Government Finance Statistics Manual 2014

372 Government Finance Statistics Manual 2014

of payments, which summarizes economic transac-

tions between residents and nonresidents during a

specifi c time period; (ii) the other changes in fi nan-

cial assets and liabilities, which show fl ows due to

economic events other than transactions between

residents and nonresidents, and include valuation

changes; and (iii) the international investment po-

sition (IIP), which shows the value of the fi nancial

asset and liability stock positions between the resi-

dents of an economy and nonresidents at a reporting

date. Th e diff erence between the opening and clos-

ing stock positions of the IIP is explained by the sum

of transactions and other changes in fi nancial assets

and liabilities.

Linkages between GFS and Balance of Payments and the International Investment Position

A7.75 Th e BPM6 framework provides a sequence

of accounts, each encompassing a separate economic

process or phenomenon and a balancing item. Th e

remainder of this section describes how the various

international accounts correspond to GFS.

Th e balance of payments

A7.76 Th e balance of payments summarizes eco-

nomic transactions between residents and nonresi-

dents during a specifi c time period. Th e diff erent

accounts within the balance of payments are dis-

tinguished according to the nature of the economic

resources provided and received, and comprise the

following:

• Th e current account shows fl ows of goods and
  services, primary income, and secondary income
  between residents and nonresidents.


• Th e capital account shows fl ows for transactions
  in nonproduced nonfi nancial assets, and capital
  transfers between residents and nonresidents.


• Th e fi nancial account shows net acquisition and
  disposal of fi nancial assets and liabilities.


• Th e sum of the balances on the current and
  capital accounts represents the net lending
  (surplus) or net borrowing (defi cit) by the resi-
  dent economy with the rest of the world. Th is
  is conceptually equal to the net balance of the
  fi nancial account. It is also conceptually equal
  to the sum of net lending/borrowing for all the
  resident sectors.

Th e current account

A7.77 Th e current account shows fl ows of goods

and services, primary income, and secondary income

between residents and nonresidents. Th e balance on

this account, known as the current account balance,

shows the diff erence between the sum of exports and

income receivable and the sum of imports and in-

come payable. Th e current account balance represents

the saving-investment gap for the economy.

Th e goods and services account

A7.78 Th e goods and services account shows

transactions in items that are outcomes of produc-

tion activities. Th e focus of the account is the point

at which goods and services^21 are exchanged between

a resident and a nonresident. Production is an activ-

ity in which an enterprise uses inputs (intermediate

inputs, labor, produced and nonproduced assets) in

order to transform them to an output that can be sup-

plied to other units.

A7.79 Th e GFS Statement of Operations has a

linkage to the goods and services account to the

extent that general government/public sector units

enter into transactions with nonresidents, involv-

ing goods and services, either as a producer/seller or

user of these goods or services. GFS will usually not

separately identify these transactions, which limits

opportunities for reconciliation between the goods

and service account and GFS. However, in some

cases, supplementary information in the underlying

source data may identify such transactions—either

because of their nature, large volumes, or large val-

ues of the transactions. Specifi cally, where produced

assets are exchanged, contractual arrangements may

be publicly available and should be consistently

treated in the goods and services account of the bal-

ance of payments and GFS.

A7.80 Th e goods and services account requires

that goods and services be classifi ed according to the

nature of the good or service. One of these specifi cally

requires the separate disclosure of government goods

and services not included elsewhere, which cover:

• Goods and services supplied by and to enclaves,
  such as embassies, military bases, and interna-
  tional organizations

(^21) Goods as used in this context include both consumer goods and
produced nonfi nancial assets.