What is a balance of payments

what is a balance of payments

Sixth Edition of the IMF's Balance of Payments and International Investment Position Manual (BPM6 )

Last Updated: November 2013

The sixth edition of the Balance of Payments and International Investment Position Manual (BPM6), updates the fifth edition (BPM5 ) that was released in 1993. The update was undertaken in close collaboration with the IMF Committee on Balance of Payments Statistics (Committee) and involved extensive consultations with national compilers, and regional and international agencies over many years.

Table of Contents

Chapter 9. Other Changes in Financial Assets and Liabilities Account

Appendix 4. Statistics on the Activities of Multinational Enterprises

Appendix 6. Topical summaries

Appendix 7. Relationship of the SNA Accounts for the Rest of the World to the International Accounts

Appendix 9. Standard Components and Selected Other Items

The IMF's Statistics Department has prepared a conversion matrix to facilitate converting balance of payments and IIP data from a BPM5 basis to a BPM6 basis. The conversion matrix also provides concise descriptions of the changes from BPM5 .

Like earlier editions, the BPM6 provides guidance on the recording of cross-border transactions and positions according to a set of internationally-agreed guidelines, and provides greater clarity and details on an expanded range of international activities that affect the IMF's member countries. The BPM6 takes into account globalization (for example, currency unions, cross-border production processes, complex international company structures, and issues associated with labor mobility, such as remittances) and builds on the growing interest in examining vulnerability using balance sheet data (for example, greater elaboration of balance sheet components). It also contains increased and updated guidance on new financial instruments and financial activities linked to innovation (for example, on the treatment of short positions, goods under financial leases, and financial intermediation services indirectly measured). BPM6 makes the international investment position (IIP) more central to the framework than does BPM5. and also incorporates clarifications and changes that had already been agreed, such as the clarification of some direct investment transactions (see Direct Investment Methodology: Recommended Treatment of Selected FDI Transactions ) and the treatment of financial derivatives (see Classification of Financial Derivatives Involving Affiliated Enterprises ). BPM6 was drafted in parallel with the System of National Accounts 2008 (2008 SNA) to retain consistency between the two systems.

BPM6 is available in hardcopy in English, Arabic, Chinese, French, Russian, and Spanish. The BPM6 can be ordered on the IMF online bookstore. The downloadable version in PDF format will continue to be available free of charge on the IMF’s website (see above links).

Introduction

In close consultation with the Committee, the IMF's Statistics Department started substantively working on updating the fifth edition of the Balance of Payments Manual (BPM5) in 2003. The Committee agreed that it would be appropriate to update BPM5 for a number of reasons:

  • the international economic and financial environment had changed significantly since BPM5 was published in 1993;
  • a new round of trade negotiations had lead, inter alia, to the publication

    of a manual on statistics of international trade-in services;

  • there had been development work on the statistical treatment of reverse transactions, accrued interest, financial derivatives, and nonproduced nonfinancial assets;
  • new frameworks had been developed in other statistical areas, in particular in monetary and financial, government finance, and external debt statistics and the data template for international reserves and foreign currency liquidity;
  • there was, and is, an increased focus on positions statistics.

Further, a range of other methodological issues were discussed by the Committee in recent years.

Harmonization with other manuals

The update of the BPM5 was conducted in parallel with the update of the 1993 SNA to maintain consistency between the two manuals to the maximum extent possible. Information on the updated System of National Accounts 2008 (2008 SNA) is available on the UN website. The BPM6 also takes into account improved recording and methodological treatments contained in other manuals prepared by the IMF Statistics Department, including External Debt Statistics: Guide for Compilers and Users (2003), Monetary and Financial Statistics Manual (2000), and Government Finance Statistics Manual (2001). In turn, these manuals have been or will be updated to reflect the revisions made in the BPM6 and the 2008 SNA.

Process for producing the new manual

An Annotated Outline (AO) of BPM6 was produced by IMF staff and reviewed by the Committee and other groups. The AO proposed the structure, and a description of the proposed content for the new manual, identified the issues to be resolved, and indicated possible solutions in some cases. The final format and content of the AO were agreed by the Committee at its meeting in December 2003. It was circulated widely, including to balance of payments compilers, for information and comment. Comments received were considered during the drafting of the new manual.

A process of development and consultation was conducted in order to produce a draft manual by December 2006. This process involved the preparation of issues and position papers, discussions by the Committee, technical expert groups, and other interested groups including the ISWGNA, followed by preparation of the draft text for the manual. Four technical expert groups (one to focus on issues related to direct investment—DITEG. one to focus on issues related to monetary and economic unions—CUTEG. one to focus on issues related to reserve assets—RESTEG. and one to work on all other areas of balance of payments and international investment position statistics—BOPTEG ) were formed to support this work. Background information on the work of these groups is available on the technical expert group webpage .

In 2007-8, a program of broad consultation and review was conducted, and agreement on the near-final document was reached by late 2008 when the draft of BPM6. mainly subject to editing, was placed on the IMF website. Since then, amongst other things, a comprehensive index was prepared; changes were made to take account of a new type of lending arrangement with the IMF; and final editing and formatting were completed.

Source: www.imf.org

Category: Forex

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