## d7-sectoral-breakdown-of-direct-investment ## Source details **Canonical URL:** [d7-sectoral-breakdown-of-direct-investment](https://www.imf.org/-/media/files/data/statistics/bpm6/approved-guidance-notes/d7-sectoral-breakdown-of-direct-investment.pdf) ## Other formats - [Markdown version](/-/media/files/data/statistics/bpm6/approved-guidance-notes/d7-sectoral-breakdown-of-direct-investment.pdf.md) - [Structured JSON version](/-/media/files/data/statistics/bpm6/approved-guidance-notes/d7-sectoral-breakdown-of-direct-investment.pdf.json) --- ### Background and Rationale - Direct investment (DI) is the only functional category in the balance of payments and the international investment position (IIP) standard components in the IMF’s Balance of Payments and International Investment Position Manual, sixth edition (BPM6), that is not presented by institutional sector. - BPM6 recognizes sectoral breakdown of DI should be shown as a supplementary item where relevant (BPM6, paragraph 2.32 and table 7.2). - Objectives of including sectoral breakdown: - Provide a convenient way to analyze net foreign lending or borrowing of each domestic sector and detect external sustainability and vulnerability risks emanating from specific domestic sectors. - Enhance comparability and synergy between external sector statistics (ESS) and other datasets (SNA, MFS, GFS, Handbook on Securities Statistics). - Close a data gap in building the Balance Sheet Approach (BSA) matrix by providing sectoral classification of DI in the IIP (see BPM6, paragraphs 14.57 to 14.66 and 14.59). - Produce integrated economic accounts and facilitate aggregation of international accounts to build the balance sheet matrix. ### New DI Classification: Scope and Structure - The new DI classification will: - Include the resident institutional sector breakdown in the standard components of the balance of payments and the IIP rather than as supplementary items. - Include BPM6 assets and liabilities components as memorandum items to the standard components. - Review BPM6 DI classification to avoid numerous components under a single functional category. - Institutional sectors for DI classification (same as BPM6 or BPM7, subject to other workstreams): - central bank, - deposit-taking corporations, except the central bank, - general government, - other financial corporations, and - nonfinancial corporations, households, and NPISHs. - DI instrument classification: - No changes to instrument and maturity classification of DI. - DI classification provides two main categories of financial instruments: - equity and investment fund shares, and - debt instruments. - The category “debt instruments” is not disaggregated and includes: debt securities; currency and deposits; loans; insurance, pension, and standardized guarantee schemes; trade credits and advances; and other accounts between related companies. - Just debt securities, the only negotiable debt instrument, are requested as a supplementary item. - The maturity breakdown of DI is not requested in the standard components of the BPM6. - A convention classifying debt instruments between related parties as long-term instruments could be adopted. - Reinvestment of earnings: - Reinvestment of earnings will be aggregated into equity and investment fund shares in the standard components of the financial account of the balance of payments and the IIP. - Reinvestment of earnings will be separately identified as a memorandum (“of which”) item in the financial account of the balance of payments. - Reinvested earnings remain a separate standard component in the primary income account of the balance of payments. ### Presentation and Relationship to Directional Principle - Standard components, memorandum items, and supplementary items are defined as in BPM6 (paragraph 1.15). - The sectoral breakdown of DI will be included under the standard components. - BPM6 standard DI breakdown (used to derive quarterly directional values) will be included as memorandum items to enable directional calculations on a quarterly basis. - The directional presentation remains useful for examining nature and motivations for DI; detailed DI statistics by country and by industry should continue to be published according to the directional presentation. - The BPM6 supplemental breakdown related to ultimate controlling parent (UCP) residency (to derive the extended directional principle) will remain supplementary. ### Outcomes: Changes Adopted - Include sectoral breakdown of DI in the standard components of the balance of payments and the IIP, replacing BPM6 standard components shown in Annex II. - Key elements to be included: - Sectoral breakdown of DI for both equity and debt instruments as the primary breakdown within the standard components. - Apply the sectoral breakdown of the total equity investment to reinvestment of earnings in both the balance of payments and the IIP. - Maintain BPM6 standard components used to derive directional values as memorandum items (combining equity and debt). - Consider additional supplemental statistics on DI by directional components after coordination due to ongoing work on MNEs. - New memorandum items to include: - BPM6 DI standard components as memorandum items: direct investor in direct investment enterprise; direct investment enterprises in direct investor (reverse investment); and between fellow enterprises, combining equity and debt. - Reinvestment of earnings as a new memorandum item of the balance of payments, consistent with the primary income account standard component. - Supplementary items retained or removed: - Retain total of debt securities as supplementary. - Retain items: “if ultimate controlling parent is resident,” “nonresident”, and “unknown.” - Remove “of which, Investment fund shares/units” and “Money market fund shares/units.” - Remove split under debt securities by directional components (direct investor in direct investment enterprise; reverse investment; and between fellow enterprises). ### Annex I (High-level Structure of New Standard Components, Memorandum, and Supplementary Items) - Direct investment — Equity and investment fund shares — sectoral breakdown: - Central Bank n.a. n.a. - Deposit-taking corporations, except the central bank - General government n.a. n.a. - Other sectors - Other financial corporations - Nonfinancial corporations, households, and NPISHs - Of which, Reinvestment of earnings (only BOP) - Direct investment — Debt instruments — sectoral breakdown: - Central Bank - Deposit-taking corporations, except the central bank - General government - Other sectors - Other financial corporations - Nonfinancial corporations, households, and NPISHs - Memorandum items (combining equity and debt): - Direct investor in direct investment enterprises - Direct investment enterprises in direct investor (reverse inv.) - Between fellow enterprises - if ultimate controlling parent is resident - if ultimate controlling parent is nonresident - if ultimate controlling parent is unknown - Of Which Debt securities ### Other Related Issues - Inclusion of sectoral classification of DI in the currency composition of the IIP will be considered along with updates to tables requested in section C. “Additional Analytical Position Data” of Appendix 9 of the BPM6 during the update of the BPM Compilation Guide. - Sectoral classification of DI will be included in external debt statistics (EDS) as a separate item under intercompany lending. - Number of standard and supplementary items of the primary income account will be reduced to be consistent with the standard components of the IIP (Annex III). - Consequent changes to the Coordinated Direct Investment Survey (CDIS) are not contemplated in this note. ### BPM6 Standard Components and Supplementary Items of Direct Investment (Section 2) - Sectors/Accounts: BOP | IIP | NAFA | NIL | Assets | Liabilities - Direct investment - Equity and investment fund shares - Equity other than reinvestment of earnings - Direct investor in direct investment enterprises - Direct investment enterprises in direct investor (reverse investment) - Between fellow enterprises - if ultimate controlling parent is resident - if ultimate controlling parent is nonresident - if ultimate controlling parent is unknown - Reinvestment of earnings (only BOP) - Of Which, Investment fund shares/units - Money market fund shares/units - Debt instruments - Direct investor in direct investment enterprises - Direct investment enterprises in direct investor (reverse investment) - Between fellow enterprises - if ultimate controlling parent is resident - if ultimate controlling parent is nonresident - if ultimate controlling parent is unknown - Of Which, Debt securities - Direct investor in direct investment enterprises - Direct investment enterprises in direct investor (reverse investment) - Between fellow enterprises - if ultimate controlling parent is resident - if ultimate controlling parent is nonresident - if ultimate controlling parent is unknown ### Annex III. New Primary Income Direct Investment — Standard and Supplementary Components - Account: BOP | Credits | Debits - Investment income - Direct investment - Income on equity and investment fund shares - Dividends and withdrawals from income of quasi-corporations - Direct investor in direct investment enterprises - Direct investment enterprises in direct investor (reverse investment) - Between fellow enterprises - if ultimate controlling parent is resident - if ultimate controlling parent is nonresident - if ultimate controlling parent is unknown - Reinvested earnings - Investment income attributable to policyholders in insurance, pension schemes, and standardized guarantees, and to investment fund shareholders - Of which: Investment income attributable to investment fund shareholders - Interest - Direct investor in direct investment enterprises - Direct investment enterprises in direct investor (reverse investment) - Between fellow enterprises - if ultimate controlling parent is resident - if ultimate controlling parent is nonresident - if ultimate controlling parent is unknown - Memorandum: Interest before FISIM *Source: Direct Investment Task Team (DITT), IMF Committee on Balance of Payments Statistics — D.7 Sectoral Breakdown of Direct Investment (Approved/Final Version).* ### Section 1 ### D.7 Sectoral Breakdown of Direct Investment ### Background and Rationale - Direct investment (DI) is the only functional category in the balance of payments and the international investment position (IIP) standard components in the IMF’s Balance of Payments and International Investment Position Manual, sixth edition (BPM6), that is not presented by institutional sector. - BPM6 recognizes sectoral breakdown of DI should be shown as a supplementary item where relevant (BPM6, paragraph 2.32 and table 7.2). - Objectives of including sectoral breakdown: - Provide a convenient way to analyze net foreign lending or borrowing of each domestic sector and detect external sustainability and vulnerability risks emanating from specific domestic sectors. - Enhance comparability and synergy between external sector statistics (ESS) and other datasets (SNA, MFS, GFS, Handbook on Securities Statistics). - Close a data gap in building the Balance Sheet Approach (BSA) matrix by providing sectoral classification of DI in the IIP (see BPM6, paragraphs 14.57 to 14.66 and 14.59). - Produce integrated economic accounts and facilitate aggregation of international accounts to build the balance sheet matrix. ### New DI Classification: Scope and Structure - The new DI classification will: - Include the resident institutional sector breakdown in the standard components of the balance of payments and the IIP rather than as supplementary items. - Include BPM6 assets and liabilities components as memorandum items to the standard components. - Review BPM6 DI classification to avoid numerous components under a single functional category. - Institutional sectors for DI classification (same as BPM6 or BPM7, subject to other workstreams): - central bank, - deposit-taking corporations, except the central bank, - general government, - other financial corporations, and - nonfinancial corporations, households, and NPISHs. - DI instrument classification: - No changes to instrument and maturity classification of DI. - DI classification provides two main categories of financial instruments: - equity and investment fund shares, and - debt instruments. - The category “debt instruments” is not disaggregated and includes: debt securities; currency and deposits; loans; insurance, pension, and standardized guarantee schemes; trade credits and advances; and other accounts between related companies. - Just debt securities, the only negotiable debt instrument, are requested as a supplementary item. - The maturity breakdown of DI is not requested in the standard components of the BPM6. - A convention classifying debt instruments between related parties as long-term instruments could be adopted. - Reinvestment of earnings: - Reinvestment of earnings will be aggregated into equity and investment fund shares in the standard components of the financial account of the balance of payments and the IIP. - Reinvestment of earnings will be separately identified as a memorandum (“of which”) item in the financial account of the balance of payments. - Reinvested earnings remain a separate standard component in the primary income account of the balance of payments. ### Presentation and Relationship to Directional Principle - Standard components, memorandum items, and supplementary items are defined as in BPM6 (paragraph 1.15). - The sectoral breakdown of DI will be included under the standard components. - BPM6 standard DI breakdown (used to derive quarterly directional values) will be included as memorandum items to enable directional calculations on a quarterly basis. - The directional presentation remains useful for examining nature and motivations for DI; detailed DI statistics by country and by industry should continue to be published according to the directional presentation. - The BPM6 supplemental breakdown related to ultimate controlling parent (UCP) residency (to derive the extended directional principle) will remain supplementary. ### Outcomes: Changes Adopted - Include sectoral breakdown of DI in the standard components of the balance of payments and the IIP, replacing BPM6 standard components shown in Annex II. - Key elements to be included: - Sectoral breakdown of DI for both equity and debt instruments as the primary breakdown within the standard components. - Apply the sectoral breakdown of the total equity investment to reinvestment of earnings in both the balance of payments and the IIP. - Maintain BPM6 standard components used to derive directional values as memorandum items (combining equity and debt). - Consider additional supplemental statistics on DI by directional components after coordination due to ongoing work on MNEs. - New memorandum items to include: - BPM6 DI standard components as memorandum items: direct investor in direct investment enterprise; direct investment enterprises in direct investor (reverse investment); and between fellow enterprises, combining equity and debt. - Reinvestment of earnings as a new memorandum item of the balance of payments, consistent with the primary income account standard component. - Supplementary items retained or removed: - Retain total of debt securities as supplementary. - Retain items: “if ultimate controlling parent is resident,” “nonresident”, and “unknown.” - Remove “of which, Investment fund shares/units” and “Money market fund shares/units.” - Remove split under debt securities by directional components (direct investor in direct investment enterprise; reverse investment; and between fellow enterprises). ### Annex I (High-level Structure of New Standard Components, Memorandum, and Supplementary Items) - Direct investment — Equity and investment fund shares — sectoral breakdown: - Central Bank n.a. n.a. - Deposit-taking corporations, except the central bank - General government n.a. n.a. - Other sectors - Other financial corporations - Nonfinancial corporations, households, and NPISHs - Of which, Reinvestment of earnings (only BOP) - Direct investment — Debt instruments — sectoral breakdown: - Central Bank - Deposit-taking corporations, except the central bank - General government - Other sectors - Other financial corporations - Nonfinancial corporations, households, and NPISHs - Memorandum items (combining equity and debt): - Direct investor in direct investment enterprises - Direct investment enterprises in direct investor (reverse inv.) - Between fellow enterprises - if ultimate controlling parent is resident - if ultimate controlling parent is nonresident - if ultimate controlling parent is unknown - Of Which Debt securities ### Other Related Issues - Inclusion of sectoral classification of DI in the currency composition of the IIP will be considered along with updates to tables requested in section C. “Additional Analytical Position Data” of Appendix 9 of the BPM6 during the update of the BPM Compilation Guide. - Sectoral classification of DI will be included in external debt statistics (EDS) as a separate item under intercompany lending. - Number of standard and supplementary items of the primary income account will be reduced to be consistent with the standard components of the IIP (Annex III). - Consequent changes to the Coordinated Direct Investment Survey (CDIS) are not contemplated in this note. *Source: Direct Investment Task Team (DITT), IMF Committee on Balance of Payments Statistics — D.7 Sectoral Breakdown of Direct Investment (Approved/Final Version).* ### Section 2 ### d7-sectoral-breakdown-of-direct-investment - Section 2 ### BPM6 Standard Components and Supplementary Items of Direct Investment - Sectors/Accounts: BOP | IIP | NAFA | NIL | Assets | Liabilities - Direct investment - Equity and investment fund shares - Equity other than reinvestment of earnings - Direct investor in direct investment enterprises - Direct investment enterprises in direct investor (reverse investment) - Between fellow enterprises - if ultimate controlling parent is resident - if ultimate controlling parent is nonresident - if ultimate controlling parent is unknown - Reinvestment of earnings (only BOP) - Of Which, Investment fund shares/units - Money market fund shares/units - Debt instruments - Direct investor in direct investment enterprises - Direct investment enterprises in direct investor (reverse investment) - Between fellow enterprises - if ultimate controlling parent is resident - if ultimate controlling parent is nonresident - if ultimate controlling parent is unknown - Of Which, Debt securities - Direct investor in direct investment enterprises - Direct investment enterprises in direct investor (reverse investment) - Between fellow enterprises - if ultimate controlling parent is resident - if ultimate controlling parent is nonresident - if ultimate controlling parent is unknown ### Annex III. New Primary Income Direct Investment — Standard and Supplementary Components - Account: BOP | Credits | Debits - Investment income - Direct investment - Income on equity and investment fund shares - Dividends and withdrawals from income of quasi-corporations - Direct investor in direct investment enterprises - Direct investment enterprises in direct investor (reverse investment) - Between fellow enterprises - if ultimate controlling parent is resident - if ultimate controlling parent is nonresident - if ultimate controlling parent is unknown - Reinvested earnings - Investment income attributable to policyholders in insurance, pension schemes, and standardized guarantees, and to investment fund shareholders - Of which: Investment income attributable to investment fund shareholders - Interest - Direct investor in direct investment enterprises - Direct investment enterprises in direct investor (reverse investment) - Between fellow enterprises - if ultimate controlling parent is resident - if ultimate controlling parent is nonresident - if ultimate controlling parent is unknown - Memorandum: Interest before FISIM --- _Source: https://www.imf.org/-/media/files/data/statistics/bpm6/approved-guidance-notes/d7-sectoral-breakdown-of-direct-investment.pdf_