## Current Account Task Team (CATT) Third Meeting — March 15, 2021

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### Opening remarks and membership changes
- New members introduced to the Current Account Task Team (CATT):
  - Mr. Andrea Carboni (Italy– Bank of Italy)
  - Ms. Patricia Abaroa (US – Bureau of Economic Analysis)
  - Mr. Joao Fonseca (International Public Sector Accounting Standards Board)
  - Mr. Borys Cotto (IMF – STA/BOP)
  - Mr. Thomas Alexander (IMF – STA/Real Sector), replacing Ms. Jennifer Ribarsky (GZTT)
- Organizational change:
  - Mr. Bedri Zymeri (Kosovo – from Central Bank of the Republic of Kosovo to World Bank)
- Departure:
  - Ms. Consuelo Soto Crovetto (Peru– Central Bank of Peru)

### Overview of CATT activity since inception
- CATT work started in June 2020.
- Inaugural meeting on June 11, 2020.
- Second meeting on November 16, 2020.
- Ten (10) Guidance Notes (GNs) of CATT to be finalized by October 2021 (individual timelines in additional slides), covering methodological, measurement issues, and supplemental presentations associated with the current account.
- Progress highlights:
  - Following public consultations, GNs C.2 and C.5.1 were approved by Oct. 2020 BOPCOM.
  - GNs C.3 and C.5.2 are under TT internal review.
  - GN C.6 is under BPTT/AEG review.
  - GNs C.1 and C.8 are on hold, waiting for decision on GN C.4 (Oct. ’21 BOPCOM meeting).
  - C.7 is pending clarification.
  - GN C.9 was dropped.
- Collaboration:
  - GZTT/CATT collaboration on C.11 (currently in testing phase) and C.4.

### Outcomes of public consultation and BOPCOM discussions — GN C.7 (Treatment of travel packages, health-related travel, and taxes and fees on passenger tickets)
- Public consultation: Summary of major issues
  - Agreement to unbundle services included in package tours, to define package tours according to IRTS 2008, and to provide more guidance for disaggregation.
  - Core unresolved issue: whether a tour operator is providing intermediation services similar to a travel agent or creating a new product — further clarification needed.
  - Health-related travel: Broad approval to classify health related travel according to IRTS 2008; divided opinions on recording of expenses of patients’ companions (whether to record under “health related travel” or “other personal travel”).
  - Taxes and fees on passenger tickets: Most respondents agreed that taxes and fees on passengers’ tickets are intrinsic components of the market price paid and agreed to keep the existing treatment.
  - General remarks from respondents:
    - Proposals in the GN were useful but practical implementation challenges exist, particularly for package tours.
    - Guidance on unbundling services by residency should extend beyond “package tours” to air passenger transport in general.
    - Use of digital platforms for traveling may negatively impact travel package services.
- BOPCOM discussion and decisions
  - GN C.7 was presented for information only.
  - Detected inconsistencies concerning the treatment of tour operators between manuals (considered as an intermediary service according to 2008 SNA and BPM6 but as a new product in ESA 2010) led to postponing final decision.
  - A final decision on GN C.7 to take place in the October 2021 BOPCOM meeting together with C.1 and C.4.
  - C.4 will elaborate on treatment of tour operators (under merchanting of services) and main conclusions should be reflected in C.7.

### Outcomes of public consultation and BOPCOM discussions — GN C.8 (Recording penalties and fines)
- Public consultation: Summary of major issues
  - Majority agreed with proposed definition of fines and penalties to separate them from payments of compensation.
  - Almost all reviewers favored proposed revision to clarify economic meaning of “major compensation payments for extensive damages” and their recording as capital transfers.
  - Time of recording: Unanimous agreement that fines and penalties should be recorded only when an unconditional claim on the funds is established by the issuing unit.
  - Impact on earnings of domestically incorporated enterprises (DIEs): Most respondents agreed fines and penalties should impact earnings of DIE (a cost) whenever payable by the DIE.
  - Recording in M&A contracts: Almost all reviewers supported recording fines and penalties in M&A contracts under direct or portfolio investment and not as current transfers.
  - General remarks: Additional practical guidance requested on time of recording in enterprises' financial statements; definition for major compensation payments under capital transfers remains unclear and needs further explanation.
- BOPCOM discussion and decisions
  - All Committee members agreed with the proposed definition of fines and penalties.
  - Members noted difficulties distinguishing compensation for damages from fines and penalties and recommended clear guidance (e.g., a decision tree).
  - Most members favored that fines and penalties impact income of DIE, but GN should clarify whether fines and penalties are part of current operations or extraordinary and thus whether they affect COPC.
  - National Accounts (NA) should be consulted due to potential impact on GDP and GNI.
  - Next steps: Finalize the GN, consult AEG for harmonization with NA, incorporate BOPCOM comments, and recirculate the updated GN to the Committee for final approval via written procedure.

### GZTT/CATT C.11 — Valuation of imports and exports of goods in the international standards (CIF to FOB Adjustment)
- October 2020 BOPCOM supported GZTT’s plan to test the proposal (access to invoice values from customs and assess differences with FOB valuation) on a large sample before deciding on change.
- Decision to prepare a Joint Report to BOPCOM and AEG.
- Post-meeting progress and testing strategy discussions focused on:
  - Extent of difficulties in obtaining invoice (transaction) values from customs data.
  - Practical implementation of the change.
  - Whether benefits outweigh disruption and cost to the statistical system.
- Questionnaire finalized by GZTT in consultation with some CATT members; targets both NA and BOP compilers to send separate or coordinated responses.
- Two-staged approach:
  - Stage 1: Wider audience (set of economies reflecting geographical representation and different stages of statistical development).
  - Stage 2: Targeted approach with selected countries.
- Outreach strategy:
  - Survey to be launched simultaneously on UNSD and the IMF’s BPM6 update webpage.
  - Generic correspondence to all BOP and NA compilers to alert them to the survey.
  - Support sought from GZTT members, CATT Secretariat, BPTT Secretariat, OECD Working Party on National Accounts and Trade in Goods and Services, OECD/WTO Inter-agency Task Force on International Trade Statistics, and the representative of the COMESA on the GZTT to reach African member states.
  - Target countries on the GZTT (Germany, Ireland, and Uruguay) agreed to active testing.

### 2021 BOPCOM meeting schedule (tentative)
- 21 – 24 June (virtual)
- 26–28 October, or 25 – 28 October if virtual

### Status of CATT Guidance Notes (GNs) — High-priority items
- C.1 Recording transactor-based components of services (travel, construction and government goods under services)
  - Research team: IMF (lead), Canada, Peru
  - Links: C.4, C.6, C.7
  - Delivery: July 2020; CATT July 2020; BOPCOM Oct. 2020
  - Current status: On hold
- C.2 Goods and services account by (trading) enterprise characteristics
  - Research team: OECD (lead), Denmark, Jamaica, Mexico
  - Delivery: July 2020; CATT July 2020; BOPCOM Oct. 2020
  - Current status: Approved
- C.3 International trade classified by currency (including for trade linked to long-term trade credits and advances)
  - Research team: Brazil (lead), World Bank, Moldova, Morocco
  - Delivery: March 2021; CATT March 2021; BOPCOM June 2021
  - Current status: CATT review
- C.4 Merchanting and factoryless producers; clarifying negative exports in merchanting; Merchanting of services
  - Research team: Germany (lead), Denmark, OECD
  - Links: C.7/GZTT
  - Delivery: July 2021; CATT July 2021; BOPCOM Oct. 2021
  - Current status: Ongoing
- C.5.1 Statistical impact of the change in treatment of operating leases in business accounting
  - Research team: Eurostat (lead), Canada, Russia
  - Links: GZTT/C.5.2
  - Delivery: July 2020; CATT July 2020; BOPCOM Oct. 2020
  - Current status: Approved
- C.5.2 Economic ownership in the context of financial and operating lease transactions pertaining, in particular, to aircrafts
  - Research team: Eurostat (lead), Russia, Canada
  - Links: GZTT
  - Delivery: March 2021; CATT March 2021; BOPCOM June 2021
  - Current status: Draft is finalized

### Status of CATT Guidance Notes (GNs) — Medium-priority items and related work
- C.6 Trade in services classification
  - Research team: OECD (Lead), IMF, UNSD, Argentina
  - Links: C.1 / GZTT, DZTT
  - Delivery: Feb. 2021; CATT Feb. 2021; BOPCOM June 2021
  - Current status: BPTT/AEG review
- C.7 Treatment of travel packages, health-related travel, and taxes and fees on passenger tickets
  - Research team: Germany (Lead), Botswana, Thailand
  - Links: C.1, C.4
  - Delivery: Sep. 2020; CATT Sep. 2020; BOPCOM Feb. 2021
  - Current status: On hold, waiting for GN C.4
- C.8 Recording penalties and fines
  - Research team: USA (Lead), Brazil
  - Links: DITT – D15
  - Delivery: Dec. 2020; CATT Dec. 2020; BOPCOM Feb. 2021
  - Current status: Under review, pending consultation with AEG
- C.9 Valuation of trade under long term contracts
  - Research team: Argentina (Lead), Jamaica, OECD
  - Current status: Dropped
- Valuation of imports and exports of goods in the international standards (CIF to FOB adjustment) — GZTT
  - Reviewed by CATT Sep. 2020 and by BOPCOM Oct. 2020
  - Current status: Undecided; Testing phase

### Way forward — Takeaways and next actions
- Takeaways from experience to date:
  - Early detection of potentially controversial issues in GN topics is valuable.
  - Need for more in-depth dialogue within Task Teams on rationale for proposed solutions versus alternatives.
  - Reviewers should gather broader institutional views and monitor new developments that might require changes in direction.
  - Careful early examination of proposed treatments and implications for related lines of work helps prevent later controversies.
  - Timely coordination among various Task Teams on cross-domain topics is essential to achieve methodological harmonization between SNA and BPM.
  - Time constraints and tight review schedules remain a restricting factor.
  - CATT benefitted from active participation in public review by relevant external groups affiliated with CATT members (e.g., Eurostat’s Working Group on the Balance of Payments, the OECD’s Working Party on International Trade in Goods and Services Statistics).
- Next set of CATT GNs:
  - C.1 (draft is on hold) — links to C.4, C.6 and C.7.
  - C.7 (draft is on hold) — links to C.1 and C.4.
  - C.4 ongoing work together with GZTT; outcome on merchanting of services will impact C.7.
  - Extended timeline to fit October 2021 BOPCOM.

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_Source: https://www.imf.org/-/media/files/data/statistics/bpm6/catt/catt-third-meeting-presentation-march-15-2021.pdf_