Outcomes of meeting of imf committee on balance of payments statistics june 27 july 1 2005
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Outcomes of Meeting of IMF Committee on Balance of Payments Statistics, June 27 – July 1, 2005. Outcomes of BOPCOM’s discussions. Migrants’ transfers Personal effects not be recorded as transaction

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Outcomes of bopcom s discussions
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Migrants’ transfers

    • Personal effects not be recorded as transaction

    • Reclassification of financial assets and liabilities arising from change of residence “other changes”

    • Change of residence usually only applies to persons but may apply to some corporations, e.g., societas europea

    • AEG agreed


Outcomes of bopcom s discussions1
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Technical assistance

    • Technical assistance represents supply of services by donor to recipient, funded by transfer

  • Debt instruments indexed to foreign currency

    • To be classified as denominated in foreign currency

    • Recommended currency of account and currency of settlement be clearly distinguished

    • AEG agreed


Outcomes of bopcom s discussions2
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Interest and index-linked debt instruments

    • Retain present treatment of 1993 SNA (para. 7.104) all changes arising from indexation equal interest

    • AEG’s view:

      • Where linked to broad price index (CPI, GDP deflator, etc.): interest, as per 1993 SNA

      • Where linked to other types of index, use rate on comparable “plain vanilla” issue as interest component, and excess as other changes


Outcomes of bopcom s discussions3
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Reinvested earnings

    • Continue present practice

    • “Income” not well defined or treated consistently create income expert group, not limited to balance of payments including national accountants and financial statisticians


Outcomes of bopcom s discussions4
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Retained earnings of mutual funds

    • Follow AEG’s position (accept ESA95 treatment)

    • Need for further work on defining “collective investment schemes”

  • Financial gold

    • “Unallocated” gold: financial asset

    • “Allocated” gold: commodity

    • Further work required to determine instrument for “unallocated” gold

      • Not discussed by AEG but indications of approval


Outcomes of bopcom s discussions5
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Fee on securities lending and gold lending

    • On securities lending and “unallocated” gold: property income (AEG agreed, treat as interest)

    • On “allocated” gold: service (AEG saw as trivial)

    • Fee on securities lending can be paid directly to custodian but represents a short-circuiting of two transactions: property income payable to lender, and service provided by custodian to lender

    • Further work by IMF and OECD to determine type of financial service by custodian to lender


Outcomes of bopcom s discussions6
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Traded loans: criteria to become security

    • Absence of consensus, status quo obtains

    • AEG agreed, following elaboration of criteria in External Debt Guide

  • Goods for processing

    • Consistent treatment necessary (at present, varies, depending on circumstances)

    • Views divided

    • Extra data on fees, materials, finished goods

    • AEG: No change of ownership to be imputed. Discussion of implications for supply and use tables; reflection of globalized world


Outcomes of bopcom s discussions7
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Merchanting

    • Need to reflect global production and marketing process properly

    • Concern about deviating from change of ownership principle but also grossing up goods transactions

    • Set up working group

    • AEG: further work required (participation in working group)


Outcomes of bopcom s discussions8
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Guarantees

    • Premature to recognize guarantees prior to activation

    • Considered untenable preliminary AEG position (at December 2004, guarantee activation = capital transfers in all cases).

    • BOPCOM’s preference “other changes” in all cases, but accept alternative, on case-by-case basis: (i) capital transfers, (ii) financial claims, and (iii) other changes

    • In July 2005, AEG decided on case-by-case approach, but accepted TFHPSA proposal recognizing financial derivatives-type and insurance-type guarantees as asset at inception


Outcomes of bopcom s discussions9
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Financial instrument classification

    • Accepted for BOP purposesbroad split of instrument and associated income, with additional split on supplementary basis

      • Equity Finance (equity securities (of which mutual funds, and of which money market mutual funds), reinvested earnings, other equity (not including insurance technical reserves)

      • Debt (debt securities (long/short), loans, currency and deposits, accounts receivable/payable (trade credit and advances, other) other debt instruments

      • Other (monetary gold, SDRs, net equity in insurance technical reserves and pension funds), financial derivatives (forwards and options) and employee stock options


Outcomes of bopcom s discussions10
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Distinction between deposits and loans

    • Useful distinction but

    • Blurred in some instances, but not prescribe criteria

    • Further work by ECB

    • AEG agreed with above


Outcomes of bopcom s discussions11
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Valuation of direct investment equity

    • Reassertion of market price principle

    • Split between quoted and unquoted: supplementary

    • Deemed acceptable:

      • Recent transaction

      • NAV, including intangibles and goodwill

      • NAV, excluding intangibles and goodwill

      • Apportioning global value of group to local unit, using appropriate indicator

      • Own funds at book value

      • Capitalization ratios

      • PIMs (or equivalent)


Outcomes of bopcom s discussions12
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Valuation of direct investment equity (cont)

    • Further work, showing pros and cons

    • No consensus on ranking. Further work on descriptions

    • Less acceptable/inferior

      • Use of stock price indices to revalue accumulated flows

      • Historic or acquisition cost

      • Summing of transactions

    • Bilateral/CDIS


Outcomes of bopcom s discussions13
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Land and buildings leased by nonresidents

    • Also to cover other natural resources

    • Needs clarification in new bop manual

    • Where effective change of ownership, create notional resident unit (in same manner as outright purchase)

    • Treat as equity

    • Valuation of acquisition of lease during its life not discussed


Outcomes of bopcom s discussions14
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Institutional sector holding companies

    • If HC has no resident subsidiaries, then OFI

    • If resident subsidiaries, views divided. Status quo (assumes “predominant” activity of subsidiaries): subject to AEG views (January 2006)

    • Recognize problems with classification where resident and nonresident subsidiaries

    • Recognize potential conflict with currency union

    • Activity classification also to be discussed by ISIC


Outcomes of bopcom s discussions15
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Nonresident SPVs linked to general govt

    • Felt TFHPSA proposal incompatible with residence concept

    • Rationale also applies to nongovernment units

    • Recognize need to resolve GFS problem, but not place residence at risk

    • Supported further work in wider context

    • AEG: provided for information only: Initial indications of concern. Support for alternative presentation (e.g., use of reconciliation account, satellite account)


Outcomes of bopcom s discussions16
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Maturity and instrument split

    • Split on instrument in direct investment “other capital”, consistent with instrument split in 1993 SNA, to be recommended on supplementary basis

    • Maturity split (short/long) also on supplementary basis

    • Note meaning of these distinctions in many cases not clear between direct investor and direct investment enterprise


Outcomes of bopcom s discussions17
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Concessional debt

    • See separate presentation

    • No consensus for inclusion of transfer in standard presentation but supplementary basis agreed

    • IMF to consider whether current or capital


Outcomes of bopcom s discussions18
Outcomes of BOPCOM’s discussions Statistics, June 27 – July 1, 2005

  • Rescheduling

    • Rescheduling should not lead to whole instrument being rescheduled

    • Rescheduling of future interest payable/receivable could lead to transactions in new instruments

    • Need to clarify definition of rescheduling

    • For HIPC grant, when granted irrevocably, asset of recipient