Regulation (EU) No 549/2013 of the European Parliament and of the Council of 21 May 2013 on the European system of national and regional accounts in the European Union Text with EEA relevance

• 17.134Row 1 shows the opening stock of pension entitlements, which is exactly equivalent to the closing stock of the previous accounting period. Row 10 shows the corresponding closing stock of pension entitlements at the end of the accounting period.

Changes in pension entitlements due to transactions

• 17.135Employer and employee actual social contributions are recorded in rows 2.1 and 2.3, as in the core national accounts. In the case of some pension schemes, notably social security pension schemes, it is necessary to distinguish actual social contributions relating to pensions from social contributions relating to other social risks such as unemployment.

• 17.136For defined benefit pension schemes, employer imputed social contributions are generally measured as the balancing item — any changes in entitlements over the year not included in other rows of the table are captured in row 2.2. This row covers 'experience effects' where the observed outcome of pension modelling assumptions (wage growth rate, inflation rate and discount rate) differs from the levels assumed. Zeros are shown in this row for defined contribution schemes.

• 17.137Row 2.4 shows the property income earned or imputed in the schemes, which is routed via the households sector or the rest of the world sector. It should be noted that for all defined benefit schemes including social security, whether funded or unfunded, this property income is equivalent to the unwinding of the discount rate. In other words, the value is equal to the discount rate times the pension entitlements at the beginning of the accounting period.

• 17.138Some of the entries in the rows of columns G and H, specifically the actual contributions made by both employers and employees, appear in the core national accounts, even though the entitlements and change in entitlements do not. Other entries in the columns for G and H shown only in the supplementary table are shaded in the table and explained below.

• 17.139The imputed contribution by employers for those government schemes for which entitlements appear in column G but not in the core national accounts requires special consideration. Within the core national accounts the imputed contributions are to be estimated on the basis of actuarial calculations. In cases where the actuarial calculations cannot obtain a sufficient level of reliability and in such cases only, two other approaches are possible to estimate government employers' imputed pension contributions as follows:

• (1) on the basis of a reasonable percentage of wages and salaries paid to current employees; or

• (2) as equal to the difference between current benefits payable and actual contributions payable (by both employees and government as employer).

• Items for household social contribution supplements and the other changes in entitlements are shown on the same basis as for private schemes.

• 17.140An item calculated on the same actuarial basis in respect of social security is shown in row 3 as 'other (actuarial) accumulation of pension entitlements in social security funds'. It is, thus, distinguished from employers' imputed social contributions.

• 17.141Given that the supplementary table provides a complete breakdown of the changes in pension entitlements over the accounting period, it is necessary to introduce a specific row to deal with the case whereby actual social contributions to the social security pension scheme are not actuarially based, and, therefore, there is an imputed contribution, which is not the responsibility of any employer. Such imputed transactions of social security pension schemes are shown in row 3 as other actuarial increase of pension entitlements in social security pension schemes. The entries in this row can be positive or negative — the negative cases occur in a social security pension scheme where the discount rate is higher than the scheme's internal rate of return. The internal rate of return of a pension scheme is the discount rate that equalises the present value of the actual contributions paid and the discounted value of pension entitlements accrued through those contributions. Negative entries occur for example when contributions have been raised above the actuarial required level in order to finance a short-run cash shortfall.

• 17.142Row 3 does not represent cash transfers from tax revenues, and would be recorded in the standard accounts as current transfers between government units if they have no impact on pension entitlements. In some Member States, governments make transfers to pension schemes which do increase pension entitlements (for example where transfers are made for specific social groups which are unable to contribute directly), which would indicate that the amounts should be implicitly included in this row figure calculated by difference.

• 17.143Differences in the accounting period encountered between assumed and actual wage growth (that is the wage growth part of the 'experience effects' or 'actuarial effects' when modelling) need to be reflected in transactions (employer's imputed social contributions), along with all other experience effects.

• 17.144Row 3 captures any 'experience effects' observed for social security pension schemes where the observed outcome of pension modelling assumptions (wage growth rate, inflation rate and discount rate) in any one year differs from the levels assumed.

• 17.145Row 4 shows pension benefits that are paid during the accounting period. Payment of pension benefits has the effect of 'settling' some of the pension entitlements included in the opening stock in row 1.

• 17.146Row 5 presents the changes in pension entitlements due to contributions and benefits. It is row 2 plus row 3 less row 4. This balancing item measured from the non-financial accounts is equivalent to that measured from the financial accounts.

• 17.147One characteristic of the changing environment of pensions is the increasing possibility of having 'portable pensions', where a person moving jobs can transfer the pension entitlement with the former employer to one with the new employer. When this happens, the pension entitlement of the household concerned is unaffected but there is a transaction between the two pension schemes as the new one assumes the liability of the former. In addition, there will be a counterpart transaction in some assets to match these liabilities.

• 17.148If government assumes the responsibility for pension provision for the employees of a non-government unit through an explicit transaction, any payment by the non-government unit needs to be recorded as pre-paid social contributions (F.89). There is further discussion of this type of arrangement in paragraphs 20.273 to 20.275.

• 17.149When one unit takes over the responsibility for pension entitlements from another unit, two transactions are recorded in row 6. First, there is a transfer of pension entitlements from the original pension scheme to the new pension scheme. Second, there may be a transfer in cash or other financial assets to compensate the new pension scheme. It is possible that the value of the transfer of financial assets is not exactly equal to the value of the pension entitlements transferred. In that case a third entry is needed in transactions of capital transfers to correctly reflect the changes in net worth of the two units concerned.

• 17.150Employers are increasingly reforming the pension schemes they manage in response to demographic and other factors. Reforms may take the form of a change to the benefit formula, a change in the retirement age, or a change in other scheme provisions.

• 17.151Only enacted pension reforms lead to recording in the national accounts, in the estimates of pension entitlements in the year in which enactment takes place and subsequently in observed flows. An announcement by an employer of its intention to undertake a pension reform is not a sufficient basis to introduce the effects of the reform into national accounts data.

• 17.152In some cases of reform, the employer chooses to leave the vested rights of existing members untouched and only applies the reformed arrangements for future acquisition of additional entitlements. There would be no immediate impact on current pension benefits. The impact would be seen in future measures of pension benefits, in line with the accrued-to-date approach.

• 17.153However, in some cases the employer decides to make reforms which affect the accrued-to-date entitlements for existing members; for example, a general increase in retirement age for all members. Such types of reforms change the stock of pension entitlements during the year in which they are enacted. This effect must be accounted for as a flow. It may be very large since it affects current and future pension entitlements.

• 17.154Changes in pension entitlements are recorded as transactions as follows:

• (a) if the entitlements of a pension scheme are included in the core national accounts, and the employer agrees to a change in the terms of pension entitlements via negotiation with the affected employee, this change is recorded as a transaction in the core national accounts (under imputed employer social contributions);

• (b) if the entitlements of a pension scheme are not recorded in the core national accounts, and the employer agrees a change in the terms of pension entitlements via negotiation with the affected employees, this change is recorded as a transaction in the supplementary table;

• (c) in the case of social security, if changes in pension entitlements are agreed by the parliamentary authorities, this is recorded in the supplementary table as if it were negotiated.

• 17.155Changes in pension entitlements that are imposed without negotiation are recorded as other changes in the volume of assets.

• 17.156Changes in accrued-to-date entitlements arising from past service are recorded as capital transfers.

• 17.157Row 7 shows the impact of reforms of pension scheme structures on entitlements relating to past service.

Changes to pension entitlements due to other economic flows

• 17.158Rows 8 and 9 account for the other flows as revaluations and other changes in volume associated with pension schemes in social insurance. Table 17.7 illustrates the other flows, divided into revaluations and other changes in volume.

• 17.159Revaluations are due to changes of key model assumptions in the actuarial calculations. These assumptions are the discount rate, the wage rate and the inflation rate. Experience effects are not included here unless it is not possible to identify them separately. Other changes in actuarial estimates are more likely to be recorded as other changes in volume of assets. The effects of price changes due to the investment of the entitlements are recorded as revaluations appearing in the revaluation account.

• 17.160When the demographic assumptions used in the actuarial calculations are changed, they are recorded as other changes in the volume of assets.

Table 17.7 —   Other flows as revaluations and other changes in the volume of assets

Revaluations

Changes in assumed discount rate

Changes in assumed wage developments

Changes in assumed price developments

Other changes in the volume of assets

Changes in demographic assumptions

Other changes

Related indicators

• 17.161Financial services produced by all pension schemes are recorded as being paid by scheme members, and so the costs of pension schemes are not recorded as intermediate consumption of the employer operating the scheme. Accordingly, Chart 17.1 shows financial services separate from social contributions. Presenting financial services in this way means the figures shown as contributions received by employees from their employers are exactly the same as that part of the contributions paid by the employees to the pension scheme. Furthermore, it is not necessary to show which element of social contributions covers the service fee. It is the household contribution supplement that covers the service fee for a defined contribution scheme and it is either the employers' or the household contribution that does so for a defined benefit scheme.

• As output is recorded for all employer pension schemes, which the scheme's members consume, row 11 shows the output by type of scheme.

Chart 17.1 —   Pension entitlements and their changes

Image omitted; see official source

Text of image

Contributions

(actual, imputed

of which: property income)

(rows 2 and 3)

Pension benefits (row 4)

Financial services

Other flows

(revaluations,

other changes in volume)

(rows 8 and 9)

Changes in

pension entitlements

(due to transactions and other

economic flows)

Pension entitlements

at the beginning

of the period (row 1)

Pension entitlements

at the end

of the period (row 10)

Stock at t0

Transactions and other flows between t0 and t1

Stock at t1

• This chart is purely illustrative and no specific meaning should be attributed to the size of the different boxes.

Actuarial assumptions

Accrued-to-date entitlements

• 17.162Pension entitlements in national accounts are measured on a gross basis. No assets or accumulated social contributions are taken into account to compile any type of net entitlements. Only pension entitlements due to actual and future pension benefits are covered.

• 17.163The accrued-to-date liability concept is appropriate for national accounts purposes. It includes the present value of pension entitlements arising from already accrued pension rights. For example, it covers the pension entitlements accrued by current employees, including deferred pension entitlements, and the remaining pension entitlements of existing pensioners.

• 17.164As for all national accounts data, the data are measured ex post, as they include only the current values of the entitlements that arise from the accrued pension rights at the balance sheet date. The method is based on observable past events and transactions, such as membership of the pension scheme and paid contributions. However, such ex post measures also rely on a number of assumptions in the modelling process. Estimates are made for the probability of current contributors dying or becoming disabled before reaching the pensionable age. The measures also reflect future changes of the payment stream due to any legislation enacted prior to the year for which pension entitlements are being calculated. Finally, the method requires some important assumptions on future developments, notably regarding the discount rate for future pension disbursements.

Discount rate

• 17.165The discount rate applied to estimates of future pension benefits in the case of accrued-to-date entitlements is one of the most important assumptions to be made in the modelling of pension schemes, since its accumulated impact over many decades can be very large. The discount rate from a chosen approach may change over time, which would lead to revaluations in the accounts.

• 17.166The discount rate can be seen as equivalent to the expected risk-free rate of return on assets held by a pension scheme. In the case of pension entitlements to be paid in the future, the discount rate can also be seen as the cost of capital in a sense that the future payments have to be financed by government, via the usual sources:

• (a) net acquisitions of liabilities, such as loans and debt securities;

• (b) net sales of assets; and

• (c) government revenue.

• A discount rate can be derived from this cost of financing.

• 17.167The discount rate should be a risk-free rate. Some criteria for identifying suitable rates are given in the following sentences. The discount rate on high quality government and corporate bonds, e.g. of 'AAA'-rating provides an appropriate reference. Yields for high quality corporate bonds are only used where the markets are broad. The bonds are to be of a residual maturity of the same order as the pension entitlements. The use of a discount rate based on a long-term maturity, where long-term is taken to be 10 years or longer, is recommended. The average of several years of the discount rate, linked to the length of the economic cycle, can be applied to smooth the time series of the discount rate. The assumption on the discount rate and the future development of wages should be consistent. Member States are required to provide the elements demonstrating the validity of the discount rate used for pension entitlements in the light of the various criteria mentioned above.

• 17.168The same discount rate has to be used for all pension schemes where government is the pension manager (including social security pension schemes) at whatever level of government since the desired result should approximate risk-free yields.

Wage growth

• 17.169Defined benefit pension schemes often apply a formula to the member's salary — whether it be the final salary, an average of a period of years, or lifetime earnings — to determine the level of pension. The final pensions paid are affected by the average growth of members' salaries, notably through promotions and career progression.

• 17.170It is, therefore, appropriate to consider what assumptions are made for the future development of wages. The assumed long-term development of wages should correspond with the observed discount rate. Both variables are, in the long-term, interdependent.

• 17.171The accounting profession uses two actuarial methods to measure the impact of wage increases. The accrued benefit obligation (ABO) records only the benefits actually accrued to date. It represents the amount an employee could walk away with if he left the firm tomorrow, and may be the basis for assessing a person's net worth in the case of a divorce settlement, for example.

• 17.172A projected benefit obligation (PBO) is a more prudent measure of what the eventual level of entitlement is likely to be. For an individual, the PBO makes assumptions about how many future promotions the person is likely to receive and calculates his final salary accordingly. Then, if that individual has in fact only worked 20 out of an expected 40 years, it halves the final salary and calculates pension entitlement for the individual as if this were his current salary. Where an individual's ABO increases in steps as he is promoted, the PBO increases steadily over time. For the individual, PBO is always higher than ABO until the moment of retirement when the ABO catches up with the PBO.

• 17.173The impact of wage increases needs to be reflected in transactions, because awarding a wage increase is a conscious economic decision taken by the employer. Moreover, in concept the ABO and PBO approaches lead, in the long run, to the same transactions being recorded, even if the timing of those transactions differs depending on the demographics of the scheme.

• 17.174Changes to assumptions of future wage changes, which are generally made every few years in response to a general review of pension modelling assumptions or due to a major restructuring of the workforce, are recorded as other flows (revaluations).

• 17.175A number of possible variants in the application of the ABO and PBO methods are observed in practice depending on how price and wage effects are treated.

• 17.176One important factor is the treatment of indexation arrangements on pensions, where the pension to be paid will increase in line with nominal wage growth after retirement.

• 17.177Given the importance of wage effects, it is recommended that the choice of an ABO or PBO approach be based on the underlying benefit formula in the pension scheme. Where this formula includes implicitly or explicitly a factor for wage increases (before or after retirement) then a PBO approach is followed. Where such a factor is not present, an ABO approach is used.

Demographic assumptions

• 17.178Future pension payments are subject to demographic effects, in terms of the age/ gender balance of members and their longevity. Demographic tables are well established for the modelling of pension and life insurance schemes.

• 17.179In the case of employment-related pension schemes, the membership of the scheme is well defined and, therefore, the data should be available. In the case of social security schemes, recourse is made to general population data if no specific data are available on social security membership.

• 17.180In the use of longevity tables, also known as mortality tables, tables which are specified with regard to gender and groups of employees are preferred. The group of members receiving a disability pension should be modelled with different longevity assumptions, if possible.

• 17.181Longevity assumptions should include the increase of longevity over time.

• 17.182The modelling of pension schemes may involve the use of demographic assumptions other than longevity, for example future fertility rates, labour participation rates or migration rates in the case where the pension benefit or indexation formula is based on a 'dependency ratio' or similar type of approach.

• 17.183Where early retirement within a scheme is actuarially neutral, modelling is unaffected. Non-actuarially neutral early retirements have an effect, and they frequently arise given the way in which different interest rates are usually applied at early retirement. Therefore, the appropriate modelling of early retirement behaviour is important, particularly where a reform raises the future pensionable age.

CHAPTER 18

REST OF THE WORLD ACCOUNTS

INTRODUCTION

• 18.01The accounts of resident institutional sectors show economic activity: production; generation, distribution and redistribution of income; consumption; and accumulation of assets and liabilities. These accounts capture transactions amongst resident units, and transactions of resident with non-resident units that make up the rest of the world.

• 18.02The ESA is a closed system in that both sides to every transaction are recorded in the accounts as a use and a resource. For resident units, this enables a coherent articulated set of accounts to be drawn up, and all the economic activities of each institutional unit are included in the sequence of accounts. This is not true for non-resident units. Non-resident units can only be observed through their interaction with resident units of the economy being measured, and so only their transactions with resident units can be recorded. This is done through the creation of a sector called 'the rest of the world' sector, and the compilation of a special set of accounts with limited entries which show, for non-resident units, only the transactions with resident units.

• 18.03The sequence of accounts for the rest of the world sector is as follows:

• (a) the external account of goods and services (V.I), covering imports and exports of goods and services;

• (b) the external account of primary and secondary incomes (V.II), covering compensation of employees, property and investment income, and current transfers such as personal transfers (including workers' remittances) and international aid;

• (c) the external accumulation accounts (V.III), consisting of:
• (1) the capital account (V.III.1), showing capital transfers and acquisitions less disposals of non-produced non-financial assets;
• (2) the financial account (V.III.2), showing transactions in financial assets and liabilities;
• (3) other changes in volume of assets account (V.III.3.1), showing uncompensated seizures etc.;
• (4) revaluation account (V.III.3.2), showing nominal holding gains and losses;

• (d) the external assets and liabilities account (V.IV) presents the opening and closing balance sheets, and the changes in the value of those assets and liabilities between opening and closing balance sheets.

• The full sequence is shown in Chapter 8, and the account numbers in brackets above refer to the account numbers in that Chapter.

• 18.04As the accounts are drawn up from the point of view of the rest of the world sector, imports to the domestic economy are shown as a resource, and exports from the domestic economy as a use of the external account of goods and services. A similar reversal occurs throughout the rest of the world accounts. If a balance is positive, it signifies a surplus for the rest of the world, and a deficit for the total domestic economy. Similarly, a negative balance shows a deficit for the rest of the world, and a surplus for the domestic economy. A financial asset held by the rest of the world is a liability for the domestic economy, and a liability held by the rest of the world is an asset for the domestic economy.

• 18.05The standard framework for statistics on the transactions and positions between an economy and the rest of the world is set out in the Balance of Payments and International Investment Position Manual 2008 (Sixth edition) (BPM6) ([^E0029]). That manual is harmonised with the System of National Accounts 2008, but sets out the interactions between the domestic economy and the rest of the world in a set of accounts and balance sheets which present the information in a different way. This Chapter sets out the rest of the world sector accounts of the ESA 2010, and how they relate to the international accounts of the BPM6.

ECONOMIC TERRITORY

• 18.06The most commonly used concept of economic territory is the area under the effective economic control of a single government. However, currency or economic unions, regions, or the world as a whole may be used, as they may also be a focus for macroeconomic policy or analysis. The full definition is given in Chapter 2 (paragraphs 2.04-2.06)

• 18.07In order to determine whether an entity is a resident in a given economic territory, one must establish:

• (1) whether the entity qualifies as an institutional unit; and, if so,

• (2) whether the entity also meets the criteria set out in Chapter 2 concerning determination of residency.

Residence

• 18.08The residence of each institutional unit is the economic territory with which it has the strongest connection, expressed as its centre of predominant economic interest. The concepts are identical in the ESA, the 2008 SNA and the BPM6. The introduction of the terminology 'centre of predominant economic interest' does not mean that entities with substantial operations in two or more territories no longer need to be split (see paragraph 18.12) or that institutional units without any significant physical presence can be disregarded (see paragraphs 18.10 and 18.15). The concept of residence in general, and for households, enterprises and other entities in particular, is described fully in Chapter 2.

INSTITUTIONAL UNITS

• 18.09The concept of 'institutional unit' is the same in the ESA, the 2008 SNA and the BPM6. The general definition is given in Chapter 2, paragraphs 2.12-2.16. Given the focus on the national economy, there are special treatments of units in cross-border situations. In some cases, legal entities are combined into a single institutional unit if they are resident in the same economy, but are not combined if they are resident in different economies. Similarly, a single legal entity may be split when it has substantial operations in two or more economies. As a result of those treatments, the residence of the units concerned becomes more clear-cut and the concept of economic territory is strengthened.

• 18.10Corporations' and governments' use of Special Purpose Entities (SPEs) is normally to raise finance. Where the SPE is resident in the same economy as the parent, then the treatment is straightforward. The SPE will normally have none of the attributes that would make it a separate entity from the parent, and assets and liabilities incurred by the SPE will be shown in the accounts of the parent corporation. Where the SPE is non-resident, the residence criteria for the rest of the world sector demand that a separate entity is recognised. In this case, any assets and liabilities incurred by the SPE are shown in the rest of the world sector, and not in a sector of the domestic economy. The treatment of non-resident SPEs belonging to the general government is defined in paragraph 2.14.

• 18.11Members of a household must all be resident in the same economy. If a person resides in a different economy from the other members of a household, that person is not regarded as a member of that household, even though they may share income and expenses, or hold assets together.

BRANCHES AS A TERM USED IN THE INTERNATIONAL ACCOUNTS OF THE BALANCE OF PAYMENTS

• 18.12A branch is an unincorporated enterprise that belongs to a non-resident unit, known as the parent. It is treated as a resident and a quasi-corporation in the territory where it is situated. The identification of branches as separate institutional units requires indications of substantial operations that can be separated from the rest of the entity. A branch is recognised in the following cases:

• (a) either a complete set of accounts, including a balance sheet, exists for the branch; or

• (b) it is possible and meaningful, from both an economic and legal viewpoint, to compile those accounts if required. The availability of separate records indicates that an actual unit exists and makes it practical to prepare statistics.

• In addition, one or more of the following factors tend to be present:

• (a) the branch undertakes or intends to undertake production on a significant scale and that production is based in a territory other than that of its head office, for one year or more:
• (1) if the production process involves physical presence, then the operations should be physically located in that territory;
• (2) if the production does not involve physical presence, such as some cases of banking, insurance, other financial services, ownership of patents, trademarks or copyrights, merchanting and 'virtual manufacturing,' then the operations should be recognised as being in the territory by virtue of the registration or legal domicile of those operations in that territory;

• (b) even if it has tax-exempt status, the branch is recognised as being subject to the income tax system, if any, of the economy in which it is located.

• 18.13The identification of branches has implications for the statistical reporting of both the parent and the branch. The operations of the branch are excluded from the institutional unit of its head office and the delineation of parent and branch has to be made consistently in both of the affected economies. A branch may be identified for construction projects or mobile operations such as transport, fishing or consulting. However, if the operations are not substantial enough to identify a branch, they are treated as an export of goods or services from the head office.

• 18.14In some cases, preliminary operations related to a future direct investment project prior to incorporation are sufficient evidence of establishing residence with the result that a quasi-corporation is established. For example, licenses and legal expenses for a project are shown as being incurred by a quasi-corporation, and are part of direct investment flows into that unit rather than sales of licenses to non-residents, or exports of services, respectively, to the head office.

NOTIONAL RESIDENT UNITS

• 18.15When land located in a territory is owned by a non-resident entity, a notional unit that is treated as resident is identified for statistical purposes as being the owner of the land. This notional resident unit is a quasi-corporation. This manner of treating a notional unit as resident is also applied to associated buildings, structures and other improvements on that land, leases of land for long periods, and ownership of natural resources other than land. As a result of such treatment, the non-resident is owner of the notional resident unit, rather than owning the land directly, so there is an equity liability to the non-resident, but the land and other natural resources are always assets of the economy in which they are located. The notional resident unit usually supplies services to its owner, for example, accommodation in the case of vacation homes.

• 18.16In general, if a non-resident unit has a long-term lease on an immovable asset such as a building, this is associated with it undertaking production in the economy where it is located. If, for any reason, there is no associated production activity, a notional resident unit is also created to cover such a lease. The non-resident unit is treated, therefore, as owning the notional resident unit and not the building, which is the property of the economy where it is located.

MULTI-TERRITORY ENTERPRISES

• 18.17Some enterprises operate as a seamless operation over more than one economic territory, typically for cross-border activities such as airlines, shipping lines, hydroelectric schemes on border rivers, pipelines, bridges, tunnels and undersea cables. Separate branches need to be identified unless the entity is run as a single operation with no separate accounts or decision-making for each territory that it operates in. In such cases, because of the central focus on data for each national economy, it is necessary to split the operations between economies. The operations are then pro-rated according to an appropriate enterprise-specific indicator of the proportions of operations in each territory. The pro-rating treatment may also be adopted for enterprises in zones subject to joint administration by two or more governments.

GEOGRAPHICAL BREAKDOWN

• 18.18For the purpose of compiling the accounts of the European Union, the rest of the world sector (S.2) is subdivided into:

• (a) Member States and institutions and bodies of the European Union (S.21):
• (1) Member States of the European Union (S.211);
• (i) Member States of the euro area (S.2111);
• (ii) Member States outside the euro area (S.2112);
• (2) institutions and bodies of the European Union (S.212):
• (i) the European Central Bank (ECB) (S.2121);
• (ii) European institutions and bodies, except the ECB (S.2122);

• (b) non-member countries and international organisations non-resident in the European Union (S.22).

• 18.19For the purpose of compiling the accounts of the euro area, the above subsectors may be grouped as follows:

the Member States of the euro area and the European Central Bank

(S.2I = S.2111 + S.2121);

countries and international organisations that are non-resident in the euro area

(S.2X = S.2112 + S.2122 + S.22).

• A description of the European accounts is provided in Chapter 19.

THE INTERNATIONAL ACCOUNTS OF THE BALANCE OF PAYMENTS

• 18.20The national accounts are different from the international accounts shown in the BPM6. The international accounts show the transactions between a domestic economy and foreign economies from the point of view of the domestic economy. Accordingly, imports are shown as a use (a debit) and exports as a resource (a credit).

• A summarised form of the international accounts as presented in the BPM6 is given in Table 18.1.

• 18.21A second major difference between the international accounts of the balance of payments, and the rest of the world sector accounts in the ESA, is the use of functional categories in the international accounts rather than instruments in the classifications of financial transactions in the ESA. This issue is further discussed in paragraphs 18.57 and 18.58.

BALANCING ITEMS IN THE CURRENT ACCOUNTS OF THE INTERNATIONAL ACCOUNTS

• 18.22The structure of the balancing items in the balance of payments is somewhat different from that in the national accounts, in that each account in the international accounts has its own balancing item and another that carries down to the next account. To illustrate this, the primary income account has its own balancing item (balance on primary income) and a cumulative balance (balance on goods, services and primary income). The external balance on primary income corresponds to the balance of primary incomes and is the item feeding into GNI. The current external balance corresponds to saving by the rest of the world relative to the domestic economy. The balancing items in the BPM6 structure of accounts are shown in Table 18.1.

Table 18.1 —  The international flow accounts of the balance of payments

Balance of payments	Balance of payments	Balance of payments	Balance of payments
Current accounts	Credits	Debits	Balance
Goods and services account	Goods and services account	Goods and services account	Goods and services account
Goods	462	392	70
Services	78	107	– 29
Goods and services	540	499	41
Primary income account	Primary income account	Primary income account	Primary income account
Compensation of employees	6	2
Interest	13	21
Distributed income of corporations	36	17
Reinvested earnings	14	0
Primary income	69	40	29
Goods, services and primary income	609	539	70
Secondary income account	Credits	Debits	Balance
Taxes on income, wealth	1	0
Net non-life insurance premiums	2	11
Non-life insurance claims	12	3
Current international transfers	1	31
Miscellaneous current transfers	1	10
Secondary income	17	55	– 38
Current account balance			32
Capital account	Capital account	Capital account	Capital account
Acquisitions/disposals of non-produced assets	0
Capital transfers	1	– 4
Capital account balance			– 3
Net lending (+)/borrowing (–)			29
Financial account (by functional category)	Change in assets	Change in liabilities	Balance
Direct investment	– 4	8
Portfolio investment	17	7
Financial derivatives etc.	3	0
Other investment	42	22
Reserve assets	8	—
Total change in assets/liabilities	66	37
Net lending (+)/net borrowing (–) (financial)			29
Net errors and omissions			0

THE ACCOUNTS FOR THE REST OF THE WORLD SECTOR AND THEIR RELATIONSHIP WITH THE INTERNATIONAL ACCOUNTS OF THE BALANCE OF PAYMENTS

The external account of goods and services

• 18.23The goods and services account consists only of imports and exports of goods and services because they are the only transactions in goods and services with a cross-border dimension. Goods and services are recorded when there is a change of economic ownership from a unit in one economy to a unit in another country. Although there is usually a physical movement of goods when there is a change of ownership, this is not necessarily the case. In the case of merchanting, goods may change ownership and not change location until they are resold to a third party.

• Tables 18.2 and 18.3 show how primary and secondary income is recorded in the ESA and the BPM6.

Table 18.2 —  External account of goods and services (ESA V.1)

Uses	Uses	Uses	Resources	Resources	Resources
P.6	Exports of goods and services	540	P.7	Imports of goods and services	499
P.61	Exports of goods	462	P.71	Imports of goods	392
P.62	Exports of services	78	P.72	Imports of services	107
B.11	External balance of goods and services	– 41

Table 18.3 —  Goods and services account of the BPM6

Current accounts	Credits	Debits	Balance
Goods and services account	Goods and services account	Goods and services account	Goods and services account
Goods	462	392	70
Services	78	107	– 29
Goods and services	540	499	41

• 18.24Goods that change locations from one economy to another but do not change economic ownership do not appear in imports and exports. Thus, goods sent abroad for processing, or returned after processing, do not appear as imports and exports of goods; only the fee agreed for processing appears as a service.

• 18.25The balance of payments gives emphasis to the distinction between goods and services. That distinction reflects policy interests, in that there are separate international treaties covering goods and services. It also reflects data issues, in that data on goods are usually obtained from customs sources, while data on services are usually obtained from payment records or surveys.

• 18.26International merchandise trade statistics are the main source of data for goods. International standards are given in International Merchandise Trade Statistics: Concepts and Definitions ([^E0030]) Rev. 2 (IMTS) of the UN. The BPM6 identifies some possible sources of difference between the value of goods recorded in merchandise trade statistics and in the balance of payments. It also recommends a standard reconciliation table to assist users in understanding such differences. One major source of difference is that the standards for IMTS use a CIF-type (cost, insurance and freight) valuation for imports, while the balance of payments use a uniform FOB (the value at the customs frontier of the exporting economy, that is, free on board) valuation for both exports and imports. It is, therefore, necessary to exclude freight and insurance costs incurred between the customs frontier of the exporter and the customs frontier of the importer. Given variations between the FOB-type valuation and actual contractual arrangements, some freight and insurance costs need to be rerouted.

• The valuation principles are the same in the ESA and the balance of payments. FOB valuation is, therefore, to be followed for recording exports and imports of goods (see paragraph 18.32).

• 18.27The change of ownership basis used for the balance of payments means that goods entries will have a time of reporting consistent with the corresponding financial flows. In the BPM6, there are no longer exceptions to the change of ownership principle. In contrast, IMTS follow the timing of customs processing. While this timing is often an acceptable approximation, adjustments may be needed in some cases, such as goods sent on consignment. In the case of goods sent abroad for processing with no change of ownership, the values of goods movements are included in IMTS, but changes in ownership are the primary presentation in the balance of payments, and, therefore, the balance of payments will only show the fees related to 'manufacturing services on physical inputs owned by others'; however, the values of goods movements are recommended as supplementary items to understand the nature of such processing arrangements. Further details of the recording of processing arrangements are given later in this chapter. Other adjustments to IMTS may be needed to bring estimates into line with the change of economic ownership of goods, either generally or because of the particular coverage of each country. Possible examples include merchanting, non-monetary gold, goods entering or leaving the territory illegally, and goods procured in ports by carriers.

• 18.28Re-exports are foreign goods (goods produced in other economies and previously imported with a change of economic ownership) that are exported with no substantial transformation from the state in which they were previously imported. Given that re-exported goods are not produced in the economy concerned, they have less connection to the economy than other exports. Economies that are major trans-shipment points and locations of wholesalers often have large values of re-exports. Re-exports increase the figures for both imports and exports and when re-exporting is significant, the proportions of imports and exports to economic aggregates are increased also. It is, therefore, useful to show re-exports separately. Goods that have been imported and are waiting to be re-exported are recorded in inventories of the resident economic owner.

• Transit trade is where goods cross a country on their way to their final destination, and, for the country crossed, are generally excluded from foreign trade statistics, balance of payments statistics and the national accounts.

• Quasi transit trade are goods imported into a country, cleared through Customs for free circulation within the EU, and then dispatched to a third country in the EU. The entity used for Customs clearance is usually not an institutional unit as defined in Chapter 2, and so does not acquire ownership of the goods. In this case, the import is shown in the national accounts as a direct import to the final destination, as in the case of simple transit trade. The appropriate value is that recorded as the goods enter the final destination country.

• 18.29Goods are presented at an aggregate level in the balance of payments. More detailed commodity breakdowns can be obtained from IMTS data.

• 18.30In the balance of payments, detail is produced for the following 12 standard components of services:

• (a) manufacturing services in relation to physical inputs owned by others;

• (b) maintenance and repair services n.i.e.;

• (c) transport;

• (d) travel;

• (e) construction;

• (f) insurance and pension services;

• (g) financial services;

• (h) charges for the use of intellectual property n.i.e.;

• (i) telecommunications, computer and information services;

• (j) other business services;

• (k) personal, cultural and recreational services; and

• (l) government goods and services n.i.e.

• 18.31Three of the balance of payments' standard components above are transactor-based items, that is, they relate to the acquirer or provider, rather than the product itself. The items fall into the categories of travel, construction and government goods and services n.i.e.

• (a) Travel covers all goods or services, acquired by non-residents during visits, whether for own use or to give away. Travel includes goods, local transport, accommodation, meals and other services.

• (b) Construction covers the total value of the product delivered by the contractor, including any materials sourced locally and, therefore, not recorded in imports and exports of goods.

• (c) Government goods and services n.i.e. cover a range of items that cannot be allocated to more specific headings.

• Besides those three transactor-based items, the remaining components are product-based, built from the more detailed classes of  CPA. Additional standards for services trade are shown in the Manual on Statistics of International Trade in Services ([^E0031]) (MSITS), which is harmonised with the international accounts.

Valuation

• 18.32Valuation principles are the same in the ESA and the international accounts. In both cases, market values are used, with nominal values used for some positions in instruments where market prices are not observable. In the international accounts, the valuation of exports and imports of goods is a special case where a uniform valuation point is used, namely the value at the customs frontier of the exporting economy, that is, the FOB-type valuation (free on board). This treatment brings about consistent valuation between exporter and importer and provides for a consistent basis for measurement in circumstances where the parties may have a wide range of different contractual arrangements, from 'ex-works' at one extreme (where the importer is responsible for arranging all transport and insurance) to 'delivered duty paid' at the other (where the exporter is responsible for arranging all transport, insurance and any import duties).

Goods for processing

• 18.33Between the ESA 95 and the ESA 2010, there has been a fundamental change in the treatment of goods sent abroad for processing without change of ownership. In the ESA 95, such goods were shown as exports on being sent abroad, and then recorded as imports on return from abroad, at a higher value as a result of the processing. This was known as the gross recording method, and effectively imputes a change of ownership so that international trade figures represent an estimate of the value of the goods being traded. The 2008 SNA, the BPM6 and the ESA 2010 do not impute a change of ownership, but rather show only one entry — an import of the processing service. This would be an export of the service for the country in which the processing takes place. This recording is more consistent with the institutional records and associated financial transactions. It does, however, cause an inconsistency with the international merchandise trade statistics (IMTS). The IMTS continue to show the gross value of the exports for process and returning imported processed goods.

• 18.34In order to avoid such an inconsistency in the national accounts, the value of the exported goods can be recorded alongside that of the imported goods as supplementary items, the values being those recorded in the IMTS. This will enable the net processing service to be derived as the value of the processed goods exported less the value of the unprocessed goods which are imported. It is this service which is recorded in the national accounts. So for the country having the goods processed abroad, the exports will be scored alongside the imported processed goods, as supplementary items in the external goods and services account. This will reconcile the IMTS entries with the net import services figure reflecting the processing costs.

• 18.35An example related to the treatment of goods for processing in the supply and use tables will demonstrate the change. Consider the case where a food manufacturing firm harvests and processes vegetables, then outsources the actual canning of the vegetables to a wholly owned subsidiary abroad, and then takes them back canned and sells the canned food on.

• 18.36In Table 18.4 for the ESA 95, the imports and exports figures should match the entries in the international merchandise trade statistics (IMTS). The exports of goods to the canning subsidiary abroad are 50, and then the canned vegetables are returned as imports of 90.

Table 18.4 —  The ESA 95 treatment of goods for processing as international trade

	Purchases	Final demand	Final demand	Total
Sales	Food manufacturing	Household expenditure	Exports
Food		90	50	140
Canned food imports	90			90
Value added	50		GDP (E) =	50
Total output	140

Table 18.5 —  The ESA 2010 treatment of goods for processing as international trade

	Purchases	Final demand	Final demand	Total
Sales	Food manufacturing	Household expenditure	Exports
Food		90	0	90
Canning services imports	40			40
Value added	50		GDP (E) =	50
Total output	90

• 18.37Table 18.5 shows the ESA 2010 treatment of goods for processing on a net basis: only the trade in services is shown and there will be no match with the movement in goods recorded in the IMTS. The net position, of exports less imports, will be shown in the balance of payments international accounts and the corresponding rest of the world sector accounts. The BPM6 recommends that where it is known that imports and exports in the IMTS reflect a situation where there is no change in ownership, then the two are recorded side by side in the balance of payments figures, so that the services element can be immediately calculated. So, for the food manufacturing industry, the vegetables sent abroad for canning would be shown as an export of 50, and the reimported canned vegetables would be shown as an import of 90. Those figures can be set beside each other in the international accounts statistics as supplementary items, with the exports recorded as negative imports, so enabling a net import of canning services of 40 to be derived.

• The recording of this example in the BPM6 is shown in Table 18.6.

Table 18.6 —  Recording of processing in the BPM6

Current accounts	Credits	Debits	Balance
Goods and services account			– 40
Services (standard components)
'Manufacturing services on physical inputs owned by others'		40	– 40
Supplementary items
Goods for processing abroad	50	90	– 40

Merchanting

Goods under merchanting

• 18.38Merchanting is defined as the purchase of goods by a resident (of the compiling economy) from a non-resident combined with the subsequent resale of the same goods to another non-resident without the goods being present in the compiling economy. Merchanting occurs for transactions involving goods where physical possession of the goods by the owner is unnecessary for the process to occur. These and the following clarifications related to merchanting follow the corresponding paragraphs in the BPM6 (paragraphs 10.41-10.48).

• 18.39Merchanting arrangements are used for wholesaling and retailing. They may also be used in commodity dealing and for the management and financing of global manufacturing processes. For example, an enterprise may contract the assembly of a good among one or more contractors, such that the goods are acquired by this enterprise and resold without passing through the territory of the owner. If the physical form of the goods is changed during the period the goods are owned, as a result of manufacturing services performed by other entities, then the goods transactions are recorded under general merchandise rather than merchanting. In other cases where the form of the goods does not change, the goods are included under merchanting, with the selling price reflecting minor processing costs as well as wholesale margins. In cases where the merchant is the organiser of a global manufacturing process, the selling price may also cover elements such as providing planning, management, patents and other know-how, marketing, and financing. Particularly for high-technology goods, these non-physical contributions may be large in relation to the value of materials and assembly.

• 18.40Goods under merchanting are recorded in the accounts of the owner in the same way as any other goods it owns. However, the goods are detailed specifically in the international accounts statistics of the economy of the merchant because they are of interest in their own right and because they are not covered by the customs system of that economy.

• The treatment of merchanting is that:

• (a) the acquisition of goods by merchants is shown under goods as a negative export of the economy of the merchant;

• (b) the sale of goods is shown under goods sold under merchanting as a positive export of the economy of the merchant;

• (c) the difference between sales over purchases of goods for merchanting is shown as the item 'net exports of goods under merchanting'. This item includes merchants' margins, holding gains and losses, and changes in inventories of goods under merchanting. As a result of losses or increases in inventories, net exports of goods under merchanting may be negative in some cases; and

• (d) Merchanting entries are valued at transaction prices as agreed by the parties, not FOB.

• 18.41Merchanting items appear only as exports in the accounts of the economy of the territory of the merchant. In the counterpart exporting and importing economies, export sales to merchants and import purchases from merchants are included under general merchandise.

• 18.42Wholesaling, retailing, commodity dealing, and management of manufacturing may also be carried out under arrangements where the goods are present in the economy of the owner, in which case they are recorded as general merchandise, rather than as merchanting. In cases where the goods do not pass through the economy of the owner, but the physical form of the goods changes, because they are processed in another economy, international transactions are recorded under general merchandise, rather than merchanting (the processing fee is recorded as a manufacturing service paid for by the owner).

• 18.43When a merchant resells goods to a resident of the same economy as the merchant, this does not meet the definition of merchanting. Accordingly, the purchase of goods is shown as imports of general merchandise to the economy in that case. If the entity that purchased from a merchant in the same economy subsequently resells the goods to a resident of another economy, whether or not the goods enter the economy of the merchant, the sales of goods are recorded in exports of general merchandise from the economy of the merchant. While such a case is very similar to merchanting, it does not meet the definition given in paragraph 18.38. In addition, it is impractical for the first merchant to record the purchases as merchanting because that merchant may not know whether or not the second merchant will bring the goods into the economy.

Imports and exports of FISIM

• 18.44Actual interest on loans paid and received includes an income element and a charge for a service. Credit institutions operate by offering rates of interest to their depositors that are lower than the rates that they charge to their borrowers. The resulting interest margins are used by the financial corporations to defray their expenses and to provide an operating surplus. Interest margins are an alternative to charging customers explicitly for financial services. The ESA prescribes the imputation of a service charge for FISIM. The concept of FISIM and the guidelines for estimating the values of FISIM are given in Chapter 14.

• 18.45The financial institutions that implicitly charge FISIM are not necessarily resident, nor need the clients of such institutions be resident. Imports and exports, therefore, of this type of financial service are possible. Guidelines for compiling FISIM imports and exports are in paragraph 14.10.

The external account of primary and secondary income

Tables 18.7 and 18.8 show an example of recording of primary and secondary income in the ESA and the BPM6.

Table 18.7 —  External account of primary and secondary incomes (ESA V.II)

Uses	Uses	Uses	Resources	Resources	Resources
			B.11	External balance of goods and services	– 41
D.1	Compensation of employees	6	D.1	Compensation of employees	2
D.2	Taxes on production and imports	0	D.2	Taxes on production and imports	0
D.3	Subsidies	0	D.3	Subsidies	0
D.4	Property income	63	D.4	Property income	38
D.5	Current taxes on income, wealth	1	D.5	Current taxes on income, wealth	0
D.6	Social contributions and benefits	0	D.6	Social contributions and benefits	0
D.7	Other current transfers	16	D.7	Other current transfers	55
D.8	Adjustment for the change in pension entitlements	0	D.8	Adjustment for the change in pension entitlements	0
B.12	Current external balance	– 32

Table 18.8 —  The primary income account and secondary income account of the BPM6

	ESA code	Credits	Debits	Balance
From goods and services				41
Primary income account	Primary income account	Primary income account	Primary income account	Primary income account
Compensation of employees	D.1	6	2
Interest	D.4	13	21
Distributed income of corporations	D.4	36	17
Reinvested earnings	D.4	14	0
Taxes on production and imports	D.2	0	0
Subsidies	D.3	0	0
Primary income		69	40	29
Goods, services and primary income		609	539	70
Secondary income account	Secondary income account	Secondary income account	Secondary income account	Secondary income account
Taxes on income, wealth	D.5	1	0
Net non-life insurance premiums	D.6, D.7, D.8	2	11
Non-life insurance claims	D.6, D.7, D.8	12	3
Current international transfers	D.6, D.7, D.8	1	31
Miscellaneous current transfers	D.6, D.7, D.8	1	10
Secondary income		17	55	– 38
Current account balance				32

The primary income account

• 18.46In the balance of payments, the entries in the primary income account include compensation of employees and property income, exactly as in the allocation of primary income account in the ESA. Payments of taxes on production by residents and receipts of subsidies by residents from the domestic government are recorded in the generation of income account, an account that does not form part of the balance of payments. Any payments of taxes on production payable by a resident to another government as well as any subsidy receivable by a resident from another government are recorded in the primary income account of the balance of payments. The matching entries for the domestic government are shown in the allocation of primary income account and for foreign governments in the rest of the world column of that account and in the primary income account of the balance of payments.

• 18.47Rent may arise in cross-border situations, but rarely, since all land is deemed to be owned by residents, including if necessary, by creating a notional resident unit. If such notional resident units are owned by non-residents then any income earned by those units is classified as direct investment income and not as rent. An example where rent is recorded in the international accounts is short-term fishing rights in territorial waters provided to foreign fishing fleets. It is common in the international accounts to use the term investment income meaning property income excluding rent. Investment income reflects income arising from the ownership of financial assets, and the disaggregation of investment income matches that of financial assets and liabilities so that rates of return can be calculated.

Direct investment income

• 18.48The role of direct investment is particularly important and reflected in both the flows and positions in the international accounts. In the case of a direct investment, it is assumed that a proportion of the enterprise's retained earnings is distributed to the direct investor as a form of investment income. The proportion corresponds to the direct investor's holding in the enterprise.

• 18.49Retained earnings are equal to the net operating surplus of the enterprise plus all property income earned less all property income payable (before calculating reinvested earnings) plus current transfers receivable less current transfers payable and less the item for the adjustment for the change in pension entitlements. Reinvested earnings accrued from any immediate subsidiaries are included in the property income receivable by the direct investment enterprise.

• 18.50Reinvested earnings may be negative, for example where the enterprise makes a loss or where dividends are distributed from holding gains, or in a quarter when an annual dividend is paid. Just as positive reinvested earnings are treated as being an injection of equity into the direct investment enterprise by the direct investor, negative reinvested earnings is treated as a withdrawal of equity.

• For a direct investment enterprise that is 100 per cent owned by a non-resident, reinvested earnings are equal to retained earnings and the balance of primary incomes of the enterprise is exactly zero.

The secondary income (current transfers) account of the BPM6

• 18.51The secondary income account shows current transfers between residents and non-residents. The range of entries of current transfers corresponds exactly to those in the secondary distribution of income account. Several of those entries are particularly important in the international accounts, especially current international cooperation and remittances sent to their home countries by individuals working abroad.

• 18.52Cross-border personal transfers are household-to-household transfers and are of interest because they are an important source of international funding for some countries that provide large numbers of long-term workers abroad. Personal transfers include remittances by long-term workers, that is, those who change their economy of residence.

• 18.53Other workers, such as border and seasonal workers, do not change their economy of residence from the home economy. Instead of transfers, the international transactions of such workers include compensation of employees, taxes and travel costs. In the balance of payments, a supplementary presentation of personal remittances brings together personal transfers with those related items. Personal remittances include personal transfers, compensation of employees less taxes and travel, and capital transfers between households.

• 18.54Insurance flows, especially flows relating to reinsurance, can be important internationally. The transactions between the direct insurer and the reinsurer are recorded as an entirely separate set of transactions and no consolidation takes place between the transactions of the direct insurer as issuer of policies to its clients, on the one hand, and the holder of a policy with the reinsurer on the other.

The external capital account

• 18.55The elements of the capital account subject to international transactions are more restricted than those covered in the domestic sectors. The entries in the capital account only cover acquisitions and disposals of non-produced non-financial assets and capital transfers. There are no transactions recorded as capital formation of produced assets because the ultimate use of exports and imports of goods is not known at the time of recording. Neither are land acquisitions and disposals included.

• 18.56Net lending or net borrowing is the balancing item for the sum of the current and capital accounts and for the financial account. It covers all instruments used for providing or acquiring funding, not just lending and borrowing. Conceptually, the BPM6 net lending or net borrowing has the same value as the corresponding national accounts item for the total economy, and the same as the national accounts item for the rest of the world but with the sign reversed. Tables 18.9, 18.10 and 18.11 show the recording of the current and capital account elements and the resulting balance both in the ESA and the BPM6.

Table 18.9 —  Change in net worth due to current external balance and capital transfers (ESAV.III.1.1) [^E0032]

Change in assets	Change in assets	Change in assets	Change in liabilities and net worth	Change in liabilities and net worth	Change in liabilities and net worth
			B.12	Current external balance	– 32
			D.9	Capital transfers, receivable	4
			D.9	Capital transfers, payable	– 1
B.101	Changes in net worth due to current external balance and capital transfers	– 29

For the rest of the world, this refers to changes in net worth due to current external balance and capital transfers.

Table 18.10 —  Acquisition of non-financial assets account (ESA V.III.1.2)

Changes in assets	Changes in assets	Changes in assets	Changes in liabilities and net worth	Changes in liabilities and net worth	Changes in liabilities and net worth
			B.101	Changes in net worth due to current external balance and capital transfers	– 29
NP	Acquisitions less disposals of non-produced assets	0
B.9	Net lending(+)/net borrowing(–)	– 29

Table 18.11 —  Capital account of the BPM6

	Credits	Debits	Balance
Current account balance			32
Capital account	Capital account	Capital account	Capital account
Acquisitions/disposals of non-produced assets	0
Capital transfers	1	4
Capital account balance			– 3
Net lending (+)/borrowing (–)			29

The external financial account and international investment position (IIP)

• 18.57The financial account of the balance of payments and the IIP are of particular importance because they provide an understanding of international financing as well as of international liquidity and vulnerability. Compared to the classification of financial instruments used in the ESA, in balance of payments the classification of the financial instruments is based on functional categories (see paragraph 18.21), with additional data on instruments and institutional sectors. Tables 18.12 and 18.13 show the financial account in the ESA and in the BPM6 respectively.

Table 18.12 —  Financial account (ESA V.III.2)