## BPM7 Chapter 4 / 2025 SNA Chapter 5: Residence, Institutional Units, and Sectors — Annotated Outline

## Source details

**Canonical URL:** [BPM7 Chapter 4 / 2025 SNA Chapter 5: Residence, Institutional Units, and Sectors — Annotated Outline](https://www.imf.org/-/media/files/data/statistics/bmp7/final-annotated-outlines/bpm7-chapter-42025-sna-chapter-5-residence-institutional-units-and-sectors-annotated-outline.pdf)

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### Introduction: scope and structure
- The Annotated Outline covers institutional units, sectors, and residence for national and international accounts and uses the 2008 SNA chapter structure (Chapter 4: Institutional Units and Sectors).
- Drafting principle: include in BPM only issues relevant to external sector statistics; include in 2025 SNA only issues relevant to national accounts.
- The chapter organization: corporations (Section B); nonprofit institutions (Section C); nonfinancial corporations sector (Section D); financial corporations sector (Section E); general government sector (Section F); household sector (Section G); nonprofit institutions serving households sector (Section H); rest of the world (Section I); specific issues associated with residence (Section J).
- Changes and cross-references:
  - Items based on BPM6/other manuals and other SNA chapters are highlighted in gray; items based on guidance notes/other references are highlighted in yellow.
  - A box on “Statistical units other than institutional units and enterprises” covering establishments and local and global enterprise groups will be included (based on paragraphs 4.53–56, BPM6) with links to 2025 SNA Chapter 6, Enterprises, Establishments, and Industries.

### Residence and Economic Territory; population
- The subsection “Residence and Economic Territory” will:
  - Cover general principles of residence based on 2008 SNA paragraphs 4.10–15 and BPM6 paragraphs 4.113–115.
  - Discuss economic territory of international organizations, special zones (free trade ones/offshore banks and offshore financial centers), changes in the economic territory, and joint zones (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 types of institutional units; assets and liabilities held by groups including both residents and nonresidents; change in residence of entities other than persons) will be covered in Section J.

### Sectoring, fintech, and institutional sector overview
- Sectoring and Economic Behavior:
  - Following GN F.7, fintech companies should be classified within existing institutional sectors/subsectors depending on economic objectives, functions, and behavior; do not create a new sector “Fintech”.
  - Countries with significant fintech activities could consider an “of which” category for statistical/analytical needs.
- An Overview of Institutional Sectors:
  - Follow 2008 SNA paragraphs 4.24–32 and include SNA institutional sector classification and international accounts institutional sector classification (updated BPM6 Tables 4.1 and 4.2 based on GN F.1).
  - Include BPM6 paragraphs 4.60–61 on international accounts.

### Subsectors and disaggregation recommendations
- Subsectors:
  - Heading revised as “Domestic and foreign control” (following GN F.1).
  - Recommend identifying NFCs and FCs that are domestically controlled and those foreign controlled (reference to relevant paragraph definitions of “control”).
  - Domestically controlled split into public corporations (controlled by government) and others (national private corporations).
  - Recommend “of which” items for:
    - domestically controlled public and private corporations (both financial and nonfinancial) that are part of a domestic multinational; and
    - foreign controlled special purpose entities (SPEs) for NFCs (S.11) and FCs (S.12).
- For IMF external sector reporting, recommend more disaggregated 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: types, special cases, ownership and control
- Types of Corporations:
  - Continue discussion on quasi-corporations (paragraphs 4.42–46).
  - New sub-topic “institutional units with cross-border elements” to cover branches (including construction projects and production delivered from base), notional resident units for land and other natural resources owned by nonresidents, multiterritory enterprises, joint ventures, quasi-corporations identified prior to incorporation, trusts, and other incorporated enterprises (based on BPM6 paragraphs 4.26–49).
  - Note: An Issue Note on “Trusts and Similar Type of Funds” is in preparation and may impact this topic.
- Special Purpose Entities (SPEs):
  - Update 2008 SNA paragraphs 4.55–67 with BPM6 paragraphs 4.50–52 and GN G.4 (definition and recommendation in paragraph 29).
  - Clarification: use the term SPEs only for entities with direct and indirect foreign control; do not use SPE label for any special-purpose financial vehicle.
  - Examples and recommendations:
    - 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 to by typology (conduits, captives, etc.) and analyzed within the corresponding sector, not classified as SPEs (and not recorded in the “of which” SPE category).
    - Special purpose units of general government resident in the government economy to be included under Section F; if non-resident, treated as separate units (2008 SNA 4.67/BPM6 4.93).
    - Recommend enhanced imputations where appropriate to reflect fiscal operations of government-controlled SPEs (GN D.5); see BPM7 Chapter 8 and alignment with GFSM 2014 paragraphs 2.136–139.
- Special Cases:
  - Guidance per SNA clarification note N&N 37 for delineating head offices (HO) and holding companies (HC): determine whether HO/HC is a separate institutional unit and distinguish HCs from HOs.
- Ownership and Control:
  - Subsidiary definition: corporation B is subsidiary of corporation A if corporation A holds more than 50 percent equity in corporation B (i.e., delete 4.73-b).
  - Control by a non-resident unit: update paragraph 4.81 to follow GNs G.2 and D.10 and BPM6 — control decided based on equity holding entitling more than 50 percent of voting power, not on control of board, appointment/removal of key personnel, or committee control.

### Nonprofit institutions; nonfinancial corporations; financial corporations
- Nonprofit Institutions: retain same subsections as 2008 SNA.
- Nonfinancial Corporations Sector:
  - Update 2008 SNA paragraph 4.96 (second criteria) and the first column of SNA Table 4.1 based on GN F.1.
  - Include a table of subsectors of the nonfinancial corporations.
- Financial Corporations Sector:
  - Add updated breakdown of FCs based on GN F.1 for national accounts and external sector statistics.
  - 2025 SNA Chapter 29 will discuss FC subsectors in detail; 2025 SNA Chapter 5 will include limited details similar to 2008 SNA.
  - BPM7 will provide detailed subsector guidance (paragraphs 4.67–90) and align FC subsector text with 2025 SNA Chapter 29; possible additions from MFSMCG.

### General government, households, and NPISH
- General Government Sector:
  - Four sub-sections: government units as institutional units; general government sector and subsectors; alternative method of subsectoring; other issues related to government units.
  - Other issues relating to government units to include:
    - government entities resident abroad (added from BPM6 paragraph 4.93);
    - restructuring agencies (BPM6 paragraphs 4.94–95).
- Households Sector:
  - Following GN WS.2, provide guidance for additional household breakdowns to account for distribution of income, consumption, saving, and wealth.
  - Note: no clarity yet about preferred definitions of income and consumption; testing is ongoing.
- Nonprofit Institutions Serving Households (NPISH): retain same subsections as 2008 SNA.

### The Rest of the World; international organizations; currency unions
- International Organizations:
  - Include updates from BPM6 paragraphs 4.103–107.
- Regional International Organizations (including Currency Union Central Banks (CUCBs)):
  - Include updates based on BPM6 paragraph 4.142.
  - Clarify two types of currency unions: centralized and decentralized.
  - National agencies of centralized CUs are treated as institutional units separate from the CUCB Headquarters (follow GN B.3).
  - Further details in BPM7 Annex 3.

### Specific issues associated with residence (Section J)
- Structure: four sub-sections based on Section E, Chapter 4, BPM6; mainly relevant for international accounts and separated from core residence principles in Section A.
- Subsections to include (BPM6 paragraph references in parentheses):
  1. Residence of different types of institutional units (paras 4.116–144): residence of households, residence of enterprises, and residence of other institutional units.
  2. Assets and liabilities held by groups that include both residents and nonresidents (paras 4.145–164).
  3. Change in residence of institutional units (paras 4.165–167).
  4. Alternatives to the residence concept (para 4.168).
- Note: “Data by partner economy” (BPM6, paragraphs 4.146–164) is not included here; it will be presented as a separate annex with additional guidance.

### Schematic overview (chapter contents and tables/figures)
- Key contents and exhibits to be included:
  - A Introduction: Institutional Units; Residence and Economic Territory; Sectoring and Economic Behavior; The Total Economy; An Overview of Institutional Sectors.
  - Figure 4.1: Illustrative Allocation of Units to Institutional Sectors.
  - Table 4.1: 2025 SNA Classification of Institutional Sectors.
  - Table 4.2: BPM7 Classification of Institutional Sectors.
  - Subsequent sections B–J with component lists as summarized above.
- Explicit list of subsection headings mirrors the 2008 SNA structure with updates noted for BPM7/2025 SNA alignment.

### References and guidance notes used
- Guidance Notes referenced: B.3, D.5, D.10, F.1, F.7, F.18, G.2, G.4, and WS.2 (posted at Update of the Balance of Payments and International Investment Position Manual, sixth edition (BPM6) (imf.org) or at List of Guidance Notes for the 2008 SNA Update (unstats.un.org)).
- Other sources for alignment: ISWGNA clarification (SNA News, Number 37, December 2014) on head offices and holding companies; 2008 SNA Chapter 4; BPM6 Chapter 4; GFSM 2014 Chapter 2; MFSMCG Chapter 3.

### Key stakeholders consulted
- System of National Accounts and Balance of Payments Manual editors.
- IMF Statistics Department Financial Institutions Division and Government Finance Division.

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_Source: https://www.imf.org/-/media/files/data/statistics/bmp7/final-annotated-outlines/bpm7-chapter-42025-sna-chapter-5-residence-institutional-units-and-sectors-annotated-outline.pdf_