## draft-consolidated-bpm7-annotated-outline ## Source details **Canonical URL:** [draft-consolidated-bpm7-annotated-outline](https://www.imf.org/-/media/files/data/statistics/bmp7/draft-consolidated-bpm7-annotated-outline.pdf) ## Other formats - [Markdown version](/-/media/files/data/statistics/bmp7/draft-consolidated-bpm7-annotated-outline.pdf.md) - [Structured JSON version](/-/media/files/data/statistics/bmp7/draft-consolidated-bpm7-annotated-outline.pdf.json) --- ### Update process, scope, and organizational milestones - The IMF Statistics Department launched the BPM6 update in March 2020 and targeted publication of BPM7 in March 2025 (The BPM7 Annotated Outline). - The update proceeded in two phases: - Phase I: finalize detailed research from the Compendium of Research Issues and discuss impacts on BPM7. - Phase II: finalize the Annotated Outline and draft chapters/annexes with extensive consultations. - BPM7 structure and counts: - Total chapters: 20 chapters. - Total annexes: 14 annexes. - Of the 20 chapters, seven are developed as common chapters with the 2025 SNA. - The consolidated Annotated Outline (AO) collates final AOs approved by the IMF Balance of Payments Committee and the Advisory Expert Group on National Accounts, prepared by the BPM6 update editorial team in the Balance of Payments Division, IMF Statistics Department. ### Major structural and topical reforms emphasized in the AO - Terminology alignment: - Subsection title changed from “Appendixes” (BPM6) to “Annexes” to align with SNA language. - Integrated International Investment Position: - BPM7 treats the integrated IIP (stock–flow reconciliation) as the centerpiece of external accounts. - Accumulation accounts aligned to 2025 SNA definitions: capital account, financial account, other changes in volume of assets account, and revaluation account. - New or expanded topical coverage: - New chapters on Globalization, Digitalization, Islamic Finance, Informal Economy, and a new chapter on Communicating and Disseminating Economic Statistics. - Several annexes are new or expanded relative to BPM6 (examples include cross-border trade; direct investment; selected financial issues; insurance and pensions; positions and transactions with the IMF; sustainable finance; data by partner economy). ### Cross-manual linkages and reference frameworks - BPM7 AO updates references to align with the 2025 SNA and other manuals/guides: - Monetary and Financial Statistics Manual and Compilation Guide; Government Finance Statistics Manual; OECD Benchmark Definition of Foreign Direct Investment; External Debt Statistics Guide; Handbook on Securities Statistics; International Merchandise Trade Statistics Manual; Manual on Statistics of International Trade in Services. - A common glossary of macroeconomic statistics was developed during the update. - Box and framework updates: - Box 2.2 on Data Quality Assessment Framework will be based on the 2012 DQAF for Balance of Payments and IIP. - Discussion on seasonal adjustment (paragraph 2.41) will refer to Quarterly National Accounts Manual, 2017 Edition (Chapter 7 Seasonal Adjustment). - Linkages between IIP and External Debt Statistics emphasized, including valuation of debt securities per GN F.8. ### Annex 7.A — Financial Derivatives (placement and context) - Annex 7.A Financial Derivatives is listed among the 14 annexes and is adjacent to Annex 7.B Reverse Transactions and Annex 8 Insurance and Pensions (The BPM7 Annotated Outline). - Annex-level and chapter-level drafting incorporated guidance notes (e.g., GN F.4, GN F.10) affecting treatment of derivatives, margins, and acceptable net recording in specific derivative cases. ### Key chapter-level updates and substantive changes (selected) - Chapter 1–3 (Foundations: Introduction; Integrated Framework; Flows, Stocks, Accounting Rules) - Accounting rules expanded to cover: - Types of accounting system (vertical, horizontal, quadruple-entry) with guidance on application to external accounts. - Valuation: retain market-price logic, retain FOB valuation for goods, note possible future move to observed transaction value (GN G.1), include guidance to compile stock of debt securities at nominal value as a supplement (GN F.8), and note GN AI.1 implications under discussion. - Time of recording: additional guidance on redistributive transactions, deferred or waived rental payments, employee stock options, nonproduced nonfinancial assets, and timing adjustments for international transactions. - Unit of account and currency conversion: updated coverage following BPM6 paragraphs 3.92–108. - Aggregation, netting, consolidation: additions from BPM6 paragraphs 3.109–121 relevant for external accounts. - Symmetry of reporting in external accounts preserved and updated from BPM6 Chapter 3, Section G. - Chapter 4 (Residence, Institutional Units, and Sectors) - Residence subsection renamed “Residence and Economic Territory” with discussion of economic territory of international organizations and special zones. - Sectoring updates: - Guidance on fintech classification: fintech firms to be classified within existing sectors, not as a new sector, with recommended “of which” items where material (GN F.7). - Enhanced “of which” items recommended for domestically controlled public/private corporations and for foreign-controlled SPEs. - Include supplementary items for Other Financial Corporations (OFCs) and SPEs for external reporting (GN F.1; GN G.4). - Detailed treatment of SPEs, head offices, holding companies, and cross-border institutional unit types included. - Ownership and control of corporations - BPM7 will treat a corporation as a subsidiary if another holds more than 50 percent equity; control by a non-resident decided on equity entitling more than 50 percent voting power (updates to paragraph 4.81 per GN G.2 and D.10). - Equity in international organizations excluded from direct investment; such equity contributions recorded in other investment — other equity. - Direct Investment (Chapters 6, 7, 8 and Annex 6) - Standard components presentation shifted to instrument- and sector-based categories (equity and debt instruments; sectoral breakdowns listed). - DI in DIE, reverse investment, and between-fellow enterprises shifted to memorandum items without instrument breakdown. - Investment fund shares (F52) always considered portfolio investment for investors (GN D.3); investment funds themselves may qualify as DI if equity ≥ 10 percent. - Annex 6 to cover selected DI issues, including pass-through funds, corporate inversions, cash pooling, greenfield investment. - Chapter 8 (Financial Account) - Structure maintained from BPM6 with modifications: - Direct investment subsection replaces “superdividends” with “Dividends and Withdrawal of Equity” (superdividends concept removed for DI per GN D.17). - Portfolio investment: new subsection on superdividends included; implementation practicalities acknowledged. - Financial derivatives guidance: clarification when net recording acceptable; potential margin classification as loans depending on GN F.10. - Other investment: coverage includes valuation of nonnegotiable instruments, financial leases, repos and reverse repos (reference to Annex 7), insurance technical reserves and pensions. - Reserve assets: additions on unallocated gold accounts recording only when between monetary authorities or with international financial organizations. - Chapter 9 (Other Changes in Financial Assets and Liabilities) - Other changes in volume and revaluations kept consistent with BPM6 with reorganized structure: - New subsections: appearance/disappearance of financial assets and liabilities; external events. - Table 9.1 to include supplementary “of which” categories: “reclassifications” and “debt cancellation and write-offs”. - Cancellation/write-offs guidance expanded to allow value resets where public evidence of loan deterioration exists (GN F.9). - External events to include catastrophic losses and align with GN B.6 for climate-related risk relevance. - Chapters 10–11 (Goods and Services Accounts) - Chapter 10 split from Goods and Services; Chapter 10 focuses on goods, Chapter 11 on services. - Goods: retain FOB valuation standard; note potential future preference for observed transaction value (GN G.1); new supplementary “of which” items for global manufacturing arrangements and FGP treatment clarified. - Merchanting: clarify acquisition recording as negative exports; include inverse merchanting examples; geographic allocation guidance for merchanting net exports. - Services: expanded classification (Table 11.1 lists 17 main standard service categories); introduce fee-based digital intermediation platform (DIP) services; split telecommunication from computer/information services; reorganize other business services into five first-level categories. - Financial services subsection (Chapter 7 within Services): - Fintech services classified within existing financial services categories (no new service categories). - Guidance on margins, factoring fees, FISIM and negative interest rates (review reference rates to avoid negative FISIM). - Merchanting of services concept clarified as conceptually infeasible; intermediation fees recorded under trade-related services. - Chapter 12 (Primary Income) - Primary income components enumerated (compensation of employees; dividends and withdrawals from quasi-corporations; reinvested earnings; interest and similar returns; investment income attributable to policyholders in insurance/pensions; rent; taxes and subsidies on products and production). - Extensive numerical example boxes listed for interest accrual calculations (Boxes 12.2–12.7) and reinvested earnings (Box 12.1). - Chapter 15 (Globalization) - Measurement challenges from MNEs and global production emphasized (allocation, pass-through, production fragmentation, ultimate ownership). - Alternative indicators and supplementary data recommended: - Emphasize less-distorted macro indicators (GNI/NNI, GNDI/NNDI, adjusted household disposable income). - Supplementary DI statistics by ultimate investing economy; AMNE/FATS and eSUTs/GVC satellite accounts and TiVA tools recommended. - Encourage “of which” identification for SPEs and supplementary presentations beyond core framework where useful. - Chapter 16 (Digitalization) - Detailed treatment of digital goods/services, digital platforms, digital financial services, crypto assets, NFTs, measurement of prices/volumes, and analytical tools: - Crypto assets: decision tree to classify fungible vs nonfungible; all fungible crypto assets meet the asset boundary; classification of CAWLM and CAWLP undecided pending GN F.18 outcomes. - NFTs: classification by rights granted (personal use/display; limited commercial rights; full ownership) and treatment per GN DZ.10. - Thematic Account on the Digital Economy and Digital SUTs proposed; digital SUT columns to include ICT industries, free platforms, nonfinancial DIPs, e-tailers, digital-only financial/insurance firms, other digital producers. - Price/volume methods: hedonics, options pricing, producer costs, resampling, unit value indexes; refer to GN DZ.1 and Eurostat Handbook on Price and Volume Measures. - Chapter 17 (Insurance and Pensions / SNA linkages) - Revisit holding gains/losses for insurance, investment income attributable to policyholders, hybrid insurance products (GN F.12), and pension scheme clarifications; ensure alignment with 2025 SNA Chapter 24 and AEG decisions. - Chapter 18 (Informal Economy) - Define informal economy and informal sector; distinguish from non-observed economy. - Provide framework to measure informal production and informal labor inputs, including digitalization-induced informal activities, informal cross-border flows, illicit financial flows distinction, dependent contractors, and use of ILO definitions. - Emphasize supply-and-use and non-observed economy measurement techniques; include GN IE.1 decision tools. - Annex 10 (Sustainable Finance in External Sector Statistics — new) - Purpose: support compilers on climate-change related data in BOP/IIP; focus on climate change (not broader sustainable finance). - Short-term emphasis: feasible additional BOP/IIP breakdowns to assess climate-related financial risks. - Suggested items: - Direct investment breakdowns by economic activity to assess sector‑specific climate risks. - Geographic granularity by counterparty country (and more granular geolocation where possible). - “Of which” supplementary reporting for transactions/positions in “green‑labelled” bonds and returns; compile according to national definitions until international taxonomies advance. - Supplementary data on international cooperation climate grants and cross‑border transactions in CO2 permits, environmental goods/services, and waste treatment services. - Future work items: green lending/equity, climate-related derivatives, cross-border catastrophe insurance claims as a supplementary item. - Contextual note: World Bank climate finance to developing countries was US$21.4 billion in 2020; IMF Resilience and Sustainability Trust complements IMF lending toolkit for structural challenges including climate change (Annex 10 text). - Annex 12 (Links between International Standards) - Update linkage framework between BOP/IIP and other macro statistics: SNA, GFS, MFSMCG, External Debt Statistics, Public Sector Debt Statistics; include schematic Figure 1 on inter-account relationships. ### Numerical and procedural facts called out in the AO (exact preservation) - Update launch date: March 2020. - Target release date for BPM7: March 2025. - Total chapters in BPM7: 20 chapters. - Total annexes in BPM7: 14 annexes. - Of 20 chapters, seven are developed as common chapters with the 2025 SNA. - Numerous paragraph and table cross-references carried forward or updated (examples provided in AO: BPM6 paragraphs 3.18, 3.25, 3.41, 3.61–66, 3.84–87, 3.90, 3.126–129; 2008 SNA Chapters 3, 11, 14, 15; GN references AI.1, B.3, B.4, B.6, B.9, C.4, C.7, CM.2, D.2, D.3, D.4, D.5, D.6, D.7, D.10, D.16*, D.17*, F.1, F.2, F.3, F.4, F.7, F.8, F.9, F.10, F.12, F.13, F.14, F.15, F.18, G.1, G.2, G.4, G.7, G.9, IF.1, IE.1, DZ.1, DZ.5, DZ.6, DZ.8, DZ.9, DZ.10, WS.2, WS.6*, WS.7*, WS.8*, WS.9, WS.10, WS.11*, WS.14*). - (Guidance notes marked with * were under consultation at time of the AO.) ### Drafting notes and pending items flagged for further decision - Valuation: potential introduction of observed transaction value as the standard for goods valuation subject to further testing (GN G.1). - Crypto asset classifications pending decisions from GN F.18 and user survey outcomes (classification of CAWLM and CAWLP undecided). - GN AI.1, GN CM.2, and GN CM.4 elements noted as potentially affecting valuation language, terminology simplification, and prominence of net measures—sections marked pending final conclusions as appropriate. - Several sections marked to be aligned at drafting stage with 2025 SNA final text (e.g., accumulation accounts terminology, Chapter 24 Insurance and Pensions linkages). *International Monetary Fund — BPM7 Annotated Outline (consolidated AO).* ### FOREWORD _____________________________________________________________________________________ IX ### FOREWORD IX ### Structure and scope (table of contents overview) - CHAPTER 1. INTRODUCTION 1 - A. Purposes of the Manual 1 - B. Structure of the Manual 1 - C. History of the Manual 2 - D. The 2025 Revision 2 - E. Revisions between Editions of the Manual 2 - CHAPTER 2. OVERVIEW OF THE INTEGRATED FRAMEWORK 5 - A. Introduction 5 - B. Structure of the External Accounts 5 - C. Metadata, Dissemination Standards, Data Quality, and Time Series 7 - CHAPTER 3. FLOWS, STOCKS, AND ACCOUNTING RULES 10 - A. Introduction 10 - B. Flows 11 - C. Stocks 12 - D. Balancing Items 12 - E. Accounting Rules 13 - F. Symmetry of Reporting in External Accounts 15 - CHAPTER 4. RESIDENCE, INSTITUTIONAL UNITS, AND SECTORS 18 - A. Introduction 18 - B. Corporations 19 - C. Nonprofit Institutions 21 - D. The Nonfinancial Corporations Sector 21 - E. The Financial Corporations Sector 21 - F. The General Government Sector 21 - G. The Households Sector 22 - H. The Nonprofit Institutions Serving Households Sector 22 - I. The Rest of the World 22 - J. Specific Issues Associated with Residence 22 - CHAPTER 5. CLASSIFICATIONS OF FINANCIAL ASSETS AND LIABILITIES 26 - A. Definition of Economic Assets and Liabilities 26 - B. Classification of Financial Assets and Liabilities by Type of Instrument 27 - C. Arrears 29 - D. Classification by Maturity 30 - E. Classification by Currency 30 - F. Classification by Type of Interest Rate 30 - CHAPTER 6. FUNCTIONAL CATEGORIES IN EXTERNAL ACCOUNTS 33 - A. Introduction 33 - B. Direct Investment 33 - C. Portfolio Investment 35 - D. Financial Derivatives (Other Than Reserves) and Employee Stock Options 35 - E. Other Investment 36 - F. Reserves 36 - CHAPTER 7. BALANCE SHEET: THE INTERNATIONAL INVESTMENT POSITION 40 - A. Introduction 40 - B. Concepts and Coverage 40 - C. Direct Investment 41 - D. Portfolio Investment 42 - E. Financial Derivatives (Other Than Reserves) and Employee Stock Options 43 - F. Other Investment 43 - G. Reserves 44 - H. Off-Balance-Sheet-Liabilities 44 - CHAPTER 8. FINANCIAL ACCOUNT 47 - A. Concepts and Coverage 47 - B. Direct Investment 47 - C. Portfolio Investment 48 - D. Financial Derivatives (Other Than Reserves) and Employee Stock Options 49 - E. Other Investment 49 - F. Reserve Assets 50 - G. Arrears 50 - CHAPTER 9. OTHER CHANGES IN FINANCIAL ASSETS AND LIABILITIES ACCOUNT 53 - A. Concepts and Coverage 53 - B. Other Changes in the Volume of Financial Assets and Liabilities 53 - C. Revaluations 55 - CHAPTER 10. GOODS ACCOUNT 58 - A. Introduction 58 - B. General Merchandise 58 - C. Goods Under Merchanting 59 - D. Nonmonetary Gold 60 - E. Reconciliation of IMTS and Balance of Payments Goods 60 - F. Additional Breakdowns and Supplementary Presentations 60 - CHAPTER 11. SERVICES ACCOUNT 63 - A. Introduction 63 - B. Classification of Services 64 - CHAPTER 12. EARNED INCOME ACCOUNT 73 - A. Overview of the Primary Income Account 73 - B. Types of Primary Income 73 - C. Investment Income and Functional Categories 75 - CHAPTER 13. TRANSFER INCOME ACCOUNT 79 - A. Overview of the Secondary Income Account 79 - B. Concepts and Coverage 79 - C. Types of Current Transfers 80 - CHAPTER 14. CAPITAL ACCOUNT 82 - A. Concepts and Coverage 82 - B. Acquisitions and Disposals and Nonproduced, Nonfinancial Assets 82 - C. Capital Transfers 83 - CHAPTER 15. GLOBALIZATION 86 - A. Introduction 86 - B. MNEs 87 - C. Global Production 88 - D. Measurement Challenges 88 - E. Alternative Indicators and Supplementary Information to Monitor the Impact of Globalization and Meet Users Needs 89 - F. Analytical Tools 91 - CHAPTER 16. DIGITALIZATION 93 - A. Introduction 93 - B. Digital Goods and Services 93 - C. Digital Platforms 94 - D. Digitalization and the Financial System 95 - E. Measuring Prices and Volumes of Products affected by Digitalization 97 - F. Analytical Tools to Increase the Visibility of Digitalization 97 - CHAPTER 17. ISLAMIC FINANCE 101 - A. General Overview of Islamic Finance and Insurance 101 - B. Economic Ownership of Non-Financial Assets Under Specific Islamic Financial Arrangements 102 - C. Islamic Financial Institutions/Entities Sectoring 103 - D. Islamic Financial Institutions’ Measures of Output in the SNA Production Account 103 - E. The Nature of Returns on Islamic Investments in the Primary Income Account of SNA/BPM 104 - F. The Classification of Islamic Financial Instruments in the Accumulation Accounts and Balance Sheet Account 104 - CHAPTER 18. INFORMAL ECONOMY 107 - A. Introduction 107 - B. Framework for the Informal Economy 108 - C. Digitalization and Informal Cross Border Flows 110 - D. Informal Work 111 - E. The Non-Observed Economy 113 - F. Guidelines, Studies, and Handbooks on the Informal Economy 113 - CHAPTER 19. SELECTED ISSUES IN BALANCE OF PAYMENTS AND INTERNATIONAL INVESTMENT POSITION ANALYSIS 116 - A. Introduction 116 - B. General Framework 117 - C. Nexus Between Current Account and International Investment Position 117 - D. Alternative Presentations of Balance of Payments Data 117 - E. Financing a Current Account Deficit 117 - F. Balance of Payments Adjustment in Response to a Current Account Deficit 117 - G. Implications of a Current Account Surplus 117 - H. The Balance Sheet Approach 117 - I. Valuation Paradox in the International Investment Position 117 - J. Calculating and Using Rates of Return 118 - K. Further Information 118 - CHAPTER 20. COMMUNICATING AND DISSEMINATING ECONOMIC STATISTICS 120 - A. Introduction 120 - B. Communication Policy and Dissemination Strategy 120 - C. Communication with Users – Principles and Standards 121 - D. Communication with Suppliers 122 - E. Statistical Confidentiality 122 - F. Taxonomies and Metadata 122 - G. A Framework for Measuring Alignment with the Economic Accounting Statistical Standards 123 - H. Prominence of Net Measures Compared to Gross Measures (Note this section is pending final conclusions on the forthcoming GN CM.4) 124 - I. Examples of the Use of Easier to Understand Terminology for Users (Note this section is pending final conclusions on GN CM.2) 124 ### Annexes (selected) - ANNEX 1. EXCEPTIONAL FINANCING TRANSACTIONS 126 - ANNEX 2. DEBT REORGANIZATION AND RELATED TRANSACTIONS 128 - ANNEX 3. REGIONAL ARRANGEMENTS: CURRENCY UNIONS, ECONOMIC UNIONS, AND OTHER REGIONAL STATEMENTS 130 - A. Introduction 130 - B. Currency Unions 130 - C. Economic Unions 133 - D. Customs Unions 133 - E. Other Regional Statements 133 - F. Numerical Example: International Transactions and Positions in the National Data for a Member State of a Centralized Currency Union 133 - ANNEX 4. REMITTANCES 135 - ANNEX 5. SELECTED ISSUES ON CROSS-BORDER TRADE 137 - A. Introduction 137 - B. Classification 137 - C. Price and Volume Measures 137 - D. Digital Trade 137 - E. International Trade Classified by Currency 138 - ANNEX 6. SELECTED ISSUES ON DIRECT INVESTMENT 140 - A. Introduction 140 - B. Overview of Direct Investment 140 - C. Ultimate Ownership and Pass-Through Funds 140 - D. Corporate Inversions 140 - E. Public-Private Partnerships 141 - F. Cash Pooling 141 - G. Greenfield Investment and Extension of Capacity 141 - ANNEX 7. SELECTED FINANCIAL ISSUES 143 - ANNEX 8. INSURANCE AND PENSIONS 147 - ANNEX 9. POSITIONS AND TRANSACTIONS WITH IMF 151 - ANNEX 10. SUSTAINABLE FINANCE IN EXTERNAL SECTOR STATISTICS 156 - ANNEX 11. DATA BY PARTNER ECONOMY 161 - ANNEX 12. LINKS BETWEEN INTERNATIONAL STANDARDS FOR MACROECONOMIC STATISTICS 166 - ANNEX 13. CHANGES FROM BPM6 170 - ANNEX 14. STANDARD COMPONENTS AND SELECTED OTHER ITEMS 171 *BPM7 Annotated Outline — FOREWORD* ### Annex 7.A Financial Derivatives ________________________________________________________________ 143 ### Annex 7.A Financial Derivatives ### Placement within the BPM7 Annotated Outline - Annex 7.A Financial Derivatives is one of the annexes listed in the consolidated BPM7 Annotated Outline. - Annexes surrounding it in the consolidated AO include: - Annex 7.B Reverse Transactions - ANNEX 8. INSURANCE AND PENSIONS (with subheadings A–E) - ANNEX 9. POSITIONS AND TRANSACTIONS WITH IMF - ANNEX 10. SUSTAINABLE FINANCE IN EXTERNAL SECTOR STATISTICS - ANNEX 11. DATA BY PARTNER ECONOMY - ANNEX 12. LINKS BETWEEN INTERNATIONAL STANDARDS FOR MACROECONOMIC STATISTICS - ANNEX 13. CHANGES FROM BPM6 - ANNEX 14. STANDARD COMPONENTS AND SELECTED OTHER ITEMS ### Update process and institutional context - The IMF Statistics Department launched the update of the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) in March 2020. - Target publication date for the updated Manual (BPM7) is March 2025. - The BPM6 update has been carried out in two phases: - Phase I: Finalization of the detailed research on the issues identified in the Compendium of Research Issues and discussion of their impact on BPM7. - Phase II: Finalization of the Annotated Outline and drafting of the chapters/annexes of BPM7, and extensive consultations about the proposed changes. - The consolidated Annotated Outline (AO) brings together final versions of the AOs of individual chapters and annexes produced during the update process. - The AO was prepared by the BPM6 update editorial team in the Balance of Payments Division, IMF Statistics Department, with named senior economists and supervisors listed in the AO. - The AOs of individual chapters/annexes were approved by the IMF Balance of Payments Committee and the Advisory Expert Group on National Accounts (for joint chapters), and benefitted from stakeholder and global consultations with statistical experts. ### Structural and topical changes in BPM7 relevant to annexes and financial derivatives - BPM7 will contain 20 chapters and 14 annexes; the AO notes that several annexes are new or expanded compared with BPM6 (e.g., cross-border trade; direct investment; selected financial issues; insurance and pensions; positions and transactions with the IMF; sustainable finance; data by partner economy). - New topical chapters will include globalization, digitalization, Islamic finance, and informal activities. - A new chapter on communicating and disseminating economic statistics will be added. - Terminology alignment: the AO changes the subsection title from “Appendixes” in BPM6 to “Annexes” in BPM7 to align with SNA language. - Integrated IIP is highlighted: BPM7 will treat the integrated International Investment Position (i.e., stock–flow reconciliation) as the centerpiece. - Accumulation accounts terminology is adjusted to align with the 2025 SNA: accumulation accounts in the SNA include the capital account, the financial account, the other change in the volume of assets account, and the revaluation account; within external accounts, accumulation accounts explain changes between opening and closing IIP and comprise the balance of payments’ financial account and other changes in financial assets and liabilities accounts. ### Links to other manuals, guidance notes, and quality frameworks - References in BPM7 AO will be updated to reflect latest versions of: - the Manual (BPM7) cross-referenced with the 2025 System of National Accounts (2025 SNA) - Monetary and Financial Statistics Manual and Compilation Guide - Government Finance Statistics Manual - OECD Benchmark Definition of Foreign Direct Investment - External Debt Statistics Guide - Handbook on Securities Statistics - International Merchandise Trade Statistics Manual - Manual on Statistics of International Trade in Services - A common glossary of macroeconomic statistics has been developed as part of the update process. - Box and framework updates: - Box 2.2 on Data Quality Assessment Framework (DQAF) will be based on the 2012 version of DQAF for Balance of Payments and International Investment Position. - Discussion on seasonal adjustment (paragraph 2.41) will refer to Quarterly National Accounts Manual, 2017 Edition (Chapter 7 Seasonal Adjustment). - Linkages between IIP and External Debt Statistics (EDS) will be emphasized, including discussion on valuation of debt securities from GN F.8. ### Key organizational and numerical details from the AO - Launch date of update: March 2020. - Target release date for BPM7: March 2025. - Total chapters in BPM7: 20 chapters. - Total annexes in BPM7: 14 annexes. - Of 20 chapters, seven are developed as common chapters with the 2025 SNA. - Phases of the update process: Phase I and Phase II (described above). *International Monetary Fund — BPM7 Annotated Outline (consolidated AO)* ### 1. TRANSACTIONS ### draft-consolidated-bpm7-annotated-outline - 1. TRANSACTIONS ### 1. Transactions — scope and major changes - Scope: will follow the 2008 SNA structure covering monetary transactions (exchanges or transfers, rearrangement, rerouting, and partitioning), non-monetary transactions (barter, remuneration in kind, transfers in kind, and internal transactions), and externalities and illegal actions, with specific BPM7 changes. - Monetary transactions (rerouting): - Three BPM6 paragraph 3.18 examples to be added: - retained earnings of investment funds - government has a nonresident entity to undertake fiscal functions related government borrowing - implicit taxes or subsidies associated with multiple exchange rate regime - Partitioning and portioning of assets: - Text on portioning of assets to be added following partitioning discussion. - Examples to include: - recording of emission trading permits (GN WS.7) - potential split asset approach for natural resources (GNs WS.6, WS.10, and WS.11) - dual use of assets for consumption and production purposes (e.g., a car used for providing taxi services as well as personal use) - Partitioning of services: - Following GN C.7, unbundling of various services included in travel packages to be added as an additional example after paragraph 3.68. - "Units facilitating a transaction on behalf of others" (paragraphs 3.69–74): - Will be renamed “reassigning transactions” to align with GFSM 2014 terminology. - Reassignment records a transaction arranged by a third party on behalf of others as taking place directly by the two principal parties involved. ### 2. Other flows — scope and clarifications - Scope: will follow the 2008 SNA sub-section covering other changes in the volume of assets and holding gains and losses. - Crypto assets: inclusion of crypto assets to be considered depending on the outcome of GN F.18. - Change of residence of individuals: - Clarification that changes in status of existing financial claims/liabilities arising from the change in residence of individuals from one economy to another are treated as other changes in the volume of assets (see BPM6 paragraph 3.21). ### C. Stocks — organization and substantive updates - Structure: separate sub-sections on benefits, ownership, definition of an asset, financial assets and liabilities, nonfinancial assets, the asset boundary, entry and exit of assets from the balance sheet, and exclusions from the asset boundary. - Nonfinancial assets: - A separate sub-section on nonfinancial assets will be included prior to the asset boundary sub-section (to be based on paragraph 3.37). - Reference provided to 2025 SNA Chapter 11 “Capital Account”. - Ownership: - Clarification on economic ownership of (non-renewable) natural resources, biological resources, and renewable energy resources, contingent on outcomes of GNs WS.6, WS.8, and WS.11. - Brief guidance on economic ownership of intellectual property products (IPPs) following GN G.5: - Economic ownership for previously produced IPP depends on the underlying arrangement. - Recommends using the decision tree from the UNECE Guide to Measuring Global Production (GMGP) to determine economic owners of IPP across an MNE group. - Clarifies that special purpose entities (SPEs) can be the economic owners of IPP assets. - For additional details, refer to BPM7 Chapter 15 / 2025 SNA Chapter 23 “Globalization”. - Financial assets and liabilities: - Clarify that the international investment position covers financial assets and liabilities that have an international character (based on BPM6 paragraph 3.25). - Asset boundary: - Sub-section on the asset boundary (covering provisions in paragraphs 3.41) will provide further clarification on: - financial asset related provisions - nonfinancial asset related provisions - provisions unrelated to asset ownership - Follow recommendations of GN WS.9. - Provide reference (updated Table 13.1 of 2008 SNA) to 2025 SNA Chapter 14 “Balance Sheet”. ### D. Balancing items - Content: will discuss balancing items in the flow accounts and balancing items in the stock accounts as in 2008 SNA. - External accounts: will include balancing items specific to external accounts (to be added from BPM6 paragraphs 3.126–129). ### E. Accounting rules — organization and key additions - Coverage: will include types of accounting system, valuation, time of recording, unit of account and currency conversion, and aggregation/netting/consolidation. 1) Types of accounting system - Systems covered: vertical double-entry bookkeeping, horizontal double-entry bookkeeping, and quadruple-entry bookkeeping, with applications to national and external accounts. - Vertical double-entry bookkeeping: - Add that external accounts for an economy are to be compiled on a vertical double-entry bookkeeping basis from the perspective of the residents of that economy (based on BPM6 paragraphs 3.26–29). - Horizontal double-entry bookkeeping: - Add example on dividends payable to illustrate that, at the worldwide level, dividends payable by all economies should be equal to dividends receivable by all economies. - Quadruple-entry bookkeeping: - Emphasize that definitions, classifications, and accounting principles in the external accounts are derived from conceptual symmetry and symmetric reporting by partner economies. - Quadruple approach needed for bilateral comparisons and global integrated data. - Conventions and terminologies for recording flows to be discussed (BPM6 paragraphs 3.30–31). 2) Valuation - Scope: valuation of transactions, valuation of partitioned flows, special valuation concerning products, valuation of other flows, and valuation of positions of financial assets and liabilities. - Market prices: - Definition of market prices from BPM6 paragraph 3.67 to be added following general rules. - Concessional pricing (paragraph 3.134): - For concessional lending, never record a transfer element for concessional lending in the “central framework” of national accounts and external sector statistics, except for concessional loans provided by employers to employees (as per GN F.15). - Reference to relevant BPM7/2025 SNA chapters for additional details. - Valuation of imports and exports of goods (paragraph 3.149): - Current standard of valuing imports and exports of goods using free on board (FOB) will be retained. - Note that valuation at the observed transaction value is conceptually preferred and, subject to further testing, will be introduced as the standard in the next version of the manuals (following GN G.1). - For additional details, refer to BPM7 Chapter 10 “Goods Account”. - Valuation of positions of financial assets and liabilities: - Include relevant parts of BPM6 text in paragraphs 3.84–87 and 3.90 in addition to SNA text. - Following GN F.8, emphasize explicit guidance to compile stock of debt securities at nominal value as a supplement to existing market valuation. - Following GN D.2, briefly mention updated guidance on valuation of unlisted equity. - Reference relevant BPM7/2025 SNA chapters for further details. - GN AI.1 recommendations (still under discussion) may have implications for valuation language (no impact on main principles envisaged at this stage). 3) Time of recording - Coverage: as in 2008 SNA with additions. - Time of recording of redistributive transactions (paragraph 3.171): - Do not record fine/penalty transactions until the unit issuing the fine has an “unconditional claim to the funds”. - If a judgment or ruling is subject to further appeal, an unconditional claim exists “when the appeal is resolved (specifically for balance of payments)”, following GN C.8. - Include guidance on time recording of deferred or waived rental payments (IMF Special Series Note on Recording of Deferred or Waived Rental Payments). - Time of recording for financial assets and liabilities: - Add details on time of recording of employee stock options and one of (nonstandardized guarantees) from BPM6 paragraphs 3.58–59. - Time of recording for nonproduced nonfinancial assets: - Add as a new item based on BPM6 paragraph 3.53. - Timing adjustment for international transactions: - Include additional details from BPM6 paragraphs 3.61–66. 4) Unit of account and currency conversion (BPM6 paragraphs 3.92–108) - Coverage: unit of account, domestic versus foreign currency, currency of denomination and currency of settlement, and currency conversion principles, as in BPM6. 5) Aggregation, netting, consolidation - Coverage: principles as in 2008 SNA with additions from BPM6. - Aggregation: - Add specific details relevant for external accounts from BPM6 paragraphs 3.109–113. - Netting: - Add specific details for external accounts from BPM6 paragraphs 3.114–121. ### F. Symmetry of reporting in external accounts - Section to be based on Section G, Chapter 3, BPM6. ### Schematic overview (chapter and section mapping) - A Introduction - 1 Stocks and Flows - 2 Balancing Items - 3 Grouping Stocks and Flows into Accounts - 4 Accounting Rules - B Flows - 1 Transactions - 2 Other Flows - C Stocks - 1 Benefits - 2 Ownership - 3 The Definition of an Asset - 4 Financial Assets and Liabilities - 5 Nonfinancial Assets - 6 The Asset Boundary - 7 Entry and Exit of Assets from the Balance Sheet - 8 Exclusions from the Asset Boundary - D Balancing Items - E Accounting Rules - 1 Types of Accounting System - 2 Valuation - 3 Time of Recording - 4 Unit of Account and Currency Conversion - 5 Aggregation, Netting, Consolidation - F Symmetry of Reporting in External Accounts ### References and cross-references (to be updated) - Guidance Notes: AI.1, C.7, C.8, CM.2, D.2, G.1, G.5, F.8, F.15, F.18, WS.6, WS.7, WS.8, WS.9, WS.10, WS.11. - IMF Special Series Note on Recording of Deferred or Waived Rental Payments. - 2008 SNA Chapter 3, BPM6 Chapter 3, GFSM 2014 Chapter 3, MFSMCG Chapter 5. ### Chapter 4 (Residence, Institutional Units, and Sectors) — selective BPM-relevant changes - Preparation: annotated outline prepared jointly with the SNA editorial team; BPM will include only issues relevant to external sector statistics and SNA only those relevant to national accounts. - Introduction: - Institutional units: based on sub-section 1 of Section A. - Residence and Economic Territory: - Sub-section to be called “Residence and Economic Territory”. - Cover general principles of residence based on 2008 SNA paragraphs 4.10–15 and BPM6 paragraphs 4.113–115. - Include discussion on economic territory of international organizations, special zones (free trade ones/offshore banks and offshore financial centers), changes in economic territory, and joint zones from BPM6 paragraphs 4.7–10. - Include definition of population and related discussion from 2008 SNA paragraphs 19.9–11. - Specific residence issues (residence of different institutional units; assets/liabilities held by groups with both residents and nonresidents; change in residence of entities other than persons) to be covered in Section J. - Sectoring and Economic Behavior: - Following GN F.7, add paragraph after 4.22 clarifying fintech classification: fintech companies should be classified within existing institutional sectors/subsectors depending on economic objectives, functions, and behavior without introducing a new sector “Fintech”; countries with significant fintech activities could consider introducing an “of which” category. - Overview of institutional sectors: - Include SNA institutional sector classification and external accounts institutional sector classification (updated BPM6 Tables 4.1 and 4.2 based on GN F.1) and BPM6 paragraphs 4.60–61 on external accounts. - Subsectors: - Following GN F.1, revise heading of 2008 SNA paragraph 4.34 to “Domestic and foreign control” and update description: - Identify NFCs and FCs controlled domestically and those foreign controlled (reference to relevant paragraphs defining “control”). - Domestically controlled split into public corporations (controlled by government) and others (national private corporations). - Recommend “of which” items for (i) domestically controlled public and private corporations (both financial and nonfinancial) that are part of a domestic multinational; and (ii) foreign controlled SPEs for NFCs (S.11) and FCs (S12). - For IMF external sector reporting, recommend more disaggregated institutional sector breakdowns: - (a) other financial corporations (OFCs) as supplementary items - (b) separately identify NFCs from households and nonprofit institutions serving households - (c) introduce “of which” items for SPEs as supplementary items for deposit-taking corporations, OFCs, and NFCs sectors (as per GN F.1) - Corporations (Section B): - Types of corporations: - Add “institutional units with cross-border elements” building on BPM6: branches including construction projects and production delivered from base (BPM6, paragraphs 4.26–33), notional resident units for land and other natural resources owned by nonresidents (BPM6, 4.34–40), multiterritory enterprises (BPM6, 4.41–44), joint ventures (BPM6, 4.45–46), quasi-corporations identified prior to incorporation (BPM6, 4.47), trusts (BPM6, 4.48), and other incorporated enterprises (BPM6, 4.49). - Special Purpose Entities (SPEs): - Update discussion in 2008 SNA paragraphs 4.55–67 with BPM6 paragraphs 4.50–52 and GN G.4 (definition and recommendation in paragraph 29). - Clarify that the term SPEs should be used only for entities with direct and indirect foreign control and not to refer to any financial entity created for a special purpose. - Examples and clarifications: - Captive financial institutions wholly owned and controlled solely by resident parent entities should not be treated as SPEs—include under FCs (BPM6 paragraphs 4.82–83). - Resident-controlled affiliates should be referred according to typology (conduits, captives, etc.) within the corresponding institutional sector, not classified as SPEs. - Special purpose units of general government to be included under Section F (general government sector) if resident of the economy of the general government; if non-resident they are treated as separate units (2008 SNA 4.67/BPM6 4.93). - Recommend enhanced imputations to better reflect fiscal operations of government controlled SPEs (GN D.5). - Refer to BPM7 Chapter 8 and align language with GFSM 2014 paragraphs 2.136–139. - Special cases (groups of corporations, head offices and holding companies): - Provide guidance following SNA clarification note N&N 37 on: - Determining whether a head office/holding company is a separate institutional unit. - Distinguishing holding companies from head offices. *BPM7 Annotated Outline (draft), IMF.* ### 3. OWNERSHIP AND CONTROL OF CORPORATIONS ### 3. OWNERSHIP AND CONTROL OF CORPORATIONS ### Ownership and control principles - BPM7 will treat corporation B as a subsidiary of corporation A if corporation A holds more than 50 percent equity in corporation B (i.e., treating them as subsidiary based on 50 percent of equity threshold). - Control by a non-resident unit will be decided based on equity holding that entitles more than 50 percent of the voting power and not on other criteria such as control of the board, control of the appointment and removal of key personnel, or control of key committees. - Paragraph 4.81 will be updated to reflect agreement on control based on Guidance Notes G.2 and D.10 and consistent with BPM6. ### Related notes and scope - An Issue Note on “Trusts and Similar Type of Funds” is in the process of being prepared and may have an impact on this topic. - Equity in international organizations is excluded from direct investment, even in cases in which voting power is 10 percent or more; equity contributions are included in other investment – other equity. ### Direct investment implications (linked to ownership/control) - Definition of direct investment and related DI concepts (direct investor/investment enterprise, control and influence, subsidiaries/associates/fellow enterprises/affiliates, and requirements for a DI relationship) will be consistent with BPM6 and BD4/5. - Investments in investment fund shares (F52) will be considered always portfolio investment following GN D.3; investments by investment funds (MMF and non-MMF) may qualify as DI if investment in equity is 10 percent or more, and PI otherwise. - A table showing which institutional sectors could be direct investors and direct investment enterprises will be added; further explanations/examples from BD4/5 and GN D.10 (Defining the boundaries of DI) will be referenced. - Coverage clarifications will address intercompany lending, debt between selected affiliated financial corporations, coverage of other financial instruments, pass-through funds, effect of domestic ownership links on DI relationships, and beginning and ending DI relationships. - A clarification table for determining the functional category of debt between affiliated institutions will be added. - Pass-through funds guidance will be updated based on GN D.6; identification of pass-through funds and income using residency of the ultimate investor will be mentioned as supplementary indicators, with additional details in Annex 6 (Selected Issues on DI); supplementary presentation of DI statistics with identification of pass-through funds based on the residency of the ultimate investor will be included. --- ### Sectoral changes and chapter-level updates ### Nonprofit institutions - No significant changes are proposed for Nonprofit Institutions and for Nonprofit Institutions Serving Households. ### The nonfinancial corporations sector - 2008 SNA paragraph 4.96 (second criteria) and the first column of SNA Table 4.1 will be updated based on GN F.1. ### The financial corporations sector - Updated breakdown of financial corporations (FCs) based on GN F.1 for national and external accounts will be added. - The 2025 SNA chapter on FCs will include only limited subsector details (as in the 2008 SNA); subsectors are discussed in detail in 2025 SNA Chapter 29 Financial Corporations. - BPM7 will continue to provide all relevant details on subsectors of FCs (with possible additions from the MFSMCG) in paragraphs 4.67–90, and efforts will be made to align BPM7 text on FC subsectors with 2025 SNA Chapter 29. ### The general government sector - The general government sector will have four sub-sections: government units as institutional units; the general government sector and subsectors; the alternative method of subsectoring; other issues related to government units. - Other issues relating to government units will include: - (a) government entities resident abroad (to be added from BPM6 paragraph 4.93); and - (b) restructuring agencies (BPM6, paragraphs 4.94–95). ### The households sector - Following GN WS.2, guidance will be provided for additional breakdowns of households to account for distribution of income, consumption, saving, and wealth. - There is no clarity at this stage about preferred definition of income and consumption (part of testing). ### The rest of the world - International organizations section will include updates from BPM6 paragraphs 4.103–107. - Regional international organizations (including Central Banks of Currency Unions (CUCBs)) will include updates based on BPM6 paragraph 4.142; two types of currency unions (centralized and decentralized) will be noted. National agencies of centralized CUs are treated as institutional units separate from the CUCB Head Quarters (with related explanation following GN B.3). Additional details appear in BPM7 Annex 3. --- ### Specific issues associated with residence - The section will present four sub-sections based on Section E, Chapter 4, BPM6, focusing on issues mainly relevant for external accounts and separated from core residence principles: 1. Residence of different types of institutional units (BPM6, paragraphs 4.116–144): residence of households, enterprises, and other institutional units. 2. Assets and liabilities held by groups that include both residents and nonresidents (BPM6, paragraphs 4.145–164). 3. Change in residence of institutional units (BPM6, paragraphs 4.165–167). 4. Alternatives to the residence concept (BPM6, paragraph 4.168). - “Data by partner economy” (BPM6, paragraphs 4.146–164) will not be included in this chapter; it will be presented as a separate annex with additional guidance. --- ### Schematics, tables, and chapter structure (overview) - Schematic components to be included: - Institutional Units; Residence and Economic Territory; Sectoring and Economic Behavior; The Total Economy; An Overview of Institutional Sectors (Figure 4.1, Table 4.1: 2025 SNA Classification of Institutional Sectors, Table 4.2: BPM7 Classification of Institutional Sectors); Subsectors; The Rest of the World. - Corporations subsection structure: 1. Types of Corporations (Legally Constituted Corporations; Quasi-Corporations; Institutional Units with Cross-Border Elements) 2. Special Cases 3. Ownership and Control of Corporations - Chapter and section listings will mirror BPM6 structures with updated cross-references to 2025 SNA where indicated. --- ### Cross-cutting references and guidance notes - References and guidance notes informing updates include Guidance Notes B.3, D.5, D.10, F.1, F.7, F.18, G.2, G.4, and WS.2; 2008 SNA Chapter 4; BPM6 Chapter 4; GFSM 2014 Chapter 2; and MFSMCG Chapter 3. These GNs and materials are used to align definitions, sectoring, and subsector details across national and external accounts. *Source: BPM7 Annotated Outline* ### 3. TYPES OF DIRECT INVESTMENT TRANSACTIONS AND POSITIONS ### 3. TYPES OF DIRECT INVESTMENT TRANSACTIONS AND POSITIONS ### Overview of updates (BPM7 Annotated Outline) - Updates are based on GN D.7 and reflect changes from BPM6 to BPM7 in presentation and analytic uses of direct investment (DI) data. - Emphasis on instrument- and sector-based standard components and on clarifying alternative presentations (directional principle and analytical purposes). ### Presentation of standard components - Direct investment standard components presentation will be by instruments (equity and debt instruments) and sectors (central bank; deposit-taking corporations except the central bank; general government; other financial corporations; nonfinancial corporations; and households and NPISHs). - Presentation based on the relationship between the investor and the entity receiving the investment (DI in DIE, reverse investment, and between fellow enterprises), and reinvestment of earnings will be included under memorandum items (these are standard components in BPM6). - Subsections on presenting data as per the directional principle and analytical uses of the different presentations will be updated, taking into account the changes to standard components based on instruments/sectors—use of the DI data by sectors in the Balance Sheet Approach (BSA) will be highlighted. ### Memorandum items and Box revisions - DI in DIE, reverse investment, and between fellows have been shifted to memorandum items with no breakdown of equity and debt instruments. - Box 6.4, BPM6 (Derivation of Data under the Directional Principle) will be modified to reflect that DI in DIE, reverse investment, and between fellows are memorandum items without instrument breakdown. ### Analytical and compilation implications - Use of DI data by sectors in the Balance Sheet Approach (BSA) will be highlighted as an analytical application of the instrument/sector presentation. - Directional-principle and asset/liability presentations will be retained in updated subsections with adjustments reflecting the instrument- and sector-based standard components. ### Related updates and cross-references - Other issues concerning DI transactions, positions, and income will be mostly maintained as in BPM6 with relevant minor updates; examples explicitly noted: - Cash pooling (GN D.18) and Greenfield Investment and Extension of Capacity (GN D.1) will be briefly introduced as separate items in this subsection, with a reference to further discussion in Appendix 6. - Direct investment is further discussed in Chapters 7, 8, and 12 (concerning positions, financial account transactions, and earned income, respectively). Selected issues on DI will be discussed in Annex 6. *Source: BPM7 Annotated Outline* ### 1. Definition of Economic Assets ### 1. Definition of Economic Assets ### Scope and cross-references - The term “statement” is noted as not used uniformly in the BPM; its usage will be examined further at the drafting stage to ensure uniformity in the updated BPM. - Annex 7.1 from BPM6 is not included in this chapter and will be discussed in Annex 9 “Positions and Transactions with IMF”. - References cited for background guidance include GNs B.4, D.2, D.7, F.1, F.3, F.6, F.8, F.9, F.15, and F.18; and a forthcoming Clarification Note on Negative Equity. --- ### Chapter 8. Financial Account (Update to BPM6 Chapter 8) ### Overall approach - The overall structure from BPM6 is maintained: separate sections on concepts and coverage (Section I), direct investment (Section II), portfolio investment (Section III), financial derivatives (other than reserves) and employee stock options (Section IV), other investment (Section V), reserve assets (Section VI), and arrears (Section VII). - Additional references to other chapters regarding treatment of financial instruments may be added during drafting. - Changes from BPM6 are highlighted in yellow in the draft. ### A. Concepts and coverage - Maintained as in BPM6: introduces the financial account, net recording in the standard framework, gross recording on a supplementary basis, and principles related to timing and valuation. ### B. Direct investment — structural adjustments and key subsections - Structure slightly adjusted from BPM6; a new subsection on dividends and withdrawal of equity replaces the BPM6 subsection on superdividends (superdividends will not apply to direct investment in BPM7). - Subsections and notes: - 1. Reinvestment of earnings — No significant changes. - 2. Dividends and Withdrawal of Equity: - Replaces Superdividends (paragraph 8.23 of BPM6). - Per GN D.17 and the Issue Note Identifying Superdividends and Establishing the Boundary Between Dividends and Withdrawal of Equity in the Context of Direct Investment: the concept of superdividends does not apply to direct investment enterprises; distributions of accumulated reserves from ordinary earnings should be treated as dividends. - Earnings from non-operating activities (sales of fixed capital assets and liquidations of branches) are treated as exceptional and recorded as withdrawals of equity. - 3. Direct investment flows in kind — no significant changes. - 4. Mergers and Acquisitions — contrasted with greenfield investment and extension of capacity; references to Chapter 6 and Annex 6. - 5. Corporate inversion and other restructuring — definition updated per GN D.4; text shortened; Annex 6 expanded to include taxonomy of corporate actions involving inversions or similar restructuring. - 6. Borrowing for fiscal purposes — updated with guidance on recording imputations with a more analytically meaningful instrument breakdown per GN D.5; reference to Annex 6. ### C. Portfolio investment — structural adjustments and new subsection on superdividends - Structure slightly adjusted from BPM6; a new subsection on superdividends is added. - Key subsections: - 1. Reinvestment of earnings in investment funds — Per GN F.2 and the Issue Note, reinvestment of earnings for portfolio investment other than investment funds will be incorporated as a supplementary item to BPM7. - 2. Superdividends — New subsection not in BPM6. Per the Issue Note, any distribution in excess of operational profits, including out of accumulated reserves, should be classified as a superdividend and treated as withdrawal of equity; implementation practical difficulties will be acknowledged. - 3. Convertible bonds — No significant changes. - 4. Debt defeasance — No significant changes. - 5. Share and debt buybacks — No significant changes. - 6. Bonus shares — No significant changes. ### D. Financial derivatives (other than reserves) and employee stock options - Structure same as BPM6 with additional guidance on financial derivatives. - 1. Financial derivatives: - Per GN F.4, paragraph 8.34 of BPM6 will be updated to clarify cases in which recording transactions on a net basis is acceptable (where separate data on transactions in assets and liabilities are not available and the position may change between assets and liabilities, e.g., forwards, swaps). - Depending on outcome of GN F.10, margins may be classified as loans in certain circumstances; if adopted, paragraph 8.39 on margins will be updated accordingly. - 2. Employee stock options — No significant changes. ### E. Other investment — selected treatments - 1. Valuation of nonnegotiable instruments — included as a topic. - 2. Financial leases — included as a topic. - 3. Securities repurchase agreements and other reverse transactions — Recording of positions associated with securities repurchase agreements and other reverse transactions discussed; reference to Annex 7 for further detail. - 4. Overnight deposits — included as a topic. - 5. Insurance technical reserves, pension and annuity entitlements, and standardized guarantees reserves — included as a topic; specific clarifications noted below. - Selected points: - 1. One-off guarantees and other debt assumption — No significant changes. - 2. Insurance technical reserves, pension fund entitlements, and provisions for calls under standardized guarantees: - Following the decision at the 15th Meeting of the Advisory Expert Group on National Accounts: when nonlife insurance policies are surrendered by mutual agreement, technical reserve liabilities of nonlife insurers will be reduced by the amount of the unearned premiums returned to policyholders and recorded as a transaction; technical reserve assets of the policyholders will be reduced by the same amount and recorded as a transaction. - 3. Special Drawing Rights — No significant changes. - 4. Securities repurchase agreements and other reverse transactions — No significant changes; reference to Annex 7. - 5. Currency — No significant changes. - 6. Change of contractual terms — No significant changes. ### F. Reserve assets - Maintained as in BPM6 with one addition: - Consistent with paragraphs 9.19–20 of BPM6: transactions involving unallocated gold accounts are recorded in the financial account under reserve assets only if they occur between two monetary authorities for reserve purposes or between a monetary authority and an international financial organization; otherwise they are classified as currency and deposits. - Reference to Chapter 6 for treatment of securities (and gold bullion) under reverse transactions in reserve assets. ### G. Arrears - Maintained as in BPM6 with no significant changes. ### Schematic overview (Table 8.1 highlights) - Concepts and Coverage: Net Recording; Gross Recording on a Supplementary Basis; Timing and Valuation. - Direct Investment: Reinvestment of Earnings; Dividends and Withdrawal of Equity; Direct Investment Flows in Kind; Mergers and Acquisitions; Corporate Inversion and Other Restructuring; Borrowing for Fiscal Purposes. - Portfolio Investment: Reinvestment of Earnings in Investment Funds; Superdividends; Convertible Bonds; Debt Defeasance; Share and Debt Buybacks; Bonus Shares. - Financial Derivatives and Employee Stock Options: Financial Derivatives; Employee Stock Options. - Other Investment: One-Off Guarantees and Other Debt Assumption; Insurance Technical Reserves, Pension Fund Entitlements, and Provisions for Calls Under Standardized Guarantees; Special Drawing Rights; Securities Repurchase Agreements and Other Reverse Transactions; Currency; Change in Contractual Terms. - Reserve Assets. - Arrears. --- ### Chapter 9. Other Changes in Financial Assets and Liabilities Account (Update to BPM6 Chapter 9) ### Overall approach - Overall structure from BPM6 maintained: concepts and coverage (Section I), other changes in the volume of financial assets and liabilities (Section II), and revaluations (Section III). - Changes from BPM6 are highlighted in yellow in the draft. ### A. Concepts and coverage - Maintained as in BPM6: introduces the other changes in financial assets and liabilities account and its main components; explains need to distinguish other flows from transactions; illustrates how other changes in volume and revaluations, together with transactions from the financial account, explain changes in the international investment position (IIP). - Per GN B.4: other changes in volume, exchange rate changes, and other price changes are now part of the core framework (standard components). - Table 9.1 will be updated to include two supplementary “of which” categories—“reclassifications” and “debt cancellation and write-offs”—under “other changes in volume”; these will be mentioned in paragraph 9.5. ### B. Other changes in the volume of financial assets and liabilities — reorganized structure - Structure adjusted to align with paragraph 9.7 definition and the SNA structure; two new subsections will be added: “appearance and disappearance of financial assets and liabilities” and “external events”. - BPM6 subsection on “insurance reserves, pension entitlements, and provisions for standardized guarantee schemes” becomes part of new “external events”. - BPM6 subsection on “financial assets and liabilities of persons and other entities changing residence” becomes part of “reclassifications”. - 1. Cancellation and write-offs: - Per GN F.9: discussion of write-offs in paragraph 9.9 will be expanded to allow for value reset beyond bankruptcy and liquidation when there is public evidence of loan deterioration. - Per GN WS.9: provisions (except in the case of standardized guarantees) are not part of the standard BPM7 framework and are therefore not treated as other flows; recognition of provisions is done through other changes in volume in monetary and financial statistics, so compilers need to know what to eliminate/ignore when source is accounting or monetary and financial statistics data. - Paragraph 9.11 on uncompensated seizures will be moved to the new subsection “external events”. - 2. Appearance and disappearance of financial assets and liabilities: - Paragraph 9.18 on monetization and demonetization of gold bullion will be moved to this subsection to better align with the SNA structure; pending the outcome of the Clarification Note Treatment of Securities Under Reverse Transactions in Reserve Assets, clarifications will be made on how monetary gold is monetized/demonetized when used for reverse transactions. - Per GN B.9: if it is not possible to adjust historical series on cross-border assets declared under tax amnesties, these assets can be recorded in the IIP in the current period through other changes in volume. - Depending on GN WS.7 outcome: emission permits may be recorded as financial assets with taxes on production recorded at surrender and at issuing price; the difference between issuing price and current market price should be recorded as other changes in the volume when the permit is surrendered. - 3. External events: - Paragraphs 12.46–47 in the 2008 SNA explain that catastrophic losses should be treated as other changes in volume; BPM7 will introduce a description as such losses could be relevant for cross-border ownership of land and buildings as well as financial assets and liabilities and feed into measures of climate change risk in external sector statistics (GN B.6). - Paragraph 9.11 on uncompensated seizures will be moved to this subsection. - Paragraph 9.24 on changes in model assumptions and their effect on insurance reserves, pension entitlements, and provisions for standardized guarantee schemes will be moved to this subsection. - 4. Reclassifications: - Paragraph 9.18 on monetization and demonetization of gold bullion will be moved to “appearance and disappearance of financial assets and liabilities.” - Following the Clarification Note “Treatment of Securities Under Reverse Transactions in Reserve Assets”: when securities provided as collateral are not readily available for meeting balance of payments financing needs, they should be excluded from the cash borrower’s reserve assets and reclassified to portfolio investment assets. - Financial assets and liabilities of persons and other entities changing residence will be moved to the subsection on reclassifications. ### C. Revaluations — main points - Broadly maintained as in BPM6 with changes. - 1. Debt reorganization — No significant changes. - 2. Financial derivatives and employee stock options: - Per GN F.4: the convention in paragraph 9.31 will change so that all revaluation effects are due to other price revaluations rather than exchange rate revaluations for those derivatives where it may not be practical to separate exchange rate changes from other revaluations. - Following paragraph 6.59 of BPM6: reiteration that, unlike other functional categories, no primary income accrues on financial derivatives; any amounts accruing under the contract are classified as revaluations. - 3. Implications of different treatments of retained earnings: - Per GN F.2: retained earnings for non-direct investment equity and non-investment fund shares will be part of BPM7, on a supplementary basis. - 4. Implications of inconsistencies between transaction prices and values recorded in positions: - Paragraph 9.33 addresses trading of instruments recorded at nominal values in positions; subsection will be expanded to cover differences for other instruments (e.g., unlisted equity as described in GN D.2) and recommend treating the differences as other price changes. - Compilers encouraged to use available information to improve quality of estimated direct investment positions when under- or over-estimated (e.g., implement backward revisions according to national revision policy), consistent with discussions on updating paragraph 238 of the fourth edition of the OECD Benchmark Definition of Foreign Direct Investment (BD4). - 5. Implications of treatment of interest — No significant changes. ### Schematic overview (Table 9.1 highlights) - Concepts and Coverage: Definition; Distinguishing other flows from transactions; Components. - Other Changes in the Volume: Cancellation and write-offs; Appearance and disappearance of financial assets and liabilities; External events. *BPM7 Annotated Outline* ### 4. Reclassifications ### 4. Reclassifications ### C. Revaluations - Topics addressed under "Revaluations": - 1. Debt reorganization - 2. Financial derivatives and employee stock options - 3. Implications of different treatments of retained earnings - 4. Implications of inconsistencies between transaction prices and values recorded in positions - 5. Implications of treatment of interest - References cited for guidance and cross-reference: - GNs B.4, B.6, B.9, D.2, F.2, F.4, F.9, F.18, WS.7, and WS.9. - Clarification Note “Treatment of Securities Under Reverse Transactions in Reserve Assets” - BPM6, 2008 SNA, and BD4 ### Key implication - Revaluation issues intersect with multiple guidance notes and existing manuals (BPM6, 2008 SNA, BD4), indicating the need for coherent treatment across debt restructuring, derivatives and employee equity-based instruments, retained earnings accounting, valuation mismatches between transactions and position records, and interest treatment. --- ### Chapter 10. Goods Account ### A. Introduction - Chapter split from existing Chapter 10: Goods and Services Account; services moved to Chapter 11. - Separate sections: Section II General merchandise, Section III Goods under merchanting, Section IV Nonmonetary gold, Section V Reconciliation of IMTS and BOP goods, Section VI Additional breakdowns and supplementary presentations. - Table changes: - BPM6 Table 10.1 modified to present an overview of the goods account only. - Table expanded to include new supplementary (“of which”) items related to goods traded as part of global manufacturing arrangements. - Digital economy: - Introduction will include reference to products ordered through electronic means (e-commerce) but supplied across borders; digital aspects covered in Chapter 16 (Digitalization). - Note: Depending on outcome of GN F.18 on crypto assets, a section on crypto assets may be necessary. ### B. General Merchandise - Maintain BPM6 definitions and discussions with updates: - Clarify inclusion of export sales to merchants and import purchases from merchants in general merchandise; include inverse merchanting arrangements (where goods do not cross border but change economic ownership twice). - Sales of final goods under factoryless goods producer (FGP) arrangement recorded under general merchandise, not under merchanting (following GN C.4). - Goods traded within a global manufacturing arrangement included as a supplementary “of which” item under general merchandise. - Valuation: - Retain FOB-type valuation as current standard. - Note that valuation of imports and exports at observed transaction value is conceptually preferred and, subject to further testing, will be introduced as the standard in the next version of the manuals (per GN G.1). - Need alignment of CIF-FOB adjustment discussion across the SNA and BPM. ### C. Goods under Merchanting - Maintain BPM6 core definitions with important changes: - Acquisition of goods by merchants recorded as negative exports to assure global balance (following GN C.4). - Reference to inverse merchanting included (see Section II). - Box 10.1 to be modified for numerical examples on merchanting and re-exports; further examples in Chapter 11 to cover mixed arrangements. - Net exports of material inputs procured abroad by the principal in an FGP arrangement and sold abroad to the contractor to be recorded as a supplementary “of which” item under net exports of goods under merchanting (following GN C.4). - Freight and insurance costs associated with merchanting recorded at transaction prices agreed between parties, dependent on agreed delivery terms (not FOB); geographical allocation of “net exports of goods under merchanting” done by summing credit and debit entries for each partner country (following Clarification Note 10). ### D. Nonmonetary Gold - Definitions and related discussions maintained as in BPM6 with no major changes. ### E. Reconciliation of IMTS and Balance of Payments Goods - Emphasize good practice for compilers to produce and publish a reconciliation table between merchandise trade statistics (IMTS) and BOP goods, important for analysis of global value chains (see GN G.7). - Table 10.2 (reconciliation) enhanced to cover all goods transactions in the reporting country changing ownership between a resident and a nonresident without crossing the border, including: - Net exports of merchanting (+) - Adjustments for exports and imports of inverse merchanting transactions (+) - Changes to line items related to goods for processing to also cover FGP activity (following GN C.4). ### F. Additional Breakdowns and Supplementary Presentations - Encourage additional breakdowns according to compiling economy priorities to support analysis: - Major products, major product groups, industry of origin, broad economic categories (links to classification systems), trade by currency (to be discussed further in Annex 5). - Recommend disaggregation of total exports and imports by characteristics of the trading enterprise (ownership and size) as a supplementary presentation (following GN C.2 and G.7); further described in Chapter 15. ### Schematic Overview (Chapter 10 structure) - A. Introduction - 1. Outcomes of production - Table 10.1, Overview of the Goods Account - B. General Merchandise - Items to be included/excluded, deliveries between affiliates, general and special trade, time of recording, valuation, re-exports - C. Goods under Merchanting - Differences between merchanting, goods for processing, and FGP arrangements - Box 10.1 Examples of Goods under Merchanting and Re-exports - Geographic allocation; Freight and insurance related to goods under merchanting - D. Nonmonetary Gold - Unallocated gold accounts; Distinguishing nonmonetary from monetary gold transactions - E. Reconciliation of IMTS and BOP Goods - Table 10.2 Reconciliation between Merchandise Trade Statistics and Total Goods on a Balance of Payments Basis - Importance for combining datasets - F. Additional Breakdowns and Supplementary Presentations - By product, by industry, by currency, by enterprise characteristics --- ### Chapter 11. Services Account ### A. Introduction - Chapter split from former combined chapter; expands concepts and coverage of services with elements from 2008 SNA paragraphs 6.16–6.22 and Box 1.1, MSITS 2010. - Introduces definition of fee-based digital intermediation platform (DIP) services (following GNs C.4 and DZ.9 and Handbook on Measuring Digital Trade). - Intermediation services: - Not separately identified in BOP services classification; supplementary items may be introduced in MSITS 2010 update and EBOPS revision. - Digital supply and use tables (GN DZ.5) provide insights on DIPs. - Measurement of cloud computing to be briefly mentioned (GN DZ.8). - Consistency with other macroeconomic manuals (e.g., 2025 SNA, MSITS 2010, IRTS 2008) to be maintained. - Table adjustments: - BPM6 Table 10.1 modified to present overview of services account only—17 main standard service categories. - Additional breakdowns/supplementary presentations: trade in services by currency (Annex 5) and exports/imports by enterprise characteristics (Chapter 15). ### Table 11.1 Overview of Services Account (17 main standard service categories) - Manufacturing services on physical inputs owned by others - Maintenance and repair services n.i.e. - Transport - Travel - Construction - Insurance and Pension services - Financial services - Charges for the use of intellectual property n.i.e. - Telecommunication services - Computer and information services - Research and development services - Professional and management consulting services - Trade-related services - Operating leasing services - Technical and other business services - Personal, cultural and recreational services - Government goods and services n.i.e. ### B. Classification of Services - Update classification with additional first-level standard service categories to improve correspondence with the Central Product Classification (CPC). - Classification mainly product based; transactor based for travel, construction, and government goods and services n.i.e. - If new services identified during CPC revision, BOP classification will reflect them where relevant. ### Selected subsections and updates - 1. Manufacturing services on physical inputs owned by others - BPM6 Box numerical examples moved to Box 11.1; include example explaining differences between processing-type arrangements and FGP-type arrangements (per GN C.4). - Box 11.2 to explain FGPs and include decision tree from GN C.4, Annex II, with links to Globalization chapter. - 2. Maintenance and repair services - Maintained with no changes. - 3. Transport - Mostly as in BPM6 with minor update; reference to package tours box in travel subsection. - 4. Travel - Updates include: goods and services provided free to nonresidents by government and NPISH known as social transfers in kind are included under travel (e.g., free health services to a foreign tourist). - Package tours: not a new product; a basket of at least three major services per TSA (services themselves, services by tour operator, margin of travel agency) following GN C.7 and IRTS 2008. - Health-related travel follows IRTS 2008 definition of “health and medical care”. - Travel expenses of patients’ companions included under “other personal travel” treating them as “normal travelers”. - Clarifications on companions of education-related travelers to be provided (based on BEA note). - Following GN C.1, supplementary breakdown of travel to include personal, cultural and recreation services under other services. - 5. Construction - Minor update: supplementary breakdown for construction abroad (1.A.b.5.1) and construction in compiling economy (1.A.b.5.2) for constructions and construction services aligned with CPC divisions 53 and 54. - 6. Insurance and Pension Services - Updates on hybrid insurance products per GN F.12: - Hybrid products mix life insurance (saving component) and nonlife insurance (claims only on event). - Classification into life (financial account) or nonlife insurance (current transfers) depends on predominant feature. - Term life insurance continues to be included in nonlife insurance (as in BPM6). - Further details in Annex 8 “Insurance and Pensions”. - Details on Takaful and Re-takaful in Chapter 17 “Islamic Finance and Insurance”. - Insurance services through fintech (InsurTech) covered under insurance and pension services (GN F.7); further digitalization aspects in Chapter 16. *BPM7 Annotated Outline* ### 7. FINANCIAL SERVICES ### 7. FINANCIAL SERVICES ### Coverage and general approach - Subsection explains the coverage of financial services and their measurement in balance of payments, following BPM6, with updates noted below. ### Explicit charges - Additional information/links on the service charges on purchases of IMF resources and commitment fees associated with undrawn balances under stand-by or extended arrangements with the IMF will be provided, noting that further details are included in Annex 9 “Positions and Transactions with IMF”. ### Fintech - Following the GN F.7, financial services provided by fintech (e.g., payment services/peer-to-peer lending services/other financial services such as capital raising/investment management enabled by Fintech) are classified in the financial services without introducing new services categories. - Insurance services provided through Fintech are covered under insurance and pension services. - Sectorization of Fintech companies is discussed in Chapter 4 and the classification of financial instrument provided by Fintech in Chapter 5. - Fintech and other aspects of the digitalization are covered in detail in Chapter 16. ### Margins on buying and selling transactions - No changes to the underlying concept of margins presented in the BPM6. - Further elaboration will be provided on relevant concepts including a brief mention of practical challenges in compiling this item. - Additional guidance on compilation will discuss tradeoffs among compilation approaches (survey-based, estimation, and/or mixed approach) and will be provided in the updated BPM6 Compilation Guide. - Countries should assess materiality when considering whether or not to compile this item (based on GN F.13 guidance, which is expected to be finalized soon). ### Factoring - Guidance on the income received by the factor (as fee) will be provided with relevant references to factoring transactions in other chapters of BPM7 (based on GN F.14). ### FISIM and negative interest rates - Paragraphs 10.134 and 10.135 to be updated. - While FISIM should be positive irrespective of whether interest rates are either positive or negative (since output cannot be negative), negative interest rates may cast doubts on the right reference rates to be used in the calculation of FISIM. - Negative interest rates on deposits raise the risk of negative FISIM, as banks may offer interest rates higher than reference rates, to retain depositors. - Compilers shall carefully review the reference rates to be used with a view to avoid negative FISIM. - Footnote: The updated SNA will also include guidance on negative interest rates, and the possible impact on the calculation of FISIM. ### Classification changes and new/subdivided service categories - Following GN C.6, telecommunication, computer, and information services category in BPM6 is split into two standard, first-level categories to allow separate identification of telecommunication (1.A.b.9) and computer/information services (1.A.b.10). - 1.A.b.9 Telecommunications services - 1.A.b.10 Computer, and information services - 1.A.b.10.1 Computer services* (supplementary item) - 1.A.b.10.2 Information services* (supplementary item) - Computer and information services will include the provision of cloud computing services (i.e., delivery of computing power, database storage, and other IT resources). - Definition of cloud computing (based on GN DZ.8) including the challenges in measuring it will be added with links to further discussion in Chapter 16, Digitalization. ### Technical and other business services: reorganization - Following GN C.6, other business services category in BPM6 is split into five standard, first-level categories: - 1.A.b.11 Research and development services - 1.A.b.12 Professional and management consulting services - 1.A.b.13 Trade-related services - 1.A.b.14 Operating leasing services - 1.A.b.15 Technical and other business services - Coverage of 1.A.b.11 and 1.A.b.12 identical to BPM6. - 1.A.b.13 and 1.A.b.14 cover Trade-related services and Operating leasing services, respectively. - 1.A.b.15 covers BPM6 items: - (i) Architectural, engineering, and other technical services (10.151(a)); - (ii) Waste treatment and de-pollution, agricultural, and mining services (10.151(b)); - (iii) Other business services (10.151(e)). ### Leasing and IFRS 16 - A reference will be made to IFRS 16, preferably in a footnote, highlighting that it is not aligned with the BPM/SNA standards regarding the concept of economic ownership (based on GN C.5). - Concepts of dry and wet leasing of aircrafts (discussed in paragraph 12.34 BPM6 CG) and their treatment will be explained in updated paragraph 10.156 (leasing of aircraft/ships with and without crew). ### Merchanting of services and intermediation fees - Following GN C.4, reference to “services merchanting” in paragraph 10.160 will be removed. - Conceptual clarification: “merchanting of services”, from a pure conceptual view, is impossible as services cannot be traded in the same way as goods and “pure” merchanting transactions cannot involve services because no ownership rights can be established on services according to the current international standards. - Services are generally produced and consumed simultaneously and are delivered directly from producer to consumer. - Services can be intermediated by a third person against a fee; such intermediation fees should be recorded under trade-related services (1.A.b.13), as a supplementary “of which” item in the external accounts of partner countries. - Suggested treatment for intermediation services: assimilate them to those defined in BPM6 paragraph 3.10, when “one unit (an agent) arranges for a transaction to be carried out between two other units in return for a fee from one or both parties to the transaction” (based on GN C.4). - Clarification: payments from producers to DIPs following the “net approach” (GN DZ.9) are recorded under trade-related services, provided they are cross-border transactions. - Additional details on “net approach” and other aspects of DIPs are covered in Chapter 16 (Digitalization). ### Personal, cultural, and recreational services - Subsection retained with minor updates. - Tele-health/tele-education included under Other personal, cultural, and recreational services (10.168/10.169 already provide guidance on health services provided remotely/educational services through internet). ### Government goods and services n.i.e. - Scope remains unchanged from BPM6. - Additional methodological and compilation guidance on compilation of government goods and services n.i.e. regarding specific products to be included under Other services supplied by and to governments, aligned with CPC divisions 91 and 99, to enhance consistency between cross-border transactions and the SNA. ### Schematic overview (structure retained with updates) - A. Introduction - 1. Definition of Services - 2. Time of Recording and Valuation - Table 11.1 Overview of Services Account - B. Classification of Services (updated boxes and numerical examples noted) - 1. Manufacturing Services on Physical Inputs Owned by Others (Box 11.1; Box 11.2) - 2. Maintenance and Repair Services n.i.e. - 3. Transport - 4. Travel - 5. Construction - 6. Insurance and Pension Services - 7. Financial services - 8. Charges for the use of intellectual property n.i.e. - 9. Telecommunication Services - 10. Computer and Information Services - 11. Research and Development Services - 12. Professional and Management Consulting Services - 13. Trade-related Services - 14. Operating Leasing Services - 15. Technical and Other Business Services - 16. Personal, Cultural and Recreational Services - 17. Government Goods and Services n.i.e. *Source: IMF — BPM7 Annotated Outline (Chapter 7, “FINANCIAL SERVICES”).* ### 1. Definition ### 1. Definition ### Overview - Introduces primary income and its role in the external accounts. - Links the primary income account to GDP and GNI concepts and to the broader macroeconomic framework. ### Links to GDP and GNI - Primary income is presented as linked to gross domestic product (GDP) and gross national income (GNI) through distribution of income and cross-border income flows. - The outline indicates that relationships and presentations will be maintained from BPM6. ### Distinguishing primary income from secondary income - The outline clarifies the conceptual distinction between primary income and secondary income, and cross-references the companion chapter on secondary income (Chapter 13) for complementary treatment. ### Structure of primary income account - Presents a schematic and tabular representation: - Table 12.1 Overview of the Primary Income Account ### B. Types of Primary Income - Enumerated components of primary income: - 1. Compensation of employees - 2. Dividends and withdrawals from quasi-corporations - 3. Reinvested earnings - Box 12.1 Reinvested Earnings with Chain of Ownership - 4. Interest and similar returns - Box 12.2 Numerical Example of Calculation of Interest Accrual on a Fixed Interest Rate Bond Issued at Par - Box 12.3 Numerical Example of Calculation of Interest Accrual on a Fixed Interest Rate Bond Issued at Discount - Box 12.4 Numerical Example of Calculation of Interest Accrual on a Fixed Interest Rate Bond Issued at Premium - Box 12.5 Numerical Example of Calculation of Interest Accrual on a Zero-Coupon Bond - Box 12.6 Numerical Example of Calculation of Interest Accrual on an Index-Linked Bond—Broad-Based Index - Box 12.7 Numerical Example of Calculation of Interest Accrual on an Index-Linked Bond—Narrowly Based Index - 5. Investment income attributable to policyholders in insurance, standardized guarantees, and pension funds - 6. Rent - 7. Taxes and subsidies on products and production ### C. Investment Income and Functional Categories - Investment-income classifications by investment relationship: - 1. Direct investment income - Box 12.5 Numerical Example of Calculation of Reinvested Earnings of a Direct Investment Enterprise - Table 12.2 Detailed Breakdown of Direct Investment Income updated to reflect sectoral breakdown in favor of investment relationship - 2. Portfolio investment income - 3. Other investment income - Table 12.3 Detailed Breakdown of Other Investment Income - 4. Income on reserve assets - 5. Supplementary presentation of investment income by enterprise characteristics ### Cross-references and guidance notes - References guidance notes and technical materials informing treatment and clarifications: - GNs B.9, B.12, D.7, D.16*, D.17*, C.2, F.2*, F.3, G.9, IF.1, DZ.6, WS.6*, WS.7*, WS.8*, WS.11*, WS.14*, and AI.2. - Clarification Note on The Statistical Treatment of Negative Interest Rates (CN.3). - SNA News & Notes 39/40 on recording of flows between defined benefit pension schemes and their sponsors and AEG 9/2014 meeting decisions on treatment of holding gains and losses for pensions. - Guidance notes marked with an asterisk (*) are noted as under consultation at the time of writing the annotated outline. _The BPM7 Annotated Outline_ ### Chapter 11, Services Account, Box 11.1). The typology for global production arrangements ### Chapter 11, Services Account, Box 11.1). The typology for global production arrangements (GN C.4, Annex III) ### D. Measurement challenges - The chapter (Draft BPM7 Annotated Outline) identifies multinational enterprises (MNEs) and global production arrangements as sources of measurement challenges for both national accounts and balance of payments (BPM). - Key measurement issues summarized: - With complex global corporate structures and production arrangements dividing activities across many jurisdictions, allocation of activities to different economies becomes problematic. - Complex financing and ownership structures of MNEs can mask ultimate ownership links and “inflate” DI flows and positions as each flow into and out of each economy is counted even if the funds, or income, are just passing through. - Production fragmentation inflates gross trade flows; the effect will be illustrated in a figure (see GN G.7, Annex II). - Cross-border mobility of corporate assets—including intangible assets such as IPPs, the ability to easily change the legal domicile of a firm to another country, and other activities such as transfer pricing and intra-group services—can make the true location of the generation of profits and value added ambiguous. - Ensuring that all activity of an MNE is captured, not duplicated, and properly allocated by economic territory is a statistical challenge since current standards do not view the MNE as a single entity. If not properly recorded, the activities of MNEs can result in a misallocation of GDP and, as a result, can severely distort an economy’s macroeconomic indicators. - Drafting note: - For the purpose of the high-level outline, measurement challenges associated with globalization are presented separately in a section; at drafting stage, they may be incorporated differently in the SNA and BPM context. - A reference can be made to the use of large case units as a strategy to obtain consistent information about the economic activity of MNEs. ### E. Alternative indicators and supplementary information to monitor the impact of globalization and meet users’ needs - The chapter emphasizes three approaches: (1) emphasize macroeconomic indicators within the existing macroeconomic framework; (2) develop more granular or supplementary data consistent with the core framework; (3) provide alternative presentations extending beyond the core frameworks. - Emphasize macroeconomic indicators less distorted by globalization: - Highlight key SNA indicators such as gross/net national income (GNI/NNI), gross/net national disposable income (GNDI/NNDI), and household (adjusted) disposable income as generally less distorted by globalization and less sensitive to MNE activity than GDP, especially for countries with significant MNE presence (GN G.2). - Emphasize reconciliation of FDI and AMNE statistics to address measurement challenges and support analysis and policymaking (GN D.9). - Role of AMNE and FATS: - Statistics on the Activities of Multinational Enterprises (AMNE) and Foreign AffiliaTes Statistics (FATS) provide additional information on foreign-controlled enterprises beyond traditional FDI statistics; coverage, statistical units, time of recording and valuation, attribution of AMNE variables and compilation issues from BPM6 Appendix 4 will be brought into the chapter with updates and references to OECD Benchmark Definition of FDI and Manual on Statistics of International Trade in Services. - More granular or supplementary data (consistent with core framework): - Supplementary presentations of DI statistics by ultimate investing economy, by ultimate host economy, etc., to be covered in updated BPM7 Annex 6, Selected Issues on Direct Investment (GN D.6). - Additional granularity in institutional sector accounts (ISAs), based on control and ownership of corporations, depending on national statistical infrastructure, resources, and policy needs (GN G.2); the chapter can include a figure showing additional granularity in ISAs (GN G.2, Annex II). - Supplementary presentation of trade and investment income by enterprise characteristics (ownership, size) to identify MNE role in the current account (GN C.2, C.4, D.6, and G.7). General criteria for thresholds (product, industry, size) will be provided (as in paragraphs 12–15 of GN C.2) while compilers decide actual thresholds; the template (Annex I of GN C.2) will be introduced as a table in the chapter. - Separate identification of SPEs within cross-border statistics: encourage SPE data collection within ESS and breakdowns for SPEs, including extensions (per GN G.4). For countries where SPEs are significant, recommend national accounts compilers identify SPEs within ISAs as an “of which” supplementary category for both foreign-controlled financial and non-financial corporations. Enhanced imputations for government sponsored SPEs (GN D.5) will be covered in the updated chapter on the Financial Account (BPM6, paragraphs 8.24–8.26). - Supplementary statistics within the BPM framework, such as additional detail by geography or by product, to improve indicators for Global Value Chain (GVC) analysis (see GN G.7, Annex V). - Alternative presentations or extensions compiled outside SNA/BPM frameworks: - Encourage a voluntary option of extending the core framework with a supplementary presentation of SPEs reclassified from their countries of legal incorporation to the countries of their parents for economies where SPEs are important. (This extends beyond BPM6 paragraph 4.87, which limits supplementary separate identification for SPEs to within direct investment.) ### F. Analytical tools - Introduce analytical tools developed to understand relationships between globalization and domestic economies: - TiVA: - Introduce concept of TiVA, which measures value added by each country and industry in production of goods and services traded and consumed worldwide. - Provide an overview of TiVA indicators and refer to OECD-WTO TiVA initiative materials. - GVC satellite account: - Define GVC satellite account and explain its use to identify and articulate a GVC for specific products or groups of products produced within a GVC. - GVC satellite account comprises GVC-specific SUTs (national or multi-country) based on an enterprise-centered approach with integrated and detailed business statistics and information on business lines/functions, and GVC-specific ISAs; compilation guidance will refer to the 2019 GVC Handbook. - eSUTs (extended Supply and Use Tables): - Introduce eSUTs to provide granularity on the role of MNEs in production processes and to aid GVC and TiVA analysis. - Compilers are expected to implement eSUTs flexibly according to national circumstances; section will describe possible extensions and refer to UN guidelines Accounting for Global Value Chains: GVC Satellite Accounts and Integrated Business Statistics and the forthcoming OECD Handbook on Extended Supply and Use Tables. ### Schematic overview (as organized in the Draft BPM7 Annotated Outline) - The chapter structure includes: - A. Introduction - B. Multinational Enterprises (MNEs): definition, role, box on Typology of SPEs, Figure: GMGP Decision Tree - C. Global Production: 1. Global Production Arrangements (Box: Typology of Global Production Arrangements) - D. Measurement Challenges (Figure: Effect of Production Fragmentation on Gross Trade Flows) - E. Alternative Indicators and Supplementary Information: - 1. Existing Macroeconomic Indicators - 2. Granular or Supplementary Data (Figure: ISAs: Financial and Non-financial Corporations; Table: Template for Identifying the Role of Enterprise Characteristics in the Current Account (from GN C.2, Annex 1)) - 3. Alternative Presentations or Extensions - F. Analytical Tools: - 1. TiVA Indicators - 2. GVC Satellite Account - 3. Extended SUTs *Draft BPM7 Annotated Outline — Chapter 11, Services Account, Box 11.1). The typology for global production arrangements (GN C.4, Annex III).* ### Chapter 11 Services Account discusses these issues noting that further details are provided ### draft-consolidated-bpm7-annotated-outline - Chapter 11 Services Account ### Digital Financial Services - The BPM7 annotated outline will discuss financial digital intermediation platforms (financial DIPs) as suppliers of services to facilitate peer-to-peer lending, equity-based crowdfunding, and philanthropic crowdfunding. - The BPM7 annotated outline will highlight the distinction between: - financial digital intermediation services: platforms charge fees for facilitating transactions between suppliers and users of funds; and - financial intermediation services: intermediaries borrow from fund suppliers and lend to fund demanders. - Financial DIPs generally receive explicit fees for matching and transaction facilitation and therefore are classified as financial auxiliaries (S126), not financial intermediaries. ### Crypto Assets and Related Digital Assets - The BPM7 annotated outline will broadly classify fungible crypto assets and related digital assets into two categories: - (i) those designed to act as a general medium of exchange (with and without corresponding liability); and - (ii) other digital assets such as security tokens. - The subsection will include a decision tree to distinguish different digital assets based on Annex II.1, GN F.18. The decision tree presents digital financial assets and crypto assets as partially overlapping categories of digital assets. - The subsection will provide definitions of various types of crypto assets and explain the roles of distributed ledger technology (DLT) and blockchains in enabling decentralized payment clearing. - Crypto assets will be broken down into fungible and nonfungible crypto assets. A typology of fungible crypto assets based on Annex II.2, GN F.18, will be included to explain classification of fungible crypto assets. - The BPM7 annotated outline will note that all fungible crypto assets meet the asset boundary. - Fungible crypto assets with a corresponding liability should be recorded as financial assets. - The classification of: - fungible crypto assets designed to act as a general medium of exchange without a corresponding liability (CAWLM), and - fungible crypto assets designed to act as a medium of exchange within a platform or network without corresponding liability (CAWLP), is not yet decided; the annotated outline will be updated based on the decision made after evaluating responses to the user survey agreed at the joint AEG/BOPCOM meeting in October 2022. - Non-fungible tokens (NFTs) will be defined as digital records hosted on a blockchain that are associated with a digital or physical asset but which are distinct from that asset. - A classification of NFTs into: - (i) those that only grant personal use and display rights, - (ii) those that grant limited commercial rights, and - (iii) those that grant full ownership rights, will be discussed and guidelines on the recording of each category of NFT will be presented. - The recommended treatment of each type of NFT will be as shown in the endorsed GN DZ.10. ### Measuring Prices and Volumes of Products Affected by Digitalization - The BPM7 annotated outline will note that many measurement challenges from digitalization involve volumes rather than current-price output and will highlight distinctive issues in measuring price and volume change for digital products. - Products and activities considered will include ICT goods, software and data, cloud computing and other ICT services, DIPs, e-commerce, and free platforms funded by advertising and data collection. - Measurement issues listed include the frequent appearance of new or improved products and product models, customization/variety, bundling, and e-commerce. - Methods mentioned will include: - quality adjustment techniques (hedonics, options pricing, producer costs), - resampling (as defined in the Eurostat Handbook on Price and Volume Measures in National Accounts), and - unit value indexes for homogeneous items. - The section will assume issues in price and volume measurement are covered in more depth in Chapter 18 of the 2025 SNA and will draw on GN DZ.1, the Eurostat Handbook on Price and Volume Measures in National Accounts, and the Consumer Price Index Manual: Concepts and Methods (2020). Research papers cited in GN DZ.1 may also be consulted. ### Analytical Tools to Increase the Visibility of Digitalization - Thematic Account on the Digital Economy and Extended Account on Free Digital Products: - The BPM7 annotated outline indicates that an extended account on free digital products and a more comprehensive thematic account on the digital economy will help show the impact of digitalization. - The thematic account would show alternative aggregations and additional detail developed in digital supply and use tables (SUTs) together with alternative measures of free digital products based on expanded boundaries of production and consumption developed in the extended account on free digital products. - Digital Supply and Use Tables: - The BPM7 annotated outline will present guidelines for compiling digital SUTs by adding rows that break out transactions that are digitally ordered or digitally delivered and by providing a breakdown of digital products. - Digital SUTs will contain added columns on the output, value added, and intermediate consumption of: - (i) ICT industries; - (ii) free digital platforms funded by advertising and data collection; - (iii) non-financial DIPs; - (iv) firms dependent on DIPs; - (v) e-tailers; - (vi) digital only firms providing financial and insurance services; and - (vii) other producers operating only digitally. - Priority indicators within digital SUTs will include value added of digital industries, intermediate consumption of digital intermediation services and cloud computing services, and digitally ordered transactions. - The section will draw on GN DZ.5 and "Digital Supply-Use Tables: A Step Toward Making Digital Transformation More Visible in Economic Statistics", Going Digital Toolkit Note, No. 8. ### Schematic Overview (Chapter 11 structure) - A. Introduction - 1. Definition of digitalization; scope of the digital economy as covered in the chapter - 2. Organization of the chapter - B. Digital Goods and Services - 3. Data Assets - 4. Issues in the Measurement of Software - 5. Cloud computing - C. Digital Platforms - 6. Definitions and classifications - 7. Nonfinancial Digital Intermediation Platforms (DIPs) - 8. Free Platforms and Free Digital Products - D. Digitalization and the Financial System - 1. Digital financial services - 2. Crypto Assets and Related Digital Assets - a. Crypto Assets and Related Digital Assets Decision Tree - b. Fungible Crypto Assets - c. Nonfungible Crypto Assets - E. Measuring Prices and Volumes of Products Affected by Digitalization - 1. Distinction between volume measurement and current-price measurement - 2. Digital Products that present Price and Volume Measurement Challenges - 3. Methods for Handling the Price Measurement Challenges - F. Analytical Tools to Increase the Visibility of Digitalization - 1. Thematic Account on the Digital Economy and Extended Account on Free Digital Products - 2. Digital Supply and Use Tables *Prepared from the BPM7 annotated outline (Chapter 11) and associated guidance notes as presented in the draft-consolidated-bpm7-annotated-outline.* ### 4. Economic ownership of non-financial assets when clients default ### 4. Economic ownership of non-financial assets when clients default ### C. Islamic Financial Institutions/Entities Sectoring - Islamic Financial Institutions (IFIs) are categorized by business type. - Allocating IFIs to institutional subsectors of financial corporations: - Deposit-taking institutions (S122) - Non-MMF investment funds (S124) - Other financial intermediaries (S125) - Financial auxiliaries (S126) - Captive financial institutions and money lenders (S127) - Insurance corporations (S128) ### D. Islamic Financial Institutions’ Measures of Output in the Production Account - Output of IFIs is measured by subsector, including direct and indirect services. - FISIM methodology considerations: - Reference rate and terminology. - Alternative perspectives on output measurement specific to Islamic Finance are presented. ### E. The Nature of Returns on Islamic Investments in the Primary Income Account - Clarifies the concept of interest and similar returns, based on prescribed breakdowns. - Investment income on instruments that closely resemble: - Deposits - Loans - Debt securities - Equity securities ### F. The Classification of Islamic Financial Instruments in the Accumulation and Balance Sheet Accounts - Factors for deciding the classification of Islamic Financial Instruments are identified. - Classification in national accounts and links to investment income: - Instruments classified as currency and deposits - Instruments classified as loans - Instruments classified as debt securities - Instruments classified as trade credits and advances - Instruments classified as equity - Instruments classified as receivables - Financial instruments linked to specific financial corporations are considered. - Islamic Finance financial instruments are discussed under the functional classification of BPM7 and related investment income. - Annex summary: Islamic Finance and Insurance arrangements, and its recording in the sequence of accounts. - References cited include: - GN IF.1 Islamic Finance in the National Accounts and External Sector Statistics - UN paper “Perspectives on Islamic Finance in the National Accounts” - Annex 4.3 of the IMF Monetary and Financial Statistics Manual and Compilation Guide, 2016 *BPM7 Annotated Outline.* ### Chapter 18. Informal Economy #### A. INTRODUCTION - Rationale: - Informal productive activities provide employment and income to many people who might otherwise be unemployed and tend to be vulnerable to negative economic shocks, affecting inequality and poverty. - Measuring the informal economy is important for designing, implementing, monitoring, and analyzing macroeconomic and social policies. - Scope and purpose: - The measurement framework aims for consistent measures of informal production and informal labor inputs to inform policy decisions that may decrease vulnerability of informal workers and enterprises. - Definitions and distinctions: - The informal economy includes all informal productive activities carried out by workers or economic units within the general production boundary. - The informal sector is a subset: household unincorporated market enterprises and associated labor input not formally recognized by government authorities (not registered for tax or similar purposes). - Non-observed economy is conceptually distinct from the informal economy; overlaps exist but each concept serves different purposes. - Historical context: - The 2008 SNA recognized importance of informal activities but lacked comprehensive statistical recommendations; since 2018 the ILO developed a comprehensive framework summarized in this chapter. - Note on new forms of informal activity: - Digitalization has produced new informal activities (e.g., informal taxi drivers) with lower and uncertain income for workers. #### B. FRAMEWORK FOR THE INFORMAL ECONOMY - Overarching concept: - All informal productive activities carried out by workers or economic units within the general production boundary. - Definition of informal productive activities: - Activities carried out by persons or economic units that are—in law or in practice—not covered by formal arrangements. - Sector assignment rules: - All non-household economic units (corporations, general government, and NPISHs) are assigned to the formal sector. - Households assigned to the formal sector if they undertake production through a household unincorporated market enterprise that is registered for tax or similar purposes. - Households assigned to the informal sector if they undertake market-oriented production through a household unincorporated market enterprise that is not registered for tax or similar purposes. - Households producing mainly for own final use are assigned to the household own-use production sector (included in the informal economy but not part of the informal sector). - Additional guidance: - Household unincorporated market enterprises may lack complete accounts and may blur household-as-consumer vs household-as-producer asset boundaries. - Production/trade by formal sector units (including undeclared and underdeclared) is not part of the informal economy but may be non-observed; formal units can use informal labor inputs, which are treated as informal and compiled from a labor statistics perspective. - Characteristics of the informal sector: - Includes agricultural production of informal enterprises. - Enterprise size is not a criterion for classifying household unincorporated market enterprises as informal. - A single household may operate multiple informal enterprises; labor inputs in the informal sector are all informal. - Household own-use production sector: - Includes households producing mainly for own final consumption, production of informal or temporary NPISHs, and direct volunteer work. - Extends beyond the SNA production boundary by including services produced by households for own use, direct volunteering, and services by informal NPISHs. - Housing services of owner-occupiers are by convention excluded from the informal economy. - Household own-use production (other than housing services of owner-occupiers, informal or temporary NPISHs, and direct volunteering) using household labor is mostly informal, with exceptions possible. - Illegal activities: - Most, but not all, illegal productive activities would be part of the informal economy if informality principles are applied. - Production of goods and services whose sale, distribution or possession is forbidden by law are by convention excluded from the informal economy; statistics on informality should be supplemented with measures of such illegal productive activities. - Production usually legal but carried out by unauthorized producers should be included in the informal economy. - Incorporation of guidance materials: - Boxes and figures from IE.1 Guidance Note (tabular scope framework and decision tree) are to be incorporated. #### C. DIGITALIZATION AND INFORMAL CROSS BORDER FLOWS - Digitalization: - Has penetrated many aspects of economic activity and led to concerns about mismeasurement. - New informal activities facilitated by digital technologies create new job types that may be formal or informal; many are dependent contractors (treated in Section D). - Dependent contractors facilitated by digitalization typically depend on formal enterprises (possibly non-resident) providing digital intermediation services. - Household unincorporated market enterprises engaged in such activity are assigned to formal or informal sector based on usual criteria. - Informal Cross Border Flows: - Discusses omission problems in external sector statistics when transactions outside regular inquiries are omitted; some omissions relate to informal economy activities. - Examples: shuttle trade and smuggling by household unincorporated market enterprises may not be covered by customs; informal services (room rental, informal restaurants and bars), and remittances transmitted through informal channels. - Households may transmit income derived from the informal economy as remittances through either formal or informal channels. - Illicit Financial Flows: - Distinguished from cross-border informal economy flows. - Four main types of activities that can generate illicit financial flows: (i) tax and commercial activities, (ii) illegal markets, (iii) corruption, and (iv) exploitation-type activities and financing of crime and terrorism. - Illicit financial flows can emerge as illicit income generation or illicit income management. - Illicit financial flows should be distinguished from illegal transactions; illegal transactions are included in the balance of payments framework like legal transactions. - Not all illicit financial flows are transactions; flows arising from exploitation-type activities are not transactions and are therefore excluded from the balance of payments statistics. #### D. INFORMAL WORK - Definitions and categories: - Introduces ILO definitions: job or work activity, independent workers, dependent workers, employment for profit, and employment for pay; then defines categories of informal employment. - Employers: - Employers are in informal employment if they operate and own or co-own a household unincorporated market enterprise. - Dependent contractors: - Own and operate household unincorporated market enterprises and have commercial contractual arrangements (not employment contracts) to provide goods or services for/through another economic unit. - Dependent contractors are in informal employment if they: - do not own or co-own a formal economic unit and are not registered for tax and thereby do not have a formal status, or - own or co-own a formal economic unit or are registered for tax (have a formal status) but without effective access to formal arrangements intended to reduce economic risk related to the job. - Many new forms of dependent contractors are facilitated by digitalization. - Employees: - Employees are in informal employment if their employment relationship is not in practice formally recognized by the employer in relation to the legal administrative framework and not associated with effective access to formal arrangements such as labor legislation, social protection, income taxation, or entitlement to employment benefits. This includes domestic staff when there is no formal arrangement. - Contributing family workers: - Are in informal employment if their job is not in practice formally recognized in relation to the legal administrative framework. - Additional inclusions: - Tables from ILO appendix on “informal productive activities by persons in the informal economy” and “informal and formal jobs by status in employment and sector” are to be included. - Description of partly informal productive activities in relation to formal jobs: all labor inputs of workers in informal jobs are informal; workers in formal employment can provide informal labor inputs to formal sector units (e.g., undeclared income and hours). - Other informal forms of work: - Direct volunteering is always informal. - Organization-based volunteer work is informal if carried out for an informal NPISH, an informal sector enterprise, or for/through a formal economic unit when the volunteer is not covered by formal protective arrangements. - Unpaid trainee work is informal if not effectively covered by formal protective and facilitative arrangements. - Own-use production work is informal if not effectively covered by formal arrangements that promote, facilitate, protect, and regulate the worker. #### E. THE NON-OBSERVED ECONOMY - Definition and scope: - Extent of economic activity missing from statistical data collections and administrative sources, including some illegal activities. - Overlaps with but is not identical to the informal economy. - International transactions: - International transactions (and possibly positions) missing from statistical data collection and administrative sources constitute non-observed elements of the external accounts; omissions may be related to informal economy activities or to undeclared/underdeclared production and trade by formal units. - Measurement and compilation: - Assembling national accounts, especially using supply and use frameworks, casts light on missing information including illegal activities. - Balancing supply and use tables may estimate some non-observed activity but may not capture all. - Techniques from the manual Measurement of the Non-Observed Economy: A Handbook are useful for measuring the non-observed economy and aspects of informal enterprises. #### F. GUIDELINES, STUDIES, AND HANDBOOKS ON THE INFORMAL ECONOMY - Reviews and cites various guidelines, studies, and handbooks useful for compilers: - Reports of the BOPCOM Task Force on the Informal Economy - IMF paper, “Measuring the Informal Economy” - ILO reports and guidelines - ICLS resolutions - Conceptual Framework for Statistics on Informal Economy - Proceedings and papers of the Delhi Group on Informal Sector Statistics may be cited where especially relevant *BPM7 Annotated Outline.* ### 1. Purpose of measuring the informal activities in terms informing policy decisions ### 1. Purpose of measuring the informal activities in terms informing policy decisions ### A. Objectives and scope - Explain the purpose of measuring informal activities to inform policy decisions. - Provide a brief introduction of key concepts relevant to the informal economy. - Describe the emergence of new types of informal activity. - Develop a new framework for measuring the informal economy. - Distinguish between the informal economy and the non-observed economy. - Present the structure of the Chapter. ### B. Framework for the Informal Economy (per GN IE.1) - Definitions: - Define informal units (informal sector), informal workers, and the informal economy incorporating new guidance per GN IE.1. - Sectoral delineation: - Set out the formal sector, the informal sector, and the household own-use production sector and their links to informal activities. - Measurement guidance: - Provide guidance on measurement of informal production and labor inputs in each sector. - Exclusion of illegal production: - Per GN IE.1, clarify that unlike the SNA, the informal economy generally excludes the production of goods and services whose sale, distribution or possession is forbidden by law. - Incorporation of decision tools: - Incorporate Boxes 1 and 2 and Figure 1 from GN IE.1 providing a tabular framework and a decision tree to identify informal productive activities. ### C. Digitalization and Informal Cross Border Flows - Digitalization: - Discuss the role of digitalization in the emergence of new types of informal activities. - Informal trade and cross-border flows: - Discuss informal trade and cross-border flows. - Illicit financial flows: - Discuss illicit cross-border financial flows. ### D. Informal Work - Conceptual basis: - Introduction to ILO concepts of work and employment. - Categories of informal employment: - Categories of informal employment (including a discussion of dependent contractors and partly informal productive activities in relation to formal employment). - Incorporate Tables 2 and 3 from the Appendix of “Statistics for the informal economy”. - Other informal forms of work: - Categories of informal forms of work other than employment. ### E. The Non-Observed Economy - Definition and background: - Define the non-observed economy and provide background material. - Relationship to informal economy: - Explain the relationship between the non-observed economy and the informal economy. - External accounts: - Discuss non-observed transactions in the external accounts. - Use of supply and use tables: - The role of supply and use tables and use tables in identifying some non-observed production. ### F. Guidelines, Studies, and Handbooks on the Informal Economy - Review guidance: - Discuss various guidelines, studies, and handbooks that provide guidance on compiling statistics on the informal economy or on the non-observed economy. *BPM7 Annotated Outline* ### SECTION IS PENDING FINAL CONCLUSIONS ON THE FORTHCOMING GN CM.4) ### draft-consolidated-bpm7-annotated-outline - SECTION IS PENDING FINAL CONCLUSIONS ON THE FORTHCOMING GN CM.4) ### Prominence of Net Measures Compared to Gross Measures - The section will describe: - the need to increase the prominence and use of net measures; - the need to reduce the use of the term “gross” to those areas laid out in the SNA; - references made in full, for example, acquisitions less disposals, lending less borrowing, etc. rather than using the phrase “net”. - Conceptual findings: - There has been a growing interest in the "net" aggregates. - From a conceptual perspective, "net" aggregates are more appropriate than the "gross" counterparts. - The "net" aggregates are preferred as they are more reflective of the actual costs borne in production. - Measurement challenges make it difficult to arrive at comparable aggregates across countries. - SNA update implications: - The SNA update has improved the articulation of the differences in the concepts of consumption of fixed capital (related to produced assets) and the treatment of depletion of natural resources (related to non-produced assets) recorded within the costs of production. - The conceptual advantage of using "net" measures such as net domestic product and net national income become clear and should be encouraged to become the headline-based indicators, although users may still be interested in particular purposes in the "gross" counterparts. ### Examples of the Use of Easier to Understand Terminology for Users - Rationale: - The economic accounting statistical standards have a vast array of specific technical descriptions of concepts and the underlying definitions with explicit inclusions and exclusions. - Labels used help producers and communication across the producers’ community, but they are often not user friendly or understood by users. - Proposals (without changing technical definitions): - A limited number of examples of user-friendly terms could be considered by producers when engaging with users, in particular, non-technical users. - Examples will be based on those tested with a range of users as part of GN CM.2 and will be proposals producers could consider (allowing for translation differences). - This section will also include a reference to the technical glossary. - Cross-references and scope notes: - This section will cross-reference parts elsewhere in the SNA to avoid any duplication. - Note: the chapter does not address other proposals from GN CM.2 relating to possible changes in standard terminology to introduce consistency across domains (for example, the proposal to align all domains on the use of the terms “revenues” and “expenses” instead of “resource” and “use” or “credit” and “debit”). These proposals are being tested, and if adopted, would then be reflected throughout the manuals. ### Annex 1 — Exceptional Financing Transactions (Update to BPM6 Appendix 1) - Scope: - Focus on the identification of exceptional financing transactions. - Separate sections: introduction (Section I), transfers (Section II), debt-for-equity swap (Section III), borrowing for balance of payments support (Section IV), debt rescheduling or refinancing (Section V), debt prepayment and debt buyback (Section VI), and accumulation and repayment of debt arrears (Section VII). - Schematic overview headings: - A Introduction - B Transfers (Debt Forgiveness; Other Intergovernmental Transfer) - C Debt-for-Equity Swap - D Borrowing for Balance of Payments Support - E Debt Rescheduling or Refinancing - F Debt Prepayment and Debt Buyback - G Accumulation and Repayment of Debt Arrears (Accumulation of Arrears—Current Period; Repayment of Arrears) ### Annex 2 — Debt Reorganization and Related Transactions (Update to BPM6 Appendix 2) - Scope: - Discuss various forms of debt reorganization and related transactions, and how they are recorded in the balance of payments and the international investment position. - Separate sections on debt reorganization (Section I) and transactions indirectly related to debt reorganization (Section II). - Cross-references: - Will include a cross-reference to GFSM 2014 Appendix 3 on Debt and Related Operations, which includes guidance on: - debt arising from bailout operations; - debt of special purpose entities; - debt arising from securitization; - debt arising from off-market swaps. - Schematic overview headings: - A Debt Reorganization (Debt Forgiveness; Debt Rescheduling and Refinancing; Debt Conversion and Debt Prepayment; Debt Assumption and Debt Payments on Behalf of Others; Special Cases) - B Transactions Indirectly Related to Debt Reorganization (New Money Facilities; Defeasance; Debt Write-Offs; Debt Concessionality) ### Annex 3 — Regional Arrangements: Currency Unions, Economic Unions, and Other Regional Statements (Update to BPM6 Appendix 3) - General approach: - Annex will cover conceptual framework of regional arrangements (customs unions, economic unions, and monetary and currency unions) relevant for external sector statistics. - Structure maintained from BPM6 Appendix 3 with an introduction (Section I), currency unions (Section II), economic unions (Section III), customs unions (Section IV), other regional statements (Section V), and a numerical example (Section VI). - Currency unions — key methodological clarifications and updates: - Definitional issues, application of core balance of payments concepts, and operational aspects of a currency union will be largely maintained with updates and added tables/boxes (e.g., Table A3.1, Table A3.2, Box A3.1). - Initial Subscription of the CUCB’s Capital: Section V, Chapter 6, “other investment – other equity” will be renamed as “other investment – equity in international organizations and other equity”. - Allocation of Seigniorage: seigniorage will be defined as the net revenue equal to the difference between the nominal value of the currency and the cost of acquisition, distribution, and maintenance of the currency. - Treatment of national agencies (NAs) of CUCBs: - NAs of CUCBs will be treated as institutional units separate from the headquarters of the CUCB. - Transactions among resident units of the same member state settled through accounts at the CUCB are treated as domestic transactions. - NAs have close links with member states and perform functions of monetary authorities; a complete set of accounts including the balance sheet are available for statistical purposes. - Where the CUCB carries out regular monetary authority transactions within each CU Member State and no separate legal entity exists, a resident notional unit—separate from the CUCB—shall be created in each Member State for statistical purposes. This principle is applicable to the residence attribution of transactions of NAs of the BCEAO, BEAC, and ECCB. - Treatment of regional organizations: generally treated as nonresident of their member states and transactions with member states are treated as external; BPM6 discourages treating branches/offices of regional organizations as residents without a strong connection to the domestic economy. - CUCB own-account transactions: own-account transactions are those that cannot be attributed to NAs of CUCBs; recommended to be limited to those beyond regular monetary authority operations (example: debt securities issued by the CUCB and subscribed by residents are treated as own-account transactions). - Imputed reserve assets (RA) and solidarity principle: - RA of CEMAC, ECCU, and WAEMU are pooled; treatment differs across unions. - In WAEMU and CEMAC, member states pool foreign assets in a common foreign exchange reserve fund; in ECCU, member states own/hold a national share of the common pool of RA. - Solidarity principle implies each CU member has full access to the common pool irrespective of contributions; in CEMAC imputed RA are calculated as sum of directly recorded components and apportioned items; in WAEMU imputed RA are not compiled for member states due to strong adherence to the solidarity principle. - Guidance on imputed RA following BPM6 principles (using net claims on the CUCB) will be maintained where no direct accounting records exist; deviations should be explained in metadata. - Note: As in Option 1.2 of GN B.3, net claims on the CUCB may be recorded as foreign assets in the balance sheet of NA of CUCB for Monetary and Financial Statistics purposes, and under other investment in the national balance of payments and IIP of member states. - SDR allocations for currency union members: - A new sub-section will clarify that SDR holdings and allocations are assets and liabilities of the country member that participates in the IMF’s SDR Department. - In centralized CUs, SDR allocation/holdings should be attributed to the member state and recorded in the BOP/IIP of the member state. - Guidance on imputed reserves is specific to foreign exchange reserves; SDRs, the reserve position in the IMF, and monetary gold should be recorded in the BOP/IIP of individual member states. - Other sections: - Economic unions: mostly maintained with updates and consistency with GFSM 2014 Appendix 5. - Customs unions: mostly maintained with updates; section title changed from “Customs Arrangements” to “Customs Unions”. - Other regional statements: mostly maintained with no significant changes. - Numerical example: International transactions and positions in the national data for a member state of a centralized currency union will be updated based on Annex III, GN B.3. ### Annex 4 — Remittances (Update to BPM6 Appendix 5) - Scope and intent: - Annex will be mostly maintained as in BPM6 Appendix 5 with minor updates and will discuss the concept of remittances, their significance, and how they are recorded in the balance of payments. - Present standard components in the balance of payments framework related to remittances, the supplementary items, and related data series. - Some adjustments to the opening section to reflect more prominently the new transmission channels of remittances in view of advances in fintech such as e-money/mobile money (GN F.7 “Impact of Fintech on Macroeconomic Statistics”). - Note on terminology: - The term “Remittances” will be subject to the outcome of the work of the Communications Task Team—GN CM.2 “Terminology and Branding of the Economic Accounting Statistical Standards”. - Schematic overview headings: - A Economic Concept of Remittances and Why They Are Important - B Concepts of Residence, Valuation and Time of Recording - C Standard Components in the Balance of Payments Framework Related to Remittances - D Supplementary Items Needed for Compilation of Remittances - E Related Data Series - Data by Partner Economy: - Data by Partner Economy (Section F of Appendix 4, BPM6) is not included in this Annex; it will be included with additional guidance in Annex 11 “Data by Partner Economy”. *BPM7 Annotated Outline* ### Annex 5. Selected Issues on Cross-Border ### Annex 5. Selected Issues on Cross-Border Trade ### A. INTRODUCTION - The annex covers cross-cutting issues related to trade in goods and services that are outside the core balance of payments accounts but are relevant for compilers and users of the balance of payments. - Topics included: classification (Section II), partner economy attribution (Section III), price and volume measures (Section IV), digital trade (Section V), and trade classified by currency (Section VI). - "See the Schematic Overview for details." ### B. CLASSIFICATION - Purpose: - Describe different classification systems used for goods and services and “products” more generally (e.g., by commodity or type of service, by industry, by broad economic category, by mode of transport, services by mode of supply). - Bring together classification information into one place to inform how the BPM presentation of goods and services fits into the broader classification landscape. - References to relevant manuals/standards to be included, such as: - International Merchandise Trade Statistics: Concepts and Definitions - Manual on Statistics of International Trade in Services - International Standard Industrial Classification of All Economic Activities (ISIC) - Guidance for compilers: - Present different possible trade-by-characteristic presentations and their potential uses. - Compilers may consider which presentations to adopt based on resources and policy needs. - "The information can also be summarized in a table." ### C. PRICE AND VOLUME MEASURES - Content change: - Move the single paragraph in BPM6 Chapter 10 that describes price and volume measures as “useful for analysis and data validation” into this annex (since it relates to both goods and services). - Additional references: - Add references to SNA Chapter 15 (paragraphs. 15.160–166). ### D. DIGITAL TRADE - Objective: - Better reflect the importance of digital trade in the BPM. - Current treatment in BPM6: - BPM6 does not introduce the concept of digital trade; it contains only paragraph 10.10 that defines “e-commerce” as “a method or ordering or delivering products at least partly by electronic means...” and explains that “charges for electronically delivered products are usually included in services, whereas products supplied across the border are usually classified as goods.” - Planned expansion: - Introduce the conceptual framework for digital trade from the Handbook on Measuring Digital Trade (currently being updated with an expected publication by the end of 2022). - Include a reference to Digital Supply Use and Tables (to be described in the updated SNA), which use a consistent underlying framework centered around whether goods and services are digitally ordered and/or digitally delivered (GN DZ.5). - Scope interaction: - Emerging issues for BPM goods and services, including digital intermediation platforms, cloud computing, and intellectual property products (including computer software and artificial intelligence), will be discussed in Chapter 16, Digitalization. ### E. INTERNATIONAL TRADE CLASSIFIED BY CURRENCY - Rationale: - Following GN C.3, introduce a supplementary presentation of international trade classified by currency to support analytical and surveillance purposes, including external sector vulnerabilities, sustainability analysis, regional integration, exchange rate pass-through, foreign exchange market development, and reserves adequacy. - Presentation features: - A supplementary table disaggregating gross totals of imports and exports for both goods and services by the currency of denomination. - Totals in the trade by currency composition table should equal the totals in the goods and services accounts to ensure consistency. - Currency breakdown: - First domestic and foreign currencies. - Further breakdown of foreign currencies according to the SDR basket. - Then other currencies (depending on the importance of non-SDR basket currencies to the international trade of each economy). - An unallocated item can be included to address currency allocation difficulties. ### Schematic Overview - Elements listed for Annex 5: - A. Introduction - B. Classification - Table: Classifications for Trade Statistics - C. Price and volume measures - D. Digital trade - Figure: Conceptual Framework for Digital Trade (from Handbook on Measuring Digital Trade, Figure 2.1) - E. International trade classified by currency - Table: Supplementary Presentation of International Trade by Currency *From the BPM7 Annotated Outline, Annex 5. Selected Issues on Cross-Border Trade.* ### Chapter 17, Part 1, 2008 SNA (and its update). ### Chapter 17, Part 1, 2008 SNA (and its update) ### Investment income attributable to insurance policy holders; nonlife claims; stability fees - Possible changes in the treatment of holding gains and losses for insurance transactions may affect: - output (and therefore the concept of net premiums), and - investment income attributed to insurance policy holders. - Relevance extends to life insurance and pensions. - Updates will be made to ensure consistency with: - Chapter 12, Primary Income Account (and updated SNA), and - Chapter 24 (Insurance and Pensions), 2025 SNA, when additional details are available. - Claims receivable or payable: - As in BPM6 (A6c.28) and consistent with Chapter 14 (Capital Account), claims may be classified as capital transfers in exceptional cases (such as those related to a major catastrophe). - Additional details from the 2008 SNA (paragraphs 17.39–40) will be added. - Following the recommendations of the 7th meeting of the AEG (2012) on the definition of catastrophes in the measurement of non-life insurance: - It will be recommended to determine at the national level whether or not a catastrophe is an exceptional event (including the classification of claims arising from a catastrophe). - The recommendation should not lead to inconsistencies in the recording of international transfers and therefore should be recorded in close coordination with national accountants where possible. - Whether capital transfers should only be recognized for claims related to the loss of capital assets in the event of a catastrophe is pending a decision of the AEG/ISWGNA. - Discussion on nonlife insurance claims in Chapter 14 will be referenced. - Stability fees: - Discussions from AEG 7/2012 and 8/2013 indicate that, in some cases, stability fees may qualify as a type of nonlife insurance. - Stability fees may have implications for the balance of payments that require further investigation. - Reference to Chapter 13 (Secondary Income Account) will be provided and consistency with Chapter 24 (Insurance and Pensions), 2025 SNA will be ensured. ### Life insurance - Section largely maintained as in BPM6 with one minor change. - Inconsistency in terminology will be addressed: - "gross premiums earned" (BPM6) versus "actual premiums earned" (2008 SNA) in the life insurance output formula. - Both SNA and BPM should include the same terminology. ### Hybrid insurance products - Based on recommendations of GN F.12, the concept, types, and treatment of hybrid insurance products will be explained. - Definition and classification: - Hybrid insurance products mix the two primary types of insurance: - life insurance (insurance whose financial claims arise regardless of an event occurrence—i.e., insurance with a saving component), and - nonlife insurance (insurance whose financial claims arise only if an event occurs). - Such products are classified into life (financial account) or nonlife insurance (current transfers) depending on which features are predominant: - predominance of the saving component → life insurance, or - predominance of the component where claims are paid only if the insured event occurs → nonlife insurance. - It is clarified that the term life insurance will continue to be included in nonlife insurance (as in BPM6). - Discussion in Chapter 11 (Services Account) will be referenced and consistency with Chapter 24 (Insurance and Pensions) of 2025 SNA will be ensured. ### Pension schemes - Section largely maintained as in BPM6 with the following minor changes and clarifications: - Following GN F.12, it will be recommended to treat employer-independent autonomous pension funds as part of social insurance provided they meet the conditions laid down in the GN. - Clarifications regarding autonomous pension funds and the delineation of social insurance are to be elaborated during the editing process of the 2025 SNA. - Clarifications from SNA News & Notes 39/40 and AEG 9/2014 (on recording flows between defined benefit pension schemes and their sponsors, and on treatment of holding gains and losses for pensions) will be reviewed from Chapter 24 (Insurance and Pensions), 2025 SNA at the drafting stage to determine if any changes/clarifications are needed from a BPM perspective to align with SNA treatment. ### Schematic overview (structure of Chapter 17) - Core sections and topics: - A Introduction - B Nonlife Insurance - Types of Nonlife Insurance - Role of Insurance Technical Reserves - Value of Nonlife Insurance Service Output - Value of Reinsurance Service Output - Export and Import of Insurance Services - Investment Income Attributable to Insurance Policyholders - Net Insurance Premiums - Claims Receivable or Payable - C Life Insurance and Annuities - D Hybrid Insurance Products - E Pension Schemes *Source: BPM7 Annotated Outline — Chapter 17, Part 1, 2008 SNA (and its update).* ### Annex 10. Sustainable Finance in External ### Annex 10. Sustainable Finance in External Sector Statistics (New BPM7 annex) ### A. INTRODUCTION - Purpose: support data compilers on the type of data they can provide to users regarding climate change; does not present a framework as one does not exist yet. - Focus: will concentrate on “climate change” rather than more broadly on sustainable finance. - Scope: present some items from the balance of payments/IIP framework and possible additional breakdowns relevant for: - understanding risks that climate change poses; - financing related to addressing climate change and its impacts; - relevant exports and imports of goods and services. - Update process: given the constantly evolving nature of the topic, the annex could be updated under the supervision of the IMF Balance of Payments Committee to reflect advances in methodology and data availability and the development of a broader framework. ### B. DEFINITIONS OF KEY CONCEPTS RELATED TO CLIMATE CHANGE - Will include definitions of key concepts such as: - climate change; - adaptation; - mitigation; - transition risks; - physical risks. - Source references for definitions: existing sources (e.g., Intergovernmental Panel on Climate Change, OECD). ### C. CAPTURING FINANCIAL RISKS RELATED TO CLIMATE CHANGE IN EXTERNAL SECTOR STATISTICS - Guiding principle: balance of payments statistics should be relevant at the national (or institutional sector) level and contain a clear resident–non-resident dimension to examine exposures to value decreases of financial assets from: - physical risks related to climate change; and - transition risks from the transition to a low‑carbon economy. - Initial emphasis: additional detail and breakdowns of existing Balance of Payments and IIP items considered most feasible in the short term. - a. Investments in specific sectors - Rationale: breaking down direct investment by economic activity helps assess sector‑specific climate risks for nonfinancial corporations (e.g., agriculture, real estate for physical risks; carbon‑intensive sectors for transition risks). - Financial corporations: subject mainly indirectly through lending portfolios of subsidiaries abroad. - Classification: cover deposit‑taking corporations (except the Central Bank), other financial corporations, and a more granular breakdown of non‑financial corporations aligning with other statistics (e.g., with the International Standard Industrial Classification (ISIC) revision). - Note: ISIC classification has limitations for climate change purposes (e.g., energy sector does not differentiate between electricity generated from renewable resources and from coal). - b. Physical location of investments - Direct investment by counterparty country: host economies’ exposure to physical risks varies by location; immediate counterparty country data (and ultimately direct investment by ultimate counterparty) are needed. - Geographic granularity: city/postal level most useful given geolocational variation; national data also useful because macro‑stability implications may extend to the national level and transition policies are often national. - c. Type or nature of investments - Purpose: understand the extent to which financial institutions finance investments that mitigate climate‑related risks. - Supplementary reporting: introduce an “of which” category for transactions and positions in “green‑labelled” bonds and for interest/returns earned on them. - Terminology and definitions: - Use the name “green‑labelled” bonds to reflect lack of official international standards and that labels are often commercial determinations. - Typical definition: proceeds exclusively allocated to green or climate‑related expenditures and investments. - No internationally agreed taxonomy exists; recommendation to compile according to the national definition of the compiling country for both assets and liabilities until progress is made in international fora (e.g., G‑20 Data Gaps Initiative). - Importance of providing in‑depth metadata about instruments classified as “green‑labelled”. - Where countries choose broader categories (e.g., “ESG‑labelled” or “sustainability‑labelled” bonds), clarify coverage in metadata. - d. International cooperation grants to low‑income countries - Supplementary data on international cooperation grants to finance climate change mitigation and adaptation in low‑income countries: - Could be recorded as current or capital transfers between governments or between international organizations and governments. - Separately identifying climate‑related grants is important for understanding magnitudes, macroeconomic implications for recipients, and feasibility of separate identification. ### D. OTHER USEFUL INFORMATION FROM THE BALANCE OF PAYMENTS - Potential complementary groupings of recorded transactions: - trade in low‑carbon goods and in environmental goods and services; - waste treatment and depollution services; - separate reporting of cross‑border transactions in CO2 emissions permits. - Linkages: work to improve trade classifications to better identify: - environmentally friendly goods; - environmentally damaging goods; - low‑carbon technology goods; - minerals critical for the transition to a low‑carbon economy. - These groupings would support sustainable finance analysis and the update of international trade manuals. ### E. ANALYTICAL USEFULNESS AND LIMITATIONS OF THE INDICATORS - Status: marked as (TBD) in the annex; analytical usefulness and limitations will be addressed. ### F. FUTURE WORK - Items proposed for further development: - Green lending and equity, including intercompany debt and equity. - Source of funding: exposures of financing sources to climate change related risks. - Climate‑related financial derivatives. - A supplementary item identifying exceptionally large insurance claims from natural catastrophes recorded as capital transfers to provide visibility to cross‑border insurance transactions and monitor an economy’s ability to insure and reinsure across borders. - Contextual note on climate finance by multilateral institutions: - Climate finance by the World Bank to developing countries amounted to US$21.4 billion in 2020 and is expected to be scaled up over the period 2021–2025. - The IMF Resilience and Sustainability Trust is designed to complement the IMF’s lending toolkit by focusing on longer‑term structural challenges—including climate change and pandemic preparedness. ### Key schematic structure (as outlined) - A. Introduction - B. Definitions of key concepts related to climate change - C. Capturing financial risks related to climate change in external sector statistics - D. Other useful information from the balance of payments - E. Analytical usefulness and limitations of the indicators (tbd) - F. Future work *Source: BPM7 Annotated Outline — Annex 10. Sustainable Finance in External Sector Statistics* ### References ### Annex 12. Links Between International Standards for Macroeconomic Statistics (Update to BPM6 Appendix 7) ### Introduction - Purpose: Update of BPM6 Appendix 7 to provide a broad framework of statistical linkages of external accounts with national accounts and other macroeconomic statistics. - Scope: Present interconnections of the balance of payments and international investment position (IIP) with: - national accounts, - government finance statistics, - monetary and financial statistics, - external debt statistics. ### Accounting system - Extension of discussion in paragraphs A7.2–3 in BPM6. - Objective: Outline similarities and differences between accounting systems of balance of payments/IIP and other macroeconomic statistics. ### Classification - Expansion of discussion in paragraph A7.4 in BPM6. - Objective: Provide similarities and differences in classification between the balance of payments/IIP and other macroeconomic statistics. ### Linkages of Balance of Payments/IIP with other macroeconomic statistics - Structure: Overview presented using a schematic diagram (Figure 1. "Linkages of Balance of Payments and International Investment Position with Other Macroeconomic Accounts") followed by descriptions of main linkages with each macroeconomic dataset. - Key elements highlighted for the System of National Accounts (SNA): - Maintain discussion in paragraphs A7.5–7.9 in BPM6 and Table A7.1 with possible updates. - Provide references to relevant updates in Chapter 19 of BPM7 (Chapter 14, BPM6) arising from GN B.4 “Reconciliation Between Flows and Stocks” on Consistency between Balance of Payments/IIP and National Accounts. - Specific components of the balance of payments integrated in the SNA and linkages of the IIP with the SNA rest of the world account. - Figure 1 components (schematic relationships shown): - Real sector / Fiscal sector / External sector / Monetary sector interactions. - National Accounts and Fiscal Accounts mapping (e.g., Consumption, Investment, Net Exports). - Balance of payments items mapped to monetary sector items (e.g., Net Foreign Assets, Claims on non-residents, Liabilities to non-residents). - Financial account flows and IIP elements: Net Acquisition of Financial Assets, Net Incurrence of Liabilities, Direct Investment, Portfolio Investment, Financial Derivatives, Other Investments, Reserve Assets, Errors and Omissions, Financial Account (Transactions), Opening Position, Closing position, Other Changes in Volume, Revaluations. ### Specific linkage sections (planned content) - a) Linkages of Balance of Payments/IIP with the System of National Accounts - Highlight specific components in the balance of payments integrated in the SNA. - Present linkages of the IIP with the SNA rest of the world account. - Maintain paragraphs A7.5–7.9 in BPM6 and Table A7.1 with updates. - Reference: Chapter 19 of BPM7 (Chapter 14, BPM6) and GN B.4 “Reconciliation Between Flows and Stocks”. - b) Linkages of Balance of Payments/IIP with Government Finance Statistics - Present linkages with government finance statistics. - Main source documents: BPM6 Compilation Guide Appendix 6 (paragraphs A6.54–6.110), Government Finance Statistics Manual 2014 (GFSM 2014) Appendix 7 (paragraphs A7.75–A7.98), and GFSx Course – Module 8: “Using GFS for Policy Purposes”. - c) Linkages of Balance of Payments/IIP with Monetary and Financial Statistics - Describe interconnections of transactions and positions for deposit-taking corporations, central bank, and other financial corporations in external accounts with corresponding sections in monetary and financial statistics. - Main source documents: BPM6 Compilation Guide Appendix 6 (paragraphs A6.31–6.53); Monetary and Financial Statistics Manual and Compilation Guide (MFSMCG 2016), Appendix I, Section IV (paragraphs A1.14–A1.24). - d) Linkages of the International Investment Position with External Debt Statistics - Highlight components in the IIP that constitute external debt and existing differences. - Present linkages of functional categories, instruments, and institutional units between the IIP and external debt statistics. - Main source documents: External Debt Statistics Guide, Appendix 4 “The Link between External Debt Statistics and the IIP” (paragraphs 2–6, and Table A4.1). - Provide references to the Public Sector Debt Statistics Guide for alignment between External Debt Statistics and Public Sector Debt Statistics. ### Schematic overview (annex structure) - Sections: - A Introduction - B Accounting System - C Classification - D Linkages of Balance of Payments and International Investment Position with other Macroeconomic Statistics - a) Linkages with the System of National Accounts - b) Linkages with Government Finance Statistics - c) Linkages with Monetary and Financial Statistics - d) Linkages of IIP with External Debt Statistics ### References cited in this annex - BPM6, Appendix 7. - BPM6 Compilation Guide, Appendix 6 (paragraphs A6.31–A6.110). - GFSM 2014, Appendix 7: Linkages between GFS and Balance of Payments and the International Investment Position (paragraphs A7.75–A7.98). - GFSx Online Course – Module 8: Using GFS for Policy Purposes. - MFSMCG 2016, Appendix I, Section IV. “Linkages between Monetary Statistics and External Sector Statistics” (paragraphs A1.14–A1.24). - External Debt Statistics Guide 2014, Appendix 4 “The Link between External Debt Statistics and the IIP” (paragraphs 2–6, and Table A4.1). - Public Sector Debt Statistics, Guide for Compilers and Users, 2013, Appendix I, Relationship of Public Sector Debt Statistics and External Debt Statistics. --- _Source: https://www.imf.org/-/media/files/data/statistics/bmp7/draft-consolidated-bpm7-annotated-outline.pdf_