## BPM6 Update — Direct Investment Task Team (DITT) Fourth Meeting (December 1, 2021) — Summary of Discussions

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**Canonical URL:** [BPM6 Update — Direct Investment Task Team (DITT) Fourth Meeting (December 1, 2021) — Summary of Discussions](https://www.imf.org/-/media/files/data/statistics/bpm6/ditt/ditt-fourth-meeting-minutes-december-1-2021.pdf)

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### Introduction
- The meeting was held on December 1, 2021, via WebEx.
- Co-chairs: Ms. Maria Borga, Deputy Chief, Balance of Payments Division, IMF’s Statistics Department; Mr. Krzysztof Makowski, chair of the OECD Working Group on Investment Statistics (WGIIS).
- Objective: present outcomes of Committee meetings in June and October 2021, discuss remaining DITT work until the March 2022 Committee meeting, and the prioritization process.

### Outcomes of the June 21–24, 2021 Committee meeting — Guidance Notes (GNs) discussed
- GN: Eliminating Special Imputations for an Entity Owned or Controlled by General Government (D.5)
  - Recommendation: retain the 2008 SNA/BPM6 treatment with more appropriately defined imputations to reflect nature, value, and counterpart of relevant flows and positions in government accounts.
  - Public consultation: favoured the GN recommendation and suggested further discussion by the government finance statistics (GFS) community and the GFS Advisory Committee (GFSAC) on classification and valuation of debt between government and direct investment enterprise (DIE).
  - Technical point: BPM6 does not specify the exact instrument to be imputed as debt of government but can presume it is a loan. Loans are valued at nominal value; debt securities issued by the SPE are valued at market value, so SPE liability position may not be fully reflected in government accounts without further adjustments.
  - Committee decision: agreed with recommendation and supported further discussion in the GFS community and Advisory Expert Group (AEG).
  - Next steps:
    - Revise GN stating the approved option and providing more details about proposed enhancements to imputations between the SPE and the parent government for BPM7.
    - Submit revised GN to GFSAC and AEG for comments.
    - After incorporating comments, send GN to the Committee for final approval via written procedure.

- GN: Public Private Partnership (D.8)
  - Recommendation: updated BPM6 and BPM6 Compilation Guide (BPM6 CG) should provide guidance on concepts, definitions, scope of PPP arrangements; guidance on when a direct investment (DI) relationship exists and associated DI transactions and positions; and practical compilation guidance.
  - Public consultation: supported the recommendation.
  - Committee decision: unanimously agreed with the recommendation.
  - Next step: DITT to prepare a final GN stating final recommendations and removing questions for posting on the BPM6 Update website.

### Outcomes of the October 26–29, 2021 Committee meeting — Guidance Notes (GNs) discussed
- GN: Valuation of Unlisted Equity (D.2)
  - Proposal: present options on methods recommended in manuals for treatment of unlisted equity.
  - Public consultation outcomes: strong support for including decision tree; slight support for reducing number of methods. Top three preferred methods: Own Funds at Book Value (OFBV), Recent Transaction Price, and Market Capitalization (also most used currently). Support for separate clarification note on negative equity and clarifying treatment of provisions.
  - Committee and AEG: supported decision tree, identifying most preferred methods, and inclusion of practical guidance in BPM6 CG on using decision tree and applying methods; support for clarification on negative equity and treatment of provisions.
  - Next steps:
    - DITT to update GN incorporating members’ discussion and removing questions.
    - Circulate updated GN to Committee and AEG for final decision and subsequent posting on BPM6/2008 SNA Update websites.
    - Continue discussion on best way forward for notes on negative equity and treatment of provisions.

- GN: Treatment of Reinvested Earnings (D.16)
  - Proposal: clarify language with respect to reinvested earnings; review treatment of reinvested earnings along the ownership chain; clarify treatment of retained earnings generated by investment funds.
  - Public consultation outcomes:
    - Strong support to clarify language but mixed views on supplemental item on provisions.
    - Support for maintaining status quo on recording income while acknowledging practical issues.
    - Support for recording investment income regardless of fund attributes.
    - Support for treatment of explicit fees but not for implicit fees.
  - Committee outcomes:
    - Strong support for clarifying language and slight support for supplemental item on provisions with need to explore links to supplemental item in the IIP.
    - Support for status quo but no clear outcome on reporting indirect income separately.
    - Support for compiling reinvestment of earnings (RIE) in investment funds regardless of fund attributes and treatment of explicit fees.
  - Next steps:
    - DITT to amend GN in response to comments and widen scope to include national accounts perspective, in particular proposed treatment for implicit fees.
    - Updated GN to be circulated to Committee and AEG via written procedure for final decision and subsequent posting on BPM6/2008 SNA Update websites.

- Note: Mr. Feuvrier highlighted that implicit fees imply production by investment funds and requested to be kept informed.

### Remaining Work on GNs and DITT timeline
- Status overview (as of the meeting):
  - DITT prepared 16 GNs for Committee review since October 2020. Four of the 16 GNs have been approved by the Committee and posted on the IMF website. The remaining 12 GNs will be finalized and recirculated for final approval and publication.
  - Of the 12 pending GNs, four will be approved by the Committee via written consultation.
- Specific GN statuses and actions:
  - D.3 and D.5 are being revised by drafting teams.
  - D.4 received Globalization Task Team comments; a new version is in preparation with a deadline of December 14, 2021; revised version will be sent to DITT Secretariat for final review before returning to the Committee.
  - D.17 is in consultation with other task teams.
  - D.1 and D.9 will incorporate survey outcomes.
  - D.2 and D.16 will reach out to drafting teams on how to finalize after the Committee’s Summary of Discussion.
  - D.10 sent to Global Consultation; Global Consultation closes on December 17, 2021; after this D.10 will be sent to the Committee for approval via written consultation.
  - D.11, D.14, and D.18 have been circulated to the Committee via written consultations.
- Survey activity:
  - A survey was prepared to explore compilation methods and data issues on Greenfield Investment, Reconciling FDI and AMNE/FATS, and Investment Income by Enterprise Characteristics (proposed by Current Account Task Team and Globalization Task Team in GNs C.2 and C.4).
  - The survey was launched on December 2, 2021, with a deadline to receive answers on January 11, 2022.
- DITT work way forward (timeline):
  - December 2021: Launch Survey
  - January 2022: Process survey outcomes
  - January–February 2022: 12 GNs to be finalized
  - March 7–9, 2022: Present the final versions of the GNs at the Committee Meeting
  - After the Committee meeting: Approve and publish 12 GNs
- Questions raised during meeting:
  - Status of D.3: D.3 was agreed by the Committee; a revised version reflecting Committee discussions to be shared with the drafting team shortly.
  - Timeline for online survey on D.1 and D.9: online survey launched shortly and active until January 11, 2022; aims to highlight potential usefulness of including the transaction approach to compile greenfield investment in BPM7. Results to be processed by mid-February and submitted to the Committee. UNCTAD support requested for outreach to low income countries.
  - Status of D.14: all documents related to D.14 shared with Committee but unclear status; DITT Co-Chair to follow up with D.14 team.

### Process for the Holistic Review of BPM6 (BPM7 preparation)
- Guiding principles introduced by Ms. Borga:
  - Objective: review each GN and determine what will go in BPM7, balancing users’ data needs against implementation costs for compilers.
  - The total package of amendments should be ambitious but realistic; carefully consider trade-offs between initiatives.
- Principles for new data requirements:
  - New data requirements will be introduced only if a significant number of economies can realistically produce the data.
  - Special consideration for variation in implementation capacity by allowing more supplemental presentations freely chosen by countries depending on resources and importance to their economy.
- Prioritization process:
  - An ad hoc meeting after the March 2022 Committee meeting will rely on a summary of all amendments and a preliminary assessment categorizing topics into:
    - those to be included in BPM7,
    - those to remain in the research agenda,
    - those not included in either but could be considered for other manuals (e.g., BD5).
  - Amendments to the BPM7 Compilation Guide will also be considered.
- Next steps:
  - Incorporate proposed changes and recirculate to Committee members via written procedure.
  - Launch survey on user needs (questionnaire to be reviewed by Committee members after the March 2022 meeting).
  - Prepare a summary paper with main changes to be incorporated into BPM7 (including main survey results) for decision at the ad-hoc meeting after the March 2022 Committee Meeting.
- Additional plan: an extensive paper on the holistic review will be prepared and circulated to the Committee and discussed at a dedicated meeting in spring 2022. User needs to be assessed via an online survey.

### Any Other Business
- Ms. Hanson (USA) alerted DITT members to possible implications on DI from GNs developed in other Task Teams, particularly C.8 on Fines and Penalties.
- Ms. Borga: revised version of the GN will be circulated among DITT members for information as soon as available; the note is under review by the AEG.

### Actions (assigned to DITT Co-Chair and Secretariat)
- Circulate D.3 to the authoring team and follow up with D.14 authoring team on the status of the written consultation.
- Circulate the online survey for D.1 and D.9.
- Prepare and circulate the Summary of Discussions of the DITT meeting before posting it and the presentations on the DITT website.

### Attendees
- IMF: Maria Borga (co-chair), Rita Mesias (co-secretariat), Emma Angulo, Francien Berry, Martha Tovar Soria, Bruno Rocha
- OECD: Krzysztof Makowski WGIIS chair (co-chair), Francesca Spinelli (co-secretariat)
- ECB: Carmen Picón Aguilar
- Eurostat: Irene Madsen and Philippe de Rougemont
- UNCTAD: Astrit Sulstarova
- Country Representatives: Fernando Lemos (Brazil), Eric Simard (Canada), Mei Ling Tjung (Indonesia), Stefano Federico (Italy), Paul Feuvrier (Luxembourg), Sakiko Ohtsuka (Japan), Fedor Kharlashin (Russia), Piet Swart (South Africa), Fernando Nieto (Spain), Lee Mallet (United Kingdom), Jessica Hanson (USA), Wilson Phiri (Zambia)
- Excused: Emilie Kothe (OECD)
- Absent: Michael Abbondante (Australia), Yang Can (China), Mirco Lattwein (Germany), Thomas Elkjaer (IMF)

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_Source: https://www.imf.org/-/media/files/data/statistics/bpm6/ditt/ditt-fourth-meeting-minutes-december-1-2021.pdf_