## BPM7 Chapter 7. Balance Sheet: International Investment Position: Annotated Outline ## Source details **Canonical URL:** [BPM7 Chapter 7. Balance Sheet: International Investment Position: Annotated Outline](https://www.imf.org/-/media/files/data/statistics/bmp7/final-annotated-outlines/bpm7-chapter-7-balance-sheetinternational-investment-position-annotated-outline.pdf) ## Other formats - [Markdown version](/-/media/files/data/statistics/bmp7/final-annotated-outlines/bpm7-chapter-7-balance-sheetinternational-investment-position-annotated-outline.pdf.md) - [Structured JSON version](/-/media/files/data/statistics/bmp7/final-annotated-outlines/bpm7-chapter-7-balance-sheetinternational-investment-position-annotated-outline.pdf.json) --- ### Introduction - Chapter will cover international investment position (IIP) and its main components, maintaining the overall structure from BPM6. - Separate sections: 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), reserves (Section VI), and off-balance-sheet liabilities (Section VII). - Integrated presentation of the IIP is a central piece of BPM7; integrated IIP breaks down changes between two points in time into balance of payments’ financial account transactions, revaluations, and other changes in volume. - Reference to investment in the form of crypto assets will be provided to Chapters 5, 6, and 14. ### Concepts and Coverage - Changes introduced based on GN B.4. - Integrated IIP presentation: - Will be part of the standard components of BPM7 with the same line items as the existing standard components in Appendix 9B, BPM6. - Granular data from the integrated IIP presentation (transactions, revaluations, and other changes in volume) will be emphasized as extremely helpful for analyzing net IIP dynamics; references to Chapters 2 and 19 will be provided. - Separate reporting of data on debt cancellation and write-offs as well as reclassifications under “other changes in volume” is encouraged (as supplementary items). - Importance of direct investment presentation by sectors and instruments will be emphasized (GN D.7). - IIP presentation structure in Table 7.1 will be updated based on the integrated IIP presentation structure recommended in Annex II, GN B.4. ### Direct Investment - Structure retained from BPM6 with important changes focused on valuation and specific entity treatments. - A. Valuation of Unlisted and Other Equity — Preferred Methods - The six methods from BPM6 paragraph 7.16 will be followed, with clarification that the three preferred estimation methods to provide estimates of market value are: - Own Funds at Book Value (OFBV) - Recent Transaction Prices - Market Capitalization - Estimation methods aim to capture the difference between assets and liabilities of unlisted corporations to be measured at market prices, in line with core principles of macroeconomic statistics. - Footnote 1 (BPM6, paragraph 7.16) will be removed accordingly. - A decision tree will be included to aid in implementing one of the three acceptable methods (GN D.2, Annex VII); the decision tree should serve as a guiding principle for countries transitioning to one of the preferred methods. - Treatment of negative equity to be elaborated based on the forthcoming Clarification Note to be prepared by the IMF’s Statistics Department in consultation with relevant stakeholders. - Consistency with 2025 SNA Chapter 14 “Balance Sheet” will be maintained. - B. Entities That Borrow on Behalf of Their Affiliates - No significant changes foreseen except updates to chapter references on pass-through funds, SPEs, entities owned by government resident in another economy and used for fiscal purposes, etc. - C. Quasi-Corporations - Equity in quasi-corporations may be valued using one of the three acceptable methods discussed in Section III-A. ### Portfolio Investment - Structure maintained from BPM6 with chapter-reference adjustments and specific updates. - A. Equity with dividends declared payable but not yet paid — no significant changes - B. Debt instrument with accrued interest — no significant changes - C. Short positions - Discussion updated based on MFSMCG paragraphs 4.73–78 and recommendation of Issue 2 in GN F.3 (Annex II). - D. Unlisted debt and equity securities - Positions in unlisted portfolio investment equity securities without an observable market price should be valued using the methods presented in Section III-A. - E. Debt securities at nominal values - Following GN F.8, compilation of positions of debt securities at nominal value is recommended as a supplement to market valuation. - Reference will be provided to the table on reconciliation between nominal and market valuation of debt securities liabilities (based on GN F.8 (Annex I)) included in the updated “Additional Analytical Position Data” (part of Annex 13). - Debt securities used in direct investment inter-company lending will be included as a supplementary item to this table. - F. Zero-coupon and deep-discount bonds — no significant changes ### Financial Derivatives (Other Than Reserves) and Employee Stock Options - Section maintained as in BPM6 with no significant changes. ### Other Investment - Structure maintained from BPM6 with adjustments to chapter references and updates to key sub-sections. - A. Valuation of Nonnegotiable Instruments - Nominal valuation principle for loans will be maintained. - Framework allowing value reset when there is public evidence of loan deterioration, even beyond cases of bankruptcy and liquidation, should be strengthened (GN F.9). - Concessional loans positions to be valued at nominal value as any other loan based on the contractual interest rate (GN F.15). - Other investment/equity in international organizations and other equity positions (GN B.12) should be valued using the methods and approach presented in Section III-A. - B. Financial Leases — no significant changes - C. Recording of Positions Associated with Securities Repurchase Agreements and Other Reverse Transactions - Following GN F.1 (also F.3 and F.6), a supplementary item under loans “of which: Repurchase agreements, securities lending with cash collateral, and margin lending” will be introduced. - Importance of separate identification of repo-related transactions and positions will be emphasized. - D. Overnight Deposits — no significant changes - E. Insurance Technical Reserves, Pension and Annuity Entitlements, and Standardized Guarantees Reserves - No significant changes except noting that details on Takaful and Re-takaful arrangements are provided in Chapter 17 “Islamic Finance and Insurance”. - Consistency with 2025 SNA Chapter 24 “Insurance and Pensions” will be ensured. ### Reserves - Section maintained as in BPM6 with updated chapter references. ### Off-Balance-Sheet-Liabilities - No significant changes expected; section will remain brief as in BPM6 with updated chapter references. ### Schematic Overview - Contents to include: - I Concepts and Coverage — Table 7.1: Integrated International Investment Position Statement; Table 7.2 Overview of the International Investment Position; Definition of Economic Assets; Classification - II Direct Investment — Valuation of Unlisted and Other Equity; Preferred Methods; Figure 7.1 Decision Tree for Implementing the Preferred Methods; Entities that Borrow on Behalf of Their Affiliates; Quasi-Corporations - III Portfolio Investment — Equity with Dividends Declared Payable but Not Yet Paid; Debt Instrument with Accrued Interest; Short Positions; Unlisted Debt and Equity Securities; Debt Securities at Nominal Values; Zero-Coupon and Deep-Discount Bonds - IV Financial Derivatives (Other Than Reserves) and Employee Stock Options - V Other Investment — Valuation of Nonnegotiable Instruments; Financial Leases; Recording of Positions Associated with Securities Repurchase Agreements and Other Reverse Transactions; Overnight Deposits; Insurance Technical Reserves, Pension and Annuity Entitlements, and Standardized Guarantees Reserves - VI Reserves - VII Off-Balance-Sheet-Liabilities - Note: Annex 7.1 from BPM6 is not included in this chapter; it will be discussed in Annex 9 “Positions and Transactions with IMF”. - Note: The term “statement” usage will be examined further at drafting stage to ensure uniformity in the updated BPM. ### References and Stakeholder Consultation - References cited for guidance: GNs B.4, D.2, D.7, F.1, F.3, F.6, F.8, F.9, F.15, and F.18. - Clarification Note on Negative Equity (forthcoming). - Key stakeholders consulted: - System of National Accounts and Balance of Payments Manual editors - IMF Statistics Department Financial Institutions Division and Government Finance Division --- _Source: https://www.imf.org/-/media/files/data/statistics/bmp7/final-annotated-outlines/bpm7-chapter-7-balance-sheetinternational-investment-position-annotated-outline.pdf_