transfer payments covered in Part 1 with the movements of capital and monetary gold covered in Part 2. For each of the principal accounts in Part 1 and Part 2, i.e., for goods and services (Part 1: items 1 through 8), for transfer payments (Part 1: items 9 plus 10), for foreign assets and monetary gold (Part 2: items 11 through 16, assets), and for foreign liabilities (Part 2: items 11 through 16, liabilities), a net credit or debit is transferred to Part 3, and the sum total of the net credits, on the one hand, and of the net debits, on the other, is entered in item 21, total net transactions. Finally, net errors and omissions (item 22) brings into balance the totals of the net transactions, so that the credits and debits, when entered in the total (item 23), are equal.

Errors and omissions are included in the reconciliation table (Part 3) on a net basis, since differences on account of incomplete, inaccurate, and inconsistent sources are likely to be at least partly offsetting. A credit entry in this item is the result of either a net understatement of recorded credits or a net overstatement of recorded debits; a debit entry is the result of either a net understatement of recorded debits or a net overstatement of recorded credits.

International Monetary Fund

Washington, D.C.

Progrès réalisés en vue d’une présentation uniforme des balances des paiements


Le Secrétariat de la Société des Nations s’était préoccupé, dès sa création, d’établir une formule standard pour la présentation des données de balance des paiements, responsabilité dont a hérité le Fonds Monétaire International. Avant 1939, le Secrétariat de la S.D.N. disposait d’une balance type, qu’elle envoyait à tous ses membres pour les encourager à établir leurs statistiques de balance des paiements selon des formules uniformes. Mais le degré d’uniformité ainsi atteint étant insuffisant pour permettre facilement les comparaisons entre les pays, la S.D.N., vers la fin de son existence, avait préparé des recommandations tendant à l’adoption de concepts et définitions normalisés à l’intention des autorités qui établissent les balances des paiements. Ces recommandations ont été incorporées, après quelques modifications, dans le Manuel de la Balance des Paiements du Fonds.

Du fait que tous les Etats membres du Fonds acceptent l’obligation de communiquer régulièrement à ce dernier des statistiques de balance des paiements, et que le Manuel fournit les formules à utiliser pour ces rapports, une forte tendance vers l’uniformisation s’est manifestée, en ce qui concerne non seulement les chiffres fournis au Fonds, mais également les statistiques de balance des paiements publiées par chaque pays. De nombreuses divergences d’ordre secondaire subsistent encore par rapport à la présentation standard, même dans les chiffres publiés par le Fonds dans le Balance of Payments Yearbook, mais ce Yearbook présente cependant, sous des titres uniformisés, des chiffres qui sont d’une façon générale comparables d’un pays à l’autre.

Etant donné qu’on dispose de statistiques faciles à comparer sur le plan international, il est devenu possible d’établir des états intéressants pour certaines régions ou pour l’ensemble du monde en compilant les chiffres fournis individuellement par les divers pays dans leurs balances des paiements. Des inexactitudes se produisent en raison des lacunes existant dans la liste des pays—on ne dispose par exemple d’aucune donnée pour l’URSS et la Chine populaire—et des différences dans la façon dont les divers pays classent les chiffres dont ils disposent. Le résultat de cette compilation devient progressivement plus satisfaisant à mesure que s’améliore la classification des chiffres fournis dans le Yearbook et que sont publiées de nouvelles statistiques concernant des pays qui n’y figuraient pas auparavant.

Progreso logrado para uniformar la presentación de informes sobre la balanza de pagos


Desde los primeros tiempos de su creación, la Secretaría de la Sociedad de las Naciones se interesó en establecer un patrón para la presentación de los datos relativos a la balanza de pagos; este empeño luego pasó a manos del Fondo Monetario Internacional. Antes de 1939, la aludida Secretaría contaba con que el hecho de que se tuviera determinado formulario, el cual se distribuía a todos los países miembros, fomentaría que las estadísticas de balanza de pagos se compilaran ciñéndose a epígrafes idénticos. Pero el grado de uniformidad que se obtenía no resultaba suficiente para poder establecer fácilmente comparaciones entre un país y otro, y en sus últimos días la Sociedad de las Naciones había preparado ciertas recomendaciones en punto a conceptos y definiciones uniformes que sirvieran de pauta a los compiladores de balanzas de pagos. Dichas recomendaciones figuran, en forma algo modificada, en el Manual de la Balanza de Pagos publicado por el Fondo.

Dado que cada país miembro del Fondo se compromete a suministrar con regularidad datos estadísticos sobre su balanza de pagos y que el Manual señala la forma en que deben rendirse los informes, ha mediado una fuerte influencia en sentido de que se presenten de un mismo modo no sólo las cifras que se le proporcionan al Fondo sino también los datos estadísticos de balanza de pagos que se publican en los respectivos países. Subsisten muchos pequeños detalles que se apartan de lo indicado en los modelos tipo, aún en lo que se refiere a las cifras que aparecen en el Balance of Payments Yearbook que el Fondo publica, pero es un hecho que la presentación contenida en dicho anuario ofrece bajo encabezamientos uniformes datos que, en términos generales, permiten una comparación entre países.

En vista de que se cuenta con datos que son susceptibles de compararse internacionalmente, se pueden formular útiles exposiciones relativas a cada región o al mundo entero si se forman cantidades globales con las cifras que ofrecen los informes individuales de los países sobre sus balanzas de pagos. Habrán de surgir inexactitudes en razón de las omisiones en la lista de los países que deben incluirse—por ejemplo, no se dispone de datos relativos a la U.R.S.S. ni a la China Continental—así como por los diferentes modos en que los datos disponibles hayan sido clasificados por cada país. A medida que mejora la clasificación de las cifras contenidas en el Yearbook y que van publicándose más datos estadísticos sobre países que anteriormente no figuraban en el mismo, el formar cantidades globales va resultando gradualmente más satisfactorio.

In the tables throughout this issue, as well as in the English text of the papers,

  • Dots (…) indicate that data are not available;

  • A dash (—) indicates that the figure is zero or less than half the final digit shown, or that the item does not exist;

  • A single dot (.) indicates decimals;

  • A comma (,) separates thousands and millions;

  • “Billion” means a thousand million;

  • A short dash (-) is used between years or months (e.g., 1955–58 or January-October) to indicate a total of the years or months inclusive of the beginning and ending years or months;

  • A stroke (/) is used between years (e.g., 1962/63) to indicate a fiscal year or a crop year.


The Fund publishes four periodicals by subscription:

Balance of Payments Yearbook ($7.50)

Direction of Trade ($10)

International Financial Statistics ($10)

Staff Papers ($6)

University libraries, university faculty members, and university students may subscribe to any one of the four periodicals at $3 a year, or to all four at $10 a year.

Address correspondence to

The Secretary

International Monetary Fund

19th and H Streets, N.W.

Washington, D.C. 20431, U.S.A.


Mr. Alves, an Assistant Chief in the Balance of Payments Division of the Research and Statistics Department, is a graduate of New College, Oxford. He worked on balance of payments statistics in the Bank of England for a number of years.


Not included elsewhere.


Part I, “Introduction.”


Among them, Marcus Diamond, “Trends in the Flow of International Private Capital, 1957–65,” Staff Papers, Vol. XIV (1967), pp. 1–42, and John S. Smith, “Asymmetries and Errors in Reported Balance of Payments Statistics,” ibid., pp. 211–36.


See Herbert B. Woolley, Measuring Transactions Between World Areas, National Bureau of Economic Research, Studies in International Economic Relations (New York, 1965), and discussion by Grant B. Taplin in this issue, p. 433.


Vol. CCII, p. 254, January 20,1962.

IMF Staff papers: Volume 14 No. 3
Author: International Monetary Fund. Research Dept.