## Chapter 1 Introduction

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---

### A. Purposes of the Manual
- The sixth seventh edition of the Integrated Balance of Payments and Integrated International Investment Position Manual (BPM67, the Manual) serves as the standard framework for statistics on the positions, transactions, and other changes in financial assets and liabilities, and positions between an economy and the rest of the world.
- Main objectives of the Manual:
  - (a) To provide and explain concepts, definitions, classifications, and conventions for statistics on the external accounts, i.e., the international investment position (IIP), the balance of payments (BOP), and other changes in financial assets and liabilities, and international investment position statistics;
  - (b) To enhance international comparability of data through the promotion of guidelines adopted internationally;
  - (c) To show the links of balance of payments and international investment position statisticsthe external ac-counts to other macroeconomic statistics and promote consistency between different data sets;
  - (d) To provide a brief introduction to uses of data on the external accountsbalance of payments, other changes in financial assets and liabilities, and international investment position, as the international accounts of an economy.
  - (e) To provide principles and guidelines to improve the way the external accounts are communicated and disseminated.
- Scope and application:
  - Data collection, compilation procedures, and dissemination are not generally within the scope of this conceptual Manual; decisions should take into account circumstances such as practical and legal constraints, and relative size.
  - The IMF’s Balance of Payments and International Investment Position Compilation Guide provides information on these issues.
  - The Manual provides a framework applicable for a range ofall economies, from the smallest to the largest economies and from the least developed economies to the mostmore advanced and complex economies.
  - Compilers are responsible for applying international guidelines appropriately, assessing materiality and practicality, and revisiting decisions as circumstances change.
  - Factors influencing compilation choices include foreign exchange controls, the relative importance of types of economic activities, diversity of institutions, range of instruments used in financial markets, and cost versus materiality of data collection.
- Harmonization and interlinkages:
  - The Manual is harmonized with the System of National Accounts 2008 2025 (2008 2025 SNA), which was updated in parallel.
  - Relevant elements of the Monetary and Financial Statistics Manual 2000 and Government Finance Statistics Manual 20012014 and Monetary and Financial Statistics Manual and Compilation Guide 2016 will be revised to maintain harmonization.
  - Balance of payments and international investment positionexternal accounts compilers should consult with other statisticians to ensure consistent definitions and reconcilable data.
  - A common glossary of terms and definitions in macroeconomic statistics has been developed to facilitate harmonization across statistical domains.
- Legal scope:
  - The definitions and classifications in the Manual do not purport to give effect to, or interpret, various provisions of the Articles of Agreement of the International Monetary Fund.

### B. Structure of the Manual
- Overall composition:
  - The Manual has 14 20 chapters and 9 appendixes14 annexes.
  - Introductory chapters deal with issues that cut across the accounts (Chapters 1–6) and are followed by chapters that cover respectively each main account (Chapters 7–143).
  - The next chapters address topical issues (Chapters 15-18) and analytical use of data (Chapter 19), before the Manual closesclosing with a chapter on communication and disseminationanalysis of data (Chapter 20).
  - Seven chapters have been developed as common chapters with the 2025 SNA.
- Approach and presentation:
  - The Manual states general principles intended to be applicable in a wide range of circumstances and applies the principles to specific topics needing additional guidance. Definitions are given throughout the text, shown in italics.
  - Different aspects of a topic are handled in different chapters to minimize repetition; extensive cross-references emphasize linkages.
  - Examples: classification of portfolio investment is cross-cutting (Chapter 6); valuation and timing issues are covered in Chapter 3; positions, transactions, other changes, and income aspects are treated in Chapters 7, 8, 9, and 121, respectively.
  - Appendixes annexes are included for trade, direct investment, financial derivatives, reverse transactions, insurance, financial leas-tpensions, and positions and transactions with the IMF to show linkages among accounts.
  - A separate annex on sustainable finance in external sector statistics supports compilers on data provision related to environment, social, and governance (ESG) and climate change and other macroeconomic implications of climate change.
- Chapter groupings and brief contents:
  - Introductory chapters (Chapters 1–6):
    - (a) Chapter 1 gives background to the Manual.
    - (b) Chapter 2 covers the accounting and dissemination frameworks.
    - (c) Chapter 3 deals with the accounting principlesrules (common chapter with the 2025 SNA).
    - (d) Chapters 4 deals with issues associated with units, sectors, and residence, institutional units, and sectors (common chapter with the 2025 SNA).
    - (e) Chapter 5 deals with the classifications of financial assets and liabilities.
    - (f) Chapter 6 explains the functional categories.
  - Chapters for each account:
    - Chapters 7–143 deal with the main accounts; each account reflects a single economic process or phenomenon and has a single chapter.
    - The international investment positionintegrated IIP appears first to reflect the increased emphasis on its compilation and analysis since the release of the fifth edition (BPM5).
    - Each account chapter begins with general economic principles and includes a simplified overview table and specific examples to clarify definitions.
  - Topical chapters:
    - Chapters 15–18 are new chapters including in-depth descriptions of statistical issues related to globalization, digitalization, Islamic finance, and informal activities; they are common chapters with the 2025 SNA.
  - Analysis and communication:
    - Chapter 194 provides an introduction to the analysis of data, with particular reference to macroeconomic relationships as a whole.
    - Chapter 20 deals with communication and dissemination of macroeconomic statistics; it is a new chapter developed as a common chapter with the 2025 SNA.
- Appendixes annexes and standard presentation:
  - Appendixes Annexes provide more details on cross-cutting issues including changes from BPM5, currency unions, exceptional financing, debt reorganization, currency unions, remittances, positions and transactions with the IMF, sustainable finance and climate change, data by partner economy, changes from BPM6, and a listing of standard components and selected other items.
  - A list of standard items for presenting and reporting the balance of payments and international investment positionexternal accounts is given in Appendix 9Annex 14. Standard items consist of:
    - (a) Standard components: items fully part of the framework and contributing to totals and balancing items.
    - (b) Memorandum items: part of the standard presentation but not used in deriving totals and balancing items (e.g., loans at nominal value in standard components, loans at fair value as memorandum items, see paragraphs [7.45–7.46]).
    - (c) Supplementary items: outside the standard presentation but compiled depending on circumstances in the particular economy (see items in italics in Appendix 9Annex 14).
  - Compilers are encouraged to publish additional data of importance; IMF requests for information will not be limited to standard items when further detail is required.

### C. History of the Manual
- Purpose of editions:
  - Each new edition responds to economic and financial developments, changes in analytical interests, and accumulation of compilers’ experience.
- Timeline and major changes:
  - First edition: published in January 1948; objective to provide a basis for regular, internationally standardized reporting to the IMF; grew out of League of Nations work; draft finalized in Washington, D.C., in September 1947 with representatives of some 30 countries and international organizations.
  - Second edition: published in 1950, greatly expanding material describing concepts.
  - Third edition: issued in 1961, providing a complete set of balance of paymentsBOP principles usable by countries.
  - Fourth edition: published in 1977, introduced fuller treatments of residence, valuation, and other accounting principles and flexibility in use of standard components.
  - Fifth edition: published in September 1993; harmonized with the System of National Accounts 1993 (1993 SNA); changes included moving capital transfers and nonproduced nonfinancial assets to a capital account, renaming the capital account as the financial account, splitting services from primary earned income, introducing microfoundations of units and sectors consistent with the SNA, and extending the Manual to include the international investment positionIIP.
  - Sixth edition: issued in 2009; emphasized balance sheet analysis for vulnerability and sustainability, provided more guidance on the IIP, revaluations, and other volume changes, strengthened focus on globalization (goods for processing, merchanting, migrant worker remittances), guidance on special purpose entities (SPEs) and financial instruments (financial derivatives, securitization, index-linked securities, gold accounts), and introduced "net acquisition of financial assets" and "net incurrence of liabilities" replacing credit and debit and inverting the sign of the financial account balance.
- Institutional developments and supporting publications:
  - The IMF established the IMF Committee on Balance of Payments Statistics (the CommitteeBOPCOM) in 1992 as a continuing body for consultation with national compilers and international organizations and for partial revision procedures (see Section E).
  - Related publications developed since the 1993 2009 edition include updated compilation guides, the Balance of Payments Textbook, and specialized guides on coordinated surveys, reserves, merchandise trade statistics, trade in services, digital trade (Handbook on Measuring Digital Trade (2023)), external debt statistics, securities statistics, BIS reporting, remittances, and OECD FDI definitions; relevant elements of specialized guides will be revised to maintain harmonization with the updated Manual.

### D. The 2008 2025 Revision
- Revision decision and objectives:
  - At its 2001 March 2020 meeting, the CommitteeBOPCOM decided to initiate an update of the Manual, targeting publication of the seventh edition in 2025 by around 2008.
  - The update was intended to incorporate numerous elaborations and clarifications identified since 19932009, address issues in the research agenda, and strengthen theoretical foundations and linkages to other macroeconomic statistics.

### Coordination with other manuals and institutional arrangements
- The CommitteeBOPCOM decided to conduct the update in parallel with the updates of the 1993 2008 SNA and OECD Benchmark Definition of Foreign Direct Investment, fourth edition.
- For the first time, the Manual and SNA update processes were fully coordinated.
- Joint research groups (task teams) were formed to propose common recommendations on specific topics included in both the BPM and the SNA research agendas.
- BOPCOM and the Advisory Expert Group on National Accounts (AEG) organized several joint meetings to reach agreements on cross-cutting issues.
- BPM7 and 2025 SNA editorial teams collaborated and coordinated closely throughout the process.
- Seven chapters were prepared as common chapters for the seventh edition of the Manual and the 2025 SNA.
- A common glossary of terms and definitions in macroeconomic statistics was developed to ensure maximum consistency across statistical domains.

### Update process, consultations, and timeline elements
- The IMF released, through the Committee, an Annotated Outline for the update of the Manual in April 2004.
- The Annotated Outline included proposals and options for the style and content of the revised Manual and was circulated to central banks and statistical agencies and made available on the Internet.
- The CommitteeBOPCOM established task teamstechnical expert groups to undertake detailed consideration of issues and make recommendations on general principles, the current account, and direct investment.
- BOPCOM and the AEG set up joint task teams on financial and payments systems, globalization, the informal economy, Islamic finance, and communication; AEG task teams on digitalization and wellbeing and sustainability addressed issues relevant to the external accounts.
- Task teams presented recommendations in Guidance Notes (GNs) that underwent global consultation prior to being discussed and approved by BOPCOM and the AEG.
- Draft versions of the Manual chapters and annexes of BPM7 were published posted on the IMF website for global consultation during December 2023 to [Oc- tober] 2024in March 2007 and March 2008, with invitations for worldwide comment.
- Other revised editions versions of selected chapters and annexesthe whole document were circulated to Committee BOPCOM members and other interested partieskey stakeholders for review.
- A series of regional outreach seminars was conducted between January May 2023 and September 2008April 2024 to explain the changes in the Manual and gain solicit comments on the content.
- The process led to a revised version of the Manual submitted to the CommitteeBOPCOM for endorsement in [November 20082024].
- A near-final version was published in [March 2025] and the final version, including language edits, in [MMM YYYY].
- [A second series of regional outreach seminars focusing on implementation was conducted after the release of the near-final version of the Manual.]

### Major themes emerging from the revision
- Three Four major themes identified:
  - globalization;
  - increasing elaboration of balance sheet issuesexternal sector sustainability;
  - financial innovation and digitalization;
  - sustainable finance and climate change.

### Integrated IIP, external sector sustainability, and currency breakdowns
- The Manual addresses the increased need for data to assess external sector sustainability.
- It places the stock/flow reconciliation—also known as the integrated IIP—at the center of BPM7.
- Additional importance is given to the currency breakdowns of both the BOP and IIP.
- Other changes in financial assets and liabilities are included in the standard components with a breakdown into other changes in volume, exchange rate changes, and other price changes.
- The move to a fully integrated view of transactions, other changes, and positions has been recognized in the amended title as Integrated Balance of Payments and International Investment Position Manual.
- Supplementary breakdowns of trade by currency are included to facilitate analyses of how trade flows respond to exchange rate movements.
- A standardized statistical definition of net international reserves is included as an indicator of an economy’s external vulnerability.

### Globalization, residence, and new presentations
- Globalization has increased interest in the residence concept and information on migrant workers and their associated remittance flows.
- Treatments developed for outsourced physical processes (goods for processing) and sales and management of manufacturing not involving physical possession (merchanting).
- Guidance provided on the residence and activities of special purpose entities and other legal structures used for holding assets with little or no physical presence.
- Results of work on international trade in services and remittances are included.
- Specific guidance on the treatment of currency unions is included for the first time.
- The Manual introduces supplementary presentations and new data series:
  - separate identification of factoryless goods production;
  - a breakdown of data by domestically and foreign-controlled corporations;
  - a harmonized definition of special purpose entities (SPEs) and encouragement for compilers to identify material SPE activities.

### Balance sheet emphasis and financial instrument detail
- Increased interest in balance sheet analysis for vulnerability and sustainability is reflected throughout the Manual.
- Greater emphasis and elaboration of the financial instrument classification in the SNA and Monetary and Financial Statistics Manual to facilitate linkages and consistency.
- Considerably more detailed guidance on the international investment position, including discussion of revaluations and other volume changes and their impact on asset and liability values.
- Incorporation of results from detailed work on international investment position, direct investment, external debt, portfolio investment, financial derivatives, and reserve assets.
- The move to an integrated view of transactions, other changes, and positions is recognized in the amended title as Balance of Payments and International Investment Position Manual, with the acronym BPM6 referenced historically.

### Financial innovation and digitalization
- Developments have led to new financial instruments and services, including crypto assets with and without a corresponding liability.
- Crypto assets without a corresponding liability are treated as nonproduced nonfinancial assets in a separate category within the capital account.
- Existing standards allow treatment and recording of other emerging financial instruments and services, with new supplementary “of which” categories:
  - for fintech companies within the subsector classification;
  - for fintech-related financial instruments and services when considered relevant.
- Guidance provided on digital intermediation platforms, cloud computing, nonfungible tokens, and other digitalization issues.
- Financial innovation examples include financial derivatives, securitization, index-linked securities, and gold accounts; institutional arrangements include special purpose entities and complex, multieconomy corporate structures.
- Enhanced guidelines cover direct investment in cases of long and complex chains of ownership (revised with OECD Benchmark Definition of Foreign Direct Investment).
- Revised treatments of insurance and other financial services; expanded treatment of loan impairments, debt reorganization, guarantees, and write-offs.

### Sustainable finance and climate-related data
- Demand for data related to sustainable finance and climate change is growing rapidly.
- The Manual includes a new annex with initial ideas on organizing external sector statistics to support analysis of climate change-related risks and sustainable finance activities.
- Separate identification of ESG/green bonds and loans are included as new supplementary breakdowns (both flows and positions).
- The annex identifies areas where additional or more granular external accounts data could support policy work on environmental and climate risks (e.g., direct investment by counterparty economy and industrial sector, and international cooperation grants to low-income countries).
- The annex presents some data items that, based on national circumstances, could inspire compilers to compile additional data for assessment of environmental and climate change-related risks.
- The Manual incorporates changes arising from other statistical manuals, particularly the 2008 SNA, and strengthens harmonization with other macroeconomic statistics.

### Structure of the edition and list of changes
- The overall structure of the accounts and broad definitions are largely unchanged; changes are less structural than those made for the fifth edition.
- Changes reflect economic and financial developments and evolution of economic policy concerns, providing clarification and elaboration.
- A list of changes made in this edition of the Manual is included as Appendix 8Annex 13.

### Procedures for ongoing updates and types of updates
- The IMF and the CommitteeBOPCOM developed procedures for updating the Manual on an ongoing basis between major revisions.
- Under these procedures, updates can be divided into four three types:
  - (a) editorial amendments;
  - (b) clarifications beyond dispute;
  - (bc) interpretationsclarifications; and
  - (cd) changes.
- Each update type follows a different consultation process.
- Editorial amendments: wording errors, apparent contradictions, and translation errors; IMF staff draft amendments and bring them to the CommitteeBOPCOM for advice; an errata sheet will be produced and amendments publicized on the IMF website.
- Clarifications beyond dispute: new economic situations where appropriate treatment under existing standards is straightforward; IMF staff draft clarification notes and, after advice from the CommitteeBOPCOM, publicize them.
- Interpretationsclarifications: economic situations where treatment under the Manual is not clear; IMF staff, in consultation with the CommitteeBOPCOM, draft preliminary text for panels of experts and the ISWGNA (if relevant to the SNA) and propose a final decision; Interpretations Clarifications will be publicized on the IMF website and by other means.
- Changes to the framework: when situations are not properly covered by the Manual or when concepts and definitions are not relevant or are misleading, substantial rewriting may be required; IMF staff, in consultation with the CommitteeBOPCOM, will prepare proposals disseminated widely to panels of experts, the ISWGNA (if relevant), and all IMF member countries; the CommitteeBOPCOM will advise on incorporation, whether by separate booklet or issuing a new Manual; information will be provided to all countries with changes publicized on the IMF website and by other means.
- The IMF website will provide a consolidated list of these decisions and they may be incorporated directly into the electronic version of the Manual.

### Research agenda for possible future work
- A research agenda has been identified for possible future work. [The research agenda will be added at a later stage]
- Items included:
  - (a) ultimate investing economy and ultimate host economy in direct investment (see paragraph 4.156);
  - (b) whether direct investment relationships can be achieved other than by economic ownership of equity (e.g., through warrants or repos) (see paragraph 6.19);
  - (c) pass-through funds (see paragraphs 6.33–6.34);
  - (d) reverse transactions (including short positions and investment income that is receivable/payable while a security is on-lent) (see paragraphs 5.52–5.55, 7.28, 7.58–7.61, and 11.69);
  - (e) extended use of fair values of loans (see paragraphs 7.48–7.49);
  - (f) how the risk and maturity structure of the financial assets and liabilities should be taken into account in the reference rate for calculations of financial services indirectly measured (see paragraphs 10.126–10.136);
  - (g) investment income, in particular the different treatments of retained income for different investment types and the borderline between dividends and withdrawal of equity (see Chapter 11, Primary Income Account);
  - (h) debt concessionality, in particular whether the transfer element should be recognized and, if so, how it should be recorded (see paragraphs 12.51 and 13.33); and
  - (i) emissions permits (see paragraph 13.14).

*Source: Chapter 1 Introduction, Integrated Balance of Payments and Integrated International Investment Position Manual (BPM67), International Monetary Fund.*

### Chapter 1 Introduction

### Chapter 1 Introduction

### A. Purposes of the Manual
- The sixth seventh edition of the Integrated Balance of Payments and Integrated International Investment Position Manual (BPM67, the Manual) serves as the standard framework for statistics on the positions, transactions, and other changes in financial assets and liabilities, and positions between an economy and the rest of the world.
- Main objectives of the Manual:
  - (a) To provide and explain concepts, definitions, classifications, and conventions for statistics on the external accounts, i.e., the international investment position (IIP), the balance of payments (BOP), and other changes in financial assets and liabilities, and international investment position statistics;
  - (b) To enhance international comparability of data through the promotion of guidelines adopted internationally;
  - (c) To show the links of balance of payments and international investment position statisticsthe external ac-counts to other macroeconomic statistics and promote consistency between different data sets;
  - (d) To provide a brief introduction to uses of data on the external accountsbalance of payments, other changes in financial assets and liabilities, and international investment position, as the international accounts of an economy.
  - (e) To provide principles and guidelines to improve the way the external accounts are communicated and disseminated.
- Scope and application:
  - Data collection, compilation procedures, and dissemination are not generally within the scope of this conceptual Manual; decisions should take into account circumstances such as practical and legal constraints, and relative size.
  - The IMF’s Balance of Payments and International Investment Position Compilation Guide provides information on these issues.
  - The Manual provides a framework applicable for a range ofall economies, from the smallest to the largest economies and from the least developed economies to the mostmore advanced and complex economies.
  - Compilers are responsible for applying international guidelines appropriately, assessing materiality and practicality, and revisiting decisions as circumstances change.
  - Factors influencing compilation choices include foreign exchange controls, the relative importance of types of economic activities, diversity of institutions, range of instruments used in financial markets, and cost versus materiality of data collection.
- Harmonization and interlinkages:
  - The Manual is harmonized with the System of National Accounts 2008 2025 (2008 2025 SNA), which was updated in parallel.
  - Relevant elements of the Monetary and Financial Statistics Manual 2000 and Government Finance Statistics Manual 20012014 and Monetary and Financial Statistics Manual and Compilation Guide 2016 will be revised to maintain harmonization.
  - Balance of payments and international investment positionexternal accounts compilers should consult with other statisticians to ensure consistent definitions and reconcilable data.
  - A common glossary of terms and definitions in macroeconomic statistics has been developed to facilitate harmonization across statistical domains.
- Legal scope:
  - The definitions and classifications in the Manual do not purport to give effect to, or interpret, various provisions of the Articles of Agreement of the International Monetary Fund.

### B. Structure of the Manual
- Overall composition:
  - The Manual has 14 20 chapters and 9 appendixes14 annexes.
  - Introductory chapters deal with issues that cut across the accounts (Chapters 1–6) and are followed by chapters that cover respectively each main account (Chapters 7–143).
  - The next chapters address topical issues (Chapters 15-18) and analytical use of data (Chapter 19), before the Manual closesclosing with a chapter on communication and disseminationanalysis of data (Chapter 20).
  - Seven chapters have been developed as common chapters with the 2025 SNA.
- Approach and presentation:
  - The Manual states general principles intended to be applicable in a wide range of circumstances and applies the principles to specific topics needing additional guidance. Definitions are given throughout the text, shown in italics.
  - Different aspects of a topic are handled in different chapters to minimize repetition; extensive cross-references emphasize linkages.
  - Examples: classification of portfolio investment is cross-cutting (Chapter 6); valuation and timing issues are covered in Chapter 3; positions, transactions, other changes, and income aspects are treated in Chapters 7, 8, 9, and 121, respectively.
  - Appendixes annexes are included for trade, direct investment, financial derivatives, reverse transactions, insurance, financial leas-tpensions, and positions and transactions with the IMF to show linkages among accounts.
  - A separate annex on sustainable finance in external sector statistics supports compilers on data provision related to environment, social, and governance (ESG) and climate change and other macroeconomic implications of climate change.
- Chapter groupings and brief contents:
  - Introductory chapters (Chapters 1–6):
    - (a) Chapter 1 gives background to the Manual.
    - (b) Chapter 2 covers the accounting and dissemination frameworks.
    - (c) Chapter 3 deals with accounting principlesrules (common chapter with the 2025 SNA).
    - (d) Chapters 4 deals with issues associated with units, sectors, and residence, institutional units, and sectors (common chapter with the 2025 SNA).
    - (e) Chapter 5 deals with the classifications of financial assets and liabilities.
    - (f) Chapter 6 explains the functional categories.
  - Chapters for each account:
    - Chapters 7–143 deal with the main accounts; each account reflects a single economic process or phenomenon and has a single chapter.
    - The international investment positionintegrated IIP appears first to reflect the increased emphasis on its compilation and analysis since the release of the fifth edition (BPM5).
    - Each account chapter begins with general economic principles and includes a simplified overview table and specific examples to clarify definitions.
  - Topical chapters:
    - Chapters 15–18 are new chapters including in-depth descriptions of statistical issues related to globalization, digitalization, Islamic finance, and informal activities; they are common chapters with the 2025 SNA.
  - Analysis and communication:
    - Chapter 194 provides an introduction to the analysis of data, with particular reference to macroeconomic relationships as a whole.
    - Chapter 20 deals with communication and dissemination of macroeconomic statistics; it is a new chapter developed as a common chapter with the 2025 SNA.
- Appendixes annexes and standard presentation:
  - Appendixes Annexes provide more details on cross-cutting issues including changes from BPM5, currency unions, exceptional financing, debt reorganization, currency unions, remittances, positions and transactions with the IMF, sustainable finance and climate change, data by partner economy, changes from BPM6, and a listing of standard components and selected other items.
  - A list of standard items for presenting and reporting the balance of payments and international investment positionexternal accounts is given in Appendix 9Annex 14. Standard items consist of:
    - (a) Standard components: items fully part of the framework and contributing to totals and balancing items.
    - (b) Memorandum items: part of the standard presentation but not used in deriving totals and balancing items (e.g., loans at nominal value in standard components, loans at fair value as memorandum items, see paragraphs [7.45–7.46]).
    - (c) Supplementary items: outside the standard presentation but compiled depending on circumstances in the particular economy (see items in italics in Appendix 9Annex 14).
  - Compilers are encouraged to publish additional data of importance; IMF requests for information will not be limited to standard items when further detail is required.

### C. History of the Manual
- Purpose of editions:
  - Each new edition responds to economic and financial developments, changes in analytical interests, and accumulation of compilers’ experience.
- Timeline and major changes:
  - First edition: published in January 1948; objective to provide a basis for regular, internationally standardized reporting to the IMF; grew out of League of Nations work; draft finalized in Washington, D.C., in September 1947 with representatives of some 30 countries and international organizations.
  - Second edition: published in 1950, greatly expanding material describing concepts.
  - Third edition: issued in 1961, providing a complete set of balance of paymentsBOP principles usable by countries.
  - Fourth edition: published in 1977, introduced fuller treatments of residence, valuation, and other accounting principles and flexibility in use of standard components.
  - Fifth edition: published in September 1993; harmonized with the System of National Accounts 1993 (1993 SNA); changes included moving capital transfers and nonproduced nonfinancial assets to a capital account, renaming the capital account as the financial account, splitting services from primary earned income, introducing microfoundations of units and sectors consistent with the SNA, and extending the Manual to include the international investment positionIIP.
  - Sixth edition: issued in 2009; emphasized balance sheet analysis for vulnerability and sustainability, provided more guidance on the IIP, revaluations, and other volume changes, strengthened focus on globalization (goods for processing, merchanting, migrant worker remittances), guidance on special purpose entities (SPEs) and financial instruments (financial derivatives, securitization, index-linked securities, gold accounts), and introduced "net acquisition of financial assets" and "net incurrence of liabilities" replacing credit and debit and inverting the sign of the financial account balance.
- Institutional developments and supporting publications:
  - The IMF established the IMF Committee on Balance of Payments Statistics (the CommitteeBOPCOM) in 1992 as a continuing body for consultation with national compilers and international organizations and for partial revision procedures (see Section E).
  - Related publications developed since the 1993 2009 edition include updated compilation guides, the Balance of Payments Textbook, and specialized guides on coordinated surveys, reserves, merchandise trade statistics, trade in services, digital trade (Handbook on Measuring Digital Trade (2023)), external debt statistics, securities statistics, BIS reporting, remittances, and OECD FDI definitions; relevant elements of specialized guides will be revised to maintain harmonization with the updated Manual.

### D. The 2008 2025 Revision
- Revision decision and objectives:
  - At its 2001 March 2020 meeting, the CommitteeBOPCOM decided to initiate an update of the Manual, targeting publication of the seventh edition in 2025 by around 2008.
  - The update was intended to incorporate numerous elaborations and clarifications identified since 19932009, address issues in the research agenda, and strengthen theoretical foundations and linkages to other macroeconomic statistics.

*Source: Chapter 1 Introduction, Integrated Balance of Payments and Integrated International Investment Position Manual (BPM67), International Monetary Fund.*

### 1.29 The CommitteeBOPCOM also decided to conduct the update in parallel with the updates of the

### Chapter 1 Introduction

### Coordination with other manuals and institutional arrangements
- The CommitteeBOPCOM decided to conduct the update in parallel with the updates of the 1993 2008 SNA and OECD Benchmark Definition of Foreign Direct Investment, fourth edition.
- For the first time, the Manual and SNA update processes were fully coordinated.
- Joint research groups (task teams) were formed to propose common recommendations on specific topics included in both the BPM and the SNA research agendas.
- BOPCOM and the Advisory Expert Group on National Accounts (AEG) organized several joint meetings to reach agreements on cross-cutting issues.
- BPM7 and 2025 SNA editorial teams collaborated and coordinated closely throughout the process.
- Seven chapters were prepared as common chapters for the seventh edition of the Manual and the 2025 SNA.
- A common glossary of terms and definitions in macroeconomic statistics was developed to ensure maximum consistency across statistical domains.

### Update process, consultations, and timeline elements
- The IMF released, through the Committee, an Annotated Outline for the update of the Manual in April 2004.
- The Annotated Outline included proposals and options for the style and content of the revised Manual and was circulated to central banks and statistical agencies and made available on the Internet.
- The CommitteeBOPCOM established task teamstechnical expert groups to undertake detailed consideration of issues and make recommendations on general principles, the current account, and direct investment.
- BOPCOM and the AEG set up joint task teams on financial and payments systems, globalization, the informal economy, Islamic finance, and communication; AEG task teams on digitalization and wellbeing and sustainability addressed issues relevant to the external accounts.
- Task teams presented recommendations in Guidance Notes (GNs) that underwent global consultation prior to being discussed and approved by BOPCOM and the AEG.
- Draft versions of the Manual chapters and annexes of BPM7 were published posted on the IMF website for global consultation during December 2023 to [Oc- tober] 2024in March 2007 and March 2008, with invitations for worldwide comment.
- Other revised editions versions of selected chapters and annexesthe whole document were circulated to Committee BOPCOM members and other interested partieskey stakeholders for review.
- A series of regional outreach seminars was conducted between January May 2023 and September 2008April 2024 to explain the changes in the Manual and gain solicit comments on the content.
- The process led to a revised version of the Manual submitted to the CommitteeBOPCOM for endorsement in [November 20082024].
- A near-final version was published in [March 2025] and the final version, including language edits, in [MMM YYYY].
- [A second series of regional outreach seminars focusing on implementation was conducted after the release of the near-final version of the Manual.]

### Major themes emerging from the revision
- Three Four major themes identified:
  - globalization;
  - increasing elaboration of balance sheet issuesexternal sector sustainability;
  - financial innovation and digitalization;
  - sustainable finance and climate change.

### Integrated IIP, external sector sustainability, and currency breakdowns
- The Manual addresses the increased need for data to assess external sector sustainability.
- It places the stock/flow reconciliation—also known as the integrated IIP—at the center of BPM7.
- Additional importance is given to the currency breakdowns of both the BOP and IIP.
- Other changes in financial assets and liabilities are included in the standard components with a breakdown into other changes in volume, exchange rate changes, and other price changes.
- The move to a fully integrated view of transactions, other changes, and positions has been recognized in the amended title as Integrated Balance of Payments and International Investment Position Manual.
- Supplementary breakdowns of trade by currency are included to facilitate analyses of how trade flows respond to exchange rate movements.
- A standardized statistical definition of net international reserves is included as an indicator of an economy’s external vulnerability.

### Globalization, residence, and new presentations
- Globalization has increased interest in the residence concept and information on migrant workers and their associated remittance flows.
- Treatments developed for outsourced physical processes (goods for processing) and sales and management of manufacturing not involving physical possession (merchanting).
- Guidance provided on the residence and activities of special purpose entities and other legal structures used for holding assets with little or no physical presence.
- Results of work on international trade in services and remittances are included.
- Specific guidance on the treatment of currency unions is included for the first time.
- The Manual introduces supplementary presentations and new data series:
  - separate identification of factoryless goods production;
  - a breakdown of data by domestically and foreign-controlled corporations;
  - a harmonized definition of special purpose entities (SPEs) and encouragement for compilers to identify material SPE activities.

### Balance sheet emphasis and financial instrument detail
- Increased interest in balance sheet analysis for vulnerability and sustainability is reflected throughout the Manual.
- Greater emphasis and elaboration of the financial instrument classification in the SNA and Monetary and Financial Statistics Manual to facilitate linkages and consistency.
- Considerably more detailed guidance on the international investment position, including discussion of revaluations and other volume changes and their impact on asset and liability values.
- Incorporation of results from detailed work on international investment position, direct investment, external debt, portfolio investment, financial derivatives, and reserve assets.
- The move to an integrated view of transactions, other changes, and positions is recognized in the amended title as Balance of Payments and International Investment Position Manual, with the acronym BPM6 referenced historically.

### Financial innovation and digitalization
- Developments have led to new financial instruments and services, including crypto assets with and without a corresponding liability.
- Crypto assets without a corresponding liability are treated as nonproduced nonfinancial assets in a separate category within the capital account.
- Existing standards allow treatment and recording of other emerging financial instruments and services, with new supplementary “of which” categories:
  - for fintech companies within the subsector classification;
  - for fintech-related financial instruments and services when considered relevant.
- Guidance provided on digital intermediation platforms, cloud computing, nonfungible tokens, and other digitalization issues.
- Financial innovation examples include financial derivatives, securitization, index-linked securities, and gold accounts; institutional arrangements include special purpose entities and complex, multieconomy corporate structures.
- Enhanced guidelines cover direct investment in cases of long and complex chains of ownership (revised with OECD Benchmark Definition of Foreign Direct Investment).
- Revised treatments of insurance and other financial services; expanded treatment of loan impairments, debt reorganization, guarantees, and write-offs.

### Sustainable finance and climate-related data
- Demand for data related to sustainable finance and climate change is growing rapidly.
- The Manual includes a new annex with initial ideas on organizing external sector statistics to support analysis of climate change-related risks and sustainable finance activities.
- Separate identification of ESG/green bonds and loans are included as new supplementary breakdowns (both flows and positions).
- The annex identifies areas where additional or more granular external accounts data could support policy work on environmental and climate risks (e.g., direct investment by counterparty economy and industrial sector, and international cooperation grants to low-income countries).
- The annex presents some data items that, based on national circumstances, could inspire compilers to compile additional data for assessment of environmental and climate change-related risks.
- The Manual incorporates changes arising from other statistical manuals, particularly the 2008 SNA, and strengthens harmonization with other macroeconomic statistics.

### Structure of the edition and list of changes
- The overall structure of the accounts and broad definitions are largely unchanged; changes are less structural than those made for the fifth edition.
- Changes reflect economic and financial developments and evolution of economic policy concerns, providing clarification and elaboration.
- A list of changes made in this edition of the Manual is included as Appendix 8Annex 13.

### Procedures for ongoing updates and types of updates
- The IMF and the CommitteeBOPCOM developed procedures for updating the Manual on an ongoing basis between major revisions.
- Under these procedures, updates can be divided into four three types:
  - (a) editorial amendments;
  - (b) clarifications beyond dispute;
  - (bc) interpretationsclarifications; and
  - (cd) changes.
- Each update type follows a different consultation process.
- Editorial amendments: wording errors, apparent contradictions, and translation errors; IMF staff draft amendments and bring them to the CommitteeBOPCOM for advice; an errata sheet will be produced and amendments publicized on the IMF website.
- Clarifications beyond dispute: new economic situations where appropriate treatment under existing standards is straightforward; IMF staff draft clarification notes and, after advice from the CommitteeBOPCOM, publicize them.
- Interpretationsclarifications: economic situations where treatment under the Manual is not clear; IMF staff, in consultation with the CommitteeBOPCOM, draft preliminary text for panels of experts and the ISWGNA (if relevant to the SNA) and propose a final decision; Interpretations Clarifications will be publicized on the IMF website and by other means.
- Changes to the framework: when situations are not properly covered by the Manual or when concepts and definitions are not relevant or are misleading, substantial rewriting may be required; IMF staff, in consultation with the CommitteeBOPCOM, will prepare proposals disseminated widely to panels of experts, the ISWGNA (if relevant), and all IMF member countries; the CommitteeBOPCOM will advise on incorporation, whether by separate booklet or issuing a new Manual; information will be provided to all countries with changes publicized on the IMF website and by other means.
- The IMF website will provide a consolidated list of these decisions and they may be incorporated directly into the electronic version of the Manual.

### Research agenda for possible future work
- A research agenda has been identified for possible future work. [The research agenda will be added at a later stage]
- Items included:
  - (a) ultimate investing economy and ultimate host economy in direct investment (see paragraph 4.156);
  - (b) whether direct investment relationships can be achieved other than by economic ownership of equity (e.g., through warrants or repos) (see paragraph 6.19);
  - (c) pass-through funds (see paragraphs 6.33–6.34);
  - (d) reverse transactions (including short positions and investment income that is receivable/payable while a security is on-lent) (see paragraphs 5.52–5.55, 7.28, 7.58–7.61, and 11.69);
  - (e) extended use of fair values of loans (see paragraphs 7.48–7.49);
  - (f) how the risk and maturity structure of the financial assets and liabilities should be taken into account in the reference rate for calculations of financial services indirectly measured (see paragraphs 10.126–10.136);
  - (g) investment income, in particular the different treatments of retained income for different investment types and the borderline between dividends and withdrawal of equity (see Chapter 11, Primary Income Account);
  - (h) debt concessionality, in particular whether the transfer element should be recognized and, if so, how it should be recorded (see paragraphs 12.51 and 13.33); and
  - (i) emissions permits (see paragraph 13.14).

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_Source: https://www.imf.org/-/media/files/data/statistics/bmp7/draft-chapters/bpm7-chapter-1-v7-globcon.pdf_