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Welcome to Statistics Department State Bank of Pakistan. Being a International Investment Position Data Provider Do you think it is important to be a International Investment Position (IIP) data provider ? If it is really important to be so, to whom is he / she important ?
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Welcome to Statistics Department State Bank of Pakistan
Being a International Investment Position Data Provider Do you think it is important to be a International Investment Position (IIP) data provider ? If it is really important to be so, to whom is he / she important ? The objective of this presentation is to tell how important the role of a IIP data Provider is.
Being a International Investment Position Data Provider Any discussion of being a data provider requires a discussion about the stakeholders. The job of a data provider requires professional skills,not only to understand and do his task but also to serve and communicate with the users. Failure to appreciate the importance of stakeholders often leads to poor Statistics.
Being a International Investment Position Data Provider Who are the stakeholders ? Users Legal,technical and Administrative Support
Being a International Investment Position Data Provider To sum up,it is important to have a Mission and strategy.Therefore ,let us have our Mission statement “Our mission is to provide IIP statistics matching to the users needs” And our Strategy would be “To understand the users needs and meeting those needs. Develop and implement plans to supply qualitative statistics”
International Investment Position (IIP) Definition “ The IIP is a statistical statement that shows an economy’s stock of external financial assets and liabilities at a particular point. This stock is the result of past external transactions measured according to current market values (current market prices and exchange rates) and other factors (for example, write-offs or reclassifications) at a specific point. ”
International Investment Position Conceptual Framework
Conceptual framework-concepts International Investment Position (IIP) Stock of External Financial Assets and liabilities (Financial Claims and Liabilities) ( Equity Assets and liabilities ) (Financial derivatives) (Monetary Gold and SDRs) Net IIP Difference between owned and owed
Conceptual framework-concepts Changes in IIP Stock measured at a point in time Changes between two time points Transactions Non-transaction changes ( price changes,exchange rate movements,other changes ) Reconciliation of the IIP Statement OP + Tx + PC + XR + OC = CP
Conceptual framework-concepts Where : OP = Opening Position Tx = Transactions PC = Price Change XR = Exchange Rate Change OC = Other Changes CP = Closing Position
Conceptual Framework-Relationship to other Statistics National net worth • IIP is partial balance sheet of economy • IIP + non-financial assets = National net worth
Conceptual Framework-Other terms IIP = Stock of External financial assets and liabilities “ Stock ” includes ‘Valuation’ and ‘Timing’ And “ External ”requires definition of ‘Residence’
Conceptual Framework-Other terms Valuation • Current Market Prices • Book values as proxy for illiquid assets • Nominal values for non-market items • Net present value (NPV) for non-traded securities Timing • Time when claims and liabilities arise • Based on accrual accounting • Timing of ownership change • Proxy when recorded in books
Conceptual Framework-Other terms • Residence is an important attribute in IIP because the identification of transactions between residents and nonresidents underpins the system • Identical concepts of residence are used in BPM5 and the 1993 SNA
Conceptual Framework-Other terms Three Questions: • What is the institutional unit? • What is the economic territory? • Which territory is the unit closely connected with?
Conceptual Framework-Other terms The residents of an economy comprise the following types of institutional units: • Households • Includes the individuals who make up a household • Enterprises • Financial and non-financial corporations • Unincorporated businesses • Non profit institutions serving the households • Government
Conceptual Framework-Other terms The economic territory of a country is the relevant geographical area to which the concept of residence is applied. • A geographic territory administrated by a Govt.within this,persons,goods,and capital circulate freely. • Free trade zones • Usually a country, but not necessarily • Economic and monetary unions • International organizations like IMF and UN
Conceptual Framework-Other terms Concepts of residence: • Economic connection of a unit to an economic territory • Not based on nationality or legal criteria • Not based on currency used • Expressed as a economic unit’s Center of economic interest
Conceptual Framework-Other terms Center of economic interest • Dwelling,place of production, or other premises,within the economic territory of the country on,or from,which the unit engages,or intends to engage,in economic activities and transactions on a significant scale,for an indefinite or long period
Conceptual Framework-Other terms • Households and Individuals • The BPM5 guidelines to be used for determining residence: “ The presence or the intention to be present for a period of one year or more” • Exceptions • Diplomatic representatives • Member of the armed forces • Students • Medical patients • Crew members
Conceptual Framework-Other terms • Enterprises • An enterprise has a center of economic interest and is a resident unit of a territory when the unit is engaged in a significant amount of production and plans to do so over an indefinite or long period of time. • One year guideline by BPM5
Conceptual Framework-Other terms Particular types of enterprises • Operator of mobile equipment • The residency of airlines, railway, trucking and shipping will be based on the residence of the operating unit. • An enterprise operating in more than one economy • Divide operations-identify “unincorporated branch” as separate institutional unit • Criteria used: • Separate account • Subject to income tax • Substantial physical unit • Receive funds on its own account (not as an agent)
Conceptual Framework-Classification Assets and liabilities As per balance sheet • Assets-holders are residents • Liabilities –issuers are residents • Financial claims and liabilities • Evidenced by a contract or security • Specified payments of interest and capital
Conceptual Framework-Classification • Equity claims and liabilities • No fixed claim / liability • Financial derivatives • Monetary gold and SDRs • Assets with no corresponding liability
Conceptual Framework-Classification Direct Investment • Obtain / sustain lasting interest in enterprise • Significant degree of influence on management • Practical definition • At least 10 % holding of ordinary shares,voting power or equivalent • Three Instruments • Equity • Reinvested earnings • Capital (borrowings) • Reverse Investment
Conceptual Framework-Classification Portfolio Investment • Equity and debt usually traded in organized markets • Investment for the purpose of portfolio diversification instead of having influence on the management • Two Instruments • Equity securities(Less than 10% holdings) • Debt Securities (Short-term and Long-term)
Conceptual Framework-Classification Other Investment • Trade Credits • Loans • Currency and Deposits • Others Reserves Assets • Monetary Gold • SDRs • Reserves position in IMF • Foreign Exchange • Other
Data sources - IIP Domestic Statistical Sources: • Banks' External Assets and Liabilities • Monetary Authorities’ External Assets and Liabilities • General Government External Debt • Other sector Domestic Non-statistical Sources • Financial Statement • Foreign Investment Approval • Financial Press
International Investment Position • Standard Components • Enterprises' survey Questionnaires • Schedule-I ( Branches of Foreign Enterprises ) • Schedule-II ( Enterprises incorporated in Pakistan )